When exploring selling your house you will undoubtedly come across people or companies offering to buy your home cash, fast. You might ask, is there a catch? and how much money will I keep compared to selling with an agent on the market? I will answer that in this post.
Definition: What is an I-Buyer: An I buyer is a person or company that offers to buy your home for cash. This includes “investors”. They are called this because often you will see their advertisements as; I buy homes for cash, fast! So that where the term I-buyer comes from.
The Ultimate Question: Is there a catch to selling to an Ibuyer and how much money will I make compared to a traditional sale with an agent?
The Catch: Selling to an Ibuyer or Investor is a great example of paying for convenience. They will Purchase the home at far under market value, like Hundreds of thousands. They will also include additional “transaction fees” they might be called or they use other terminology that ultimately ends up as fees paid by you.
Example: Opendoor is one of the largest home buying companies, on their website it states that they charge a “service fee” of 5% of the sale price. Which is the total amount to work with a real estate agent. There are other fees as well. Based on their sole opinion they will reduce the sale price by an amount for repairs that they determine at their own discretion. so that would likely be large costs as they will make sure to cover all repairs plus additional amounts to cover any unexpected repairs. You are still responsible for traditional closing costs which could be 1-2% of the sale price.
In Summary: Opendoor has a flat rate cost of 5%, plus a TBD repair cost that could be any amount, plus 1-2% for closing costs. These fees are on top of a a reduced purchase price of about 25-50%
Example: Your home is worth $400,000. They offer a purchase price of $275,000. Plus 5% fee of $13,750 plus repairs estimated $40,000 plus closing costs of $5,500. In total, the money you would receive would be $215,750. Compared to listing with an agent which would be net $372,000. a difference of $156,250. Would you like to lose out on over $150,000 dollars to sell to an I-buyer?
Other Large Home Buyers:
Offerpad: Has a service fee of 6%, (again the same cost as hiring a realtor) Plus repair costs and closing fees as well. They Charge 1% fee if you back out as well.
Investors: All investors and Ibuyers will have fees and often times try to hide them. They will always purchase under market value. They will have fees that are equal to or likely exceed the cost of a good agent. If you decide to work with an Investor or Ibuyer, make sure you get a list of all fees, prices, read the fine print and look out for hidden fees and costs on top of the ones they tell you about up front.
Summary: In order to sell to an I-buyer it will cost you. Lots of money. They charge More and higher fees than selling with an agent and buy at a lower price. To me, it makes more sense to hire a professional that will handle the entire sale, and do it for cheaper. A good agent will make the sale quick, profitable and easy as possible.
If you’d like to discuss the sale of your home, fill out the form on my contact me page.