Agents, Home Buyers and iBuyers

Written by Posted On Wednesday, 29 July 2020 19:44
Agents, Home Buyers and iBuyers Bruce Mars

What is an iBuyer, and how is that different than a home buyer? How do both of them compare to selling with an agent? In this article, we will look at theses different means of selling a house, and the pros and cons of each.

Real Estate Agents

Real Estate agents are the most well-known option to sell a house. Agents work on a commission-based system. A typical real estate agent commission is 6% that is split between the buying and selling agent, however, this can be negotiated. An agent is going to list the house on the market, and try to attract the highest buyer. Agents will make recommendations on what updates or repairs a house needs to sell in the neighborhood, and at what price point it should be listed at. Agents will take photos of the property, write a property description, and list it on the MLS. They will host Open-houses and expect you to allow for the agents of potential buyers to stop in and show the house as needed in order to get your house sold.

Keep in mind that not all agents are equal, and having a real estate license doesn't make someone a good agent. It is important to make sure that you find an agent that is knowledgeable of your area and has good referrals.  

Pros: Good Agents Will Get You The Highest Selling Price

Cons: Slow, due to most buyers requiring conventional financing (banks). Bad agents may not be able to sell your house. 

Typical House Condition: Market Ready/Minimal Repairs (can list houses with major repairs needed)

Days To Sell: *101 average days on market in Houston

iBuyers

These are companies like Opendoor or Zillow that buy houses and present an “instant cash offer”. Here you are given an offer that is near retail pricing for your home, however, this is actually much lower as there are additional fees associated with it. In addition, they give you a list of repairs you need to make for the house, or they charge you the cost of the repairs to have the work done.

It is also important to note that most iBuyers aren't going to buy houses with major renovations needed. They are typically purchasing houses that need minimal work, where they can quickly turn them around are re-list. Some iBuyers partner with local agents for houses that are inquired about that they don't buy. iBuyers offer a quick turn around and can buy houses directly in just a matter of weeks.

 Pros: Fast, due to not needing banks. Offers for houses needing only cosmetic repairs can be higher than typical home buying companies.

Cons: Don’t pay retail price. Don’t buy houses needing major renovations. Some work through local 3rd parties.

Typical House Condition: Market Ready/Minimal Repairs

Days To Sell: Less than 30

Home Buyers

Home buyers are mostly local companies, although there are some large ones like Homevestors which are more commonly known as the "We Buy Ugly Houses" company. Unlike iBuyers, home buyers can generally buy houses in any condition. However, keep in mind, that since home buyers, like iBuyers, are actually buying your house to make a profit, they are going to be offering a reduced price for the speed and convenience. The difference between the offer price with a homebuyer compared to an iBuyer is that the home buyer gives you an offer that has their profit requirement instead of predetermined fees.

The quality of home buyers varies dramatically, as some of them work primarily as house flippers or individual investors and may not focus on the customer's experience. Some also only do wholesaling, so they are depending on someone else wanting the property and may not be able to close if they can't find a buyer. Good reviews and proof of funds are important when looking at a home buying company.

Pros: Fast, due to not needing banks. Will buy badly damaged houses

Cons: Don’t pay retail price. Some will have very poor service, and may not be able to close. 

Typical House Condition:  Minimal or major Repairs

Days To Sell: Less Than 30

Conclusion

You have some options when you sell. If you are looking for the highest possible price for your house, and time isn't a variable, your best option is to do the needed renovations or repairs and list it with a quality agent. If you want to sell fast and you have a house that doesn't need much work it is a toss-up between an iBuyer and home buyer. If you don't want to wait for your house to sell on the market and your house has large repairs needed, a quality home buyer maybe your best option. 

 

*DataSource Texas Realtors and the Real Estate Center At Texas A&M

 

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Kevin Bazazzadeh

Kevin Bazazzadeh is the Owner of Brilliant Day Homes, a Houston-based real estate investment company that buys houses. He was born and raised in Paris, TX, and since resided in College Station and Houston. Kevin writes for multiple real estate blogs and manages real estate acquisitions.

https://www.brilliantdayhomes.com/

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