Online Home Buying May be Convenient But is it Cost-Effective
Every year it seems the attention span of the average person gets shorter and shorter. It’s an unfortunate side effect of technology getting better and better. People seek out convenience gadgets that can help them finish their tasks more quickly, so they can move on to the next. For example, you can hang a gadget in the shower to clean it for you or you can buy a vacuum that does all the work itself. And then there are convenience services that can help you move through your day faster, like ordering your groceries online and having them delivered. These examples are helpful, but are all convenience technologies really beneficial?
A growing trend in real estate is that of iBuyer (Opendoor, Zillow Offers, and Redfin). iBuyer companies work directly with consumers to buy and sell homes while, in most cases, cutting out the Agent middleman. Most will offer a cash sum, buy the house as-is (assuming it’s not a fixer-upper), and the closing will be within a few weeks. Fast, convenient, and stress-free.
But, is it worth it?
That depends...do you need to sell fast and don’t want the hassle of home showings or repairs? Then maybe this path is worth it for you.
They do come with their negatives though.
These companies make their profits from buying low, so chances are you won’t net as much as you would have if you’d used a traditional agent. A side effect of this practice is that they lower the neighborhood comparables. I wonder how your neighbors would feel about that?
While you may not be responsible for repairs upfront if there is work to be done, as determined by the company’s inspector, the sale price will be adjusted down. Leaving you even less profit.
Another negative is for the local economy. Because these are national companies that use outside vendors there isn’t much investment back into the local economy.
And, while you may think you’re saving money by cutting out the agent’s commission, the fees these companies charge can vary from 6% to 11%. So you may end up paying more on top of netting less.
So is it for you?
Only you can be the judge of that, but there are a few other things to keep in mind.
iBuyer companies aren’t everywhere, making up only .3% of overall sales in the US, but they are growing, in some areas faster than others. And not all homes are eligible, they generally want homes that are livable with a minor amount of work needed.
Watch out for fraud. Any business model that grows rapidly leaves gaps for scammers to take advantage. Do your research to make sure you’re working with a reputable company.
And, as always do your due diligence on all costs before signing on any dotted lines.
So, fast, convenient, and stress-free? Maybe
Financially beneficial? Maybe not.
“Your Friend In The Real Estate Business.”