When the time comes to sell your home, you might debate whether you should use a Realtor® or an iBuyer. What's the difference between selling it through a local real estate agent vs. an iBuyer? Let's dig in, make some comparisons and see which option is a good fit for you.
You've talked to friends who have sold their homes through Realtors®, but you're curious about online sales services too. What are the benefits of one option over the other and which option works best for your needs?
Let's start by defining what an iBuyer is. Companies who use technology to instantly make an offer, within minutes or days, on your home are called iBuyers. They provide an estimated value for your home and, if you accept, they own it, pay costs to maintain it (ex. taxes, utilities, insurance, HOA fees, etc.), market it, and resell the home. Some reason you may want to use an iBuyer include the following:
- Need to sell quickly (ex. job transfer; already found another home to purchase)
- You're the executor of a family home and don't have time to manage the sale
- Want to be able to stay in your house, after it's sold, while looking for a new home
- Want to avoid open houses and showings
- Want an all-cash offer
- On-demand convenience
- Want to sell during the off-season
- Want to avoid negotiations
- Quick closing
A traditional Realtor® creates more of a personal experience and has connections to the area. You'll sit down with your agent to discuss pricing options, how to prep your home to be shown at it's best, discuss the ins/outs of the listing agreement, contingencies, etc. You can expect a lot of personal attention from a Realtor® and benefit from their experience selling in your area. Other benefits of using a real estate agent include the following:
- Personal, hands-on approach
- Suggestions for prepping or staging your home to get the highest possible selling price
- Some control over the sales process
- Make as much money as possible without paying high, unnecessary fees
- Unlimited guidance, great if you've never sold a home before
- Ability to negotiate the sales price
- Help in finding another home
- Offers are generally higher than iBuyer offers
- Fees are generally lower than iBuyer fees
Options to Consider
By making comparisons between what an iBuyer and a Realtor can offer, you will be in the best position to make a decision that's right for you. Consider the following suggestions:
- Get a suggested sales prices from a real estate agent and an iBuyer
- Compare the amount you'll pay in fees including the inspection, appraisal, repairs, commission
- After receiving an iBuyer appraisal and inspection, hire your own appraiser and inspector and compare prices
- Look closely at the inspection report, especially if you're considering an iBuyer. Fees may be high than average for repairs which are small or petty, resulting in paying far more than you should. Also, the inspection fees from an iBuyer might be considerably more than that of an inspector hired by a Realtor®.
- Real estate agents carry professional liability insurance (E & O). Check with the iBuyer to see if they carry it as well.
- Find out how much you'll be paying in escrow and insurance fees through an iBuyer program -- you might find it more affordable to go with a traditional agent
Did You Know...
- iBuyers will typically charge fees between 6-10% of the sales price, and the sales price will be lower than market value
- A traditional Realtor® transaction charges a 5-6% commission fee and prices your home at market value
- iBuyers will offer a lower-than-market price and, as a result, you will instantly be giving up some of the equity you've put into your home
- An experienced Realtor® will price your home to sell quickly and already has a pool of active buyers and investors looking for a home like yours.
When preparing to sell a home, homeowners have the option to use an iBuyer or a traditional real estate agent. The process of selling a home to an iBuyer can prove to be a quick process but more expensive, according to research. Selling a home through a Realtor® can provide higher returns in many cases but can be a long, involved process which includes showings and open houses. Take your time when decided who you want to hire to sell your home. Research who offers the best sales price but lowest fees. Don't hesitate to hire your own inspector and appraiser to compare to iBuyer results. Following the inspection, you may consider making some of the repairs yourself to save money. We hope you'll take into consideration all suggestions outlined in this article before putting your house on the market with an iBuyer or Realtor®.