TrendsiBuyers represent a dramatic shift in the way people are buying and selling homes, offering in many cases, a simpler, more convenient alternative to a traditional home sale.
How iBuyers operate varies, but the underlying idea is that a company estimates the value of your home and makes an offer. If you accept, they take on the burden of owning, marketing, and reselling the home. Depending on the service you choose, the benefit is the certainty of an all-cash offer and more control over when you move.
An iBuyer is a company that works directly with consumers providing an instant cash offer to purchase the home outright. iBuyers — Opendoor Technologies or Offerpad, for instance — purchase the home as-is without requesting any repairs, upgrades, warranties, closing costs or concessions, or real estate agent commissions. iBuying allows homeowners to sell their home without a broker or real estate agent, saving them money and time while avoiding the challenges and costs that can be incurred with the traditional real estate transactions.
The simple answer is that real estate transactions are often complex, slow, and stressful. This video from venture capital firm Andreessen Horowitz, breaks down some of the challenges of the traditional process. Couple these pain points with the speed and transparency consumers expect from today’s on-demand services, and you get conditions that are ripe for change.
Not all iBuyers share the same business model or offer the same services. For example, we’re often referred to as an iBuyer, but we think of ourselves as a full-service real estate company where you can buy, sell, and trade in a home.
iBuyers are often confused with home flippers, yet the two business models can be very different. Home flippers want to profit from buying low and selling high. They often target distressed properties, make major renovations, and then sell at a significantly higher price.
On the other hand, iBuyers typically focus on homes in good condition. They aim to make an offer in line with what a reasonable buyer would pay, commonly referred to as fair market value. In most cases, they’ll conduct minimal repairs to ensure the safety and functionality of the home before finding the next buyer.
iBuyers use algorithms to determine an ideal buy price for the property based on comparable properties (comps) to provide instant offers sight unseen — which is what the “i” in iBuyer stands for. A prospective seller goes to their website, fills out a form, and receives an offer to buy their home in 24 hours or less. If the seller accepts the iBuyer offer, the sale is closed in just a few weeks.
By using technology to streamline the buying process, iBuyers are able to minimize costs and speed up closing timelines making it an appealing option for selling a home.
iBuying companies use different models to provide different solutions based on the seller’s needs.
Zillow is getting out of the iBuying business and will shut down its Zillow Offers division, resulting in a 25% reduction in its staff. In its quarterly earnings report on Tuesday, the company said it will see a total write-down of more than $540 million as a result of its exit from the business, which […]