By Chad Arend, Realtor
Simply put, the term iBuyer is used to group companies that will submit an immediate offer on your home using automated techniques available online. Companies in this category are most known as Opendoor, Offerpad and Zillow, including various others. The rise in occurrence has certainly been noticeable within the industry in the past two to three years, since the market favors sellers to the greatest degree since August 2005.
“We can see significant growth in iBuyer activity compared to this time last year, a 25% increase in purchases and a 51% rise in sales. In recent months, Opendoor has consolidated its position as the dominant player while OfferPad and Zillow have experienced little change in volume since the beginning of 2019,” says Ryan Sams of Empire West Title.
If you’re considering selling your home, should you consider selling to an iBuyer? Perhaps. The advantage to an iBuyer is typically convenience. A seller doesn’t have to show their home to multiple buyers and can usually pick the closing timeframe.
That being said, you should be very aware of how much your home could “retail” for and understand the net amount you would receive for your home in all scenarios.
I spoke to four different sellers that recently sold their home to either Zillow, Offerpad or Opendoor. Here is how they each broke down…
Approx. value = $267,000
Listed for $275,000 with good activity but needed to sell quickly. Accepted an offer from Offerpad for $253,000 with 6% fee and $4,000 in repairs.
Netted $233,000 for their home or 88% of retail value.
Approx. value = $565,000
Listed for $569,000 and accepted an offer from Zillow at $562,000 with 5.5% in concessions and $1,500 in repair credit.
Netted $535,000 for their home or 94% of retail value.
Approx. value = $275,000
Never listed, accepted $260,000 with 6% concessions and $1,500 repair credit.
Netted $242,900 for the home or 88% of retail value.
Approx. value = $330,000
Never listed, original offer of $315,000 from Offerpad. After inspection, Offerpad reduced offer to $297,000 due to “exterior paint” (which would have realistically cost $4,000!)
Net offer reduced to $280,000 after 6% concession or 85% of retail value.
On average, in these four cases, the seller received 89% of retail value for their home. Only one of the four cases essentially received a near-asking price offer compared to what they would could have received using a local agent. If you are considering selling your home, it is important to look at all aspects of the sales process including average retail price, offer price, commissions and concessions. All of these could greatly affect your net price and will allow you determine if the convenience fee is of value to you.