{"id":4438,"date":"2019-05-13T07:35:46","date_gmt":"2019-05-13T11:35:46","guid":{"rendered":"https:\/\/dankrell.com\/blog\/?p=4438"},"modified":"2022-12-13T10:12:18","modified_gmt":"2022-12-13T15:12:18","slug":"ibuyers-are-just-house-flippers","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2019\/05\/13\/ibuyers-are-just-house-flippers\/","title":{"rendered":"iBuyers are Just House Flippers"},"content":{"rendered":"\n

Disruption in the marketplace seems to be the standard these days. So, it should not come as a surprise that the iBuyer phenomenon has taken hold of the real estate industry and is expanding.  What started out as an experiment in limited markets has grown into the internet version of \u201cI Buy Houses.\u201d (You\u2019ve probably seen the \u201cI Buy Houses\u201d bandit signs around town.)  Nonetheless, iBuyers have become the trendy and acceptable version of house flippers<\/a>.<\/p>\n\n\n\n

According to Zillow<\/a>, an iBuyer is \u201c\u2026a real estate investor that uses an automated valuation model (known as an AVM) and other technology to make cash offers on homes quickly<\/em>.\u201d  And although Zillow\u2019s explanation of the iBuyer model describes that the home gets sold to the investor sight unseen, many will actually visit your home before finalizing the deal. <\/p>\n\n\n\n

Automated valuations are helpful but not always accurate<\/a>. Additionally, investors typically apply their AVM derived value into a formula to produce their offer price. Because they are akin to the Pawn Shop of the real estate industry, where they have to build in a profit for them, house flippers usually offer 70-75% of retail value (after repairs).<\/p>\n\n\n\n

House flipping by any other name is still house\nflipping.  But the iBuyer trend has put a\nshiny veneer to the business.  The model\nallows for anonymity, at least initially, by giving you an offer to buy your\nhome just by completing a form.  However,\njust like traditional real estate investors, iBuyer representatives will visit\nthe home to confirm the accuracy of the reported home\u2019s condition and other\nvital facts.  <\/p>\n\n\n\n

If you\u2019re looking to get top dollar on your home, you\u2019re probably going to be disappointed with the iBuyer offer (or any real estate investor offer for that matter).  However, you might be willing to accept a lower offer on your home for a quick closing and selling \u201cas-is.\u201d  The desire of convenience of selling to real estate investors is confirmed by ATTOM Data Solutions <\/a>2018 Year-End Home Flipping report that indicated \u201c207,957 U.S. single family homes and condos were flipped in 2018\u201d (attomdata.com).  Although house flipping is down four percent from 2017, the numbers indicate a continued willingness by home owners to deal with house flippers.  <\/p>\n\n\n\n

Don\u2019t think you\u2019re escaping the 6 percent commission when selling to iBuyers.<\/h3>\n\n\n\n

Patricia Mertz Esswein wrote recently that the iBuyer convenience comes at a cost (Kiplinger’s Personal Finance<\/a>. <\/em>April 2019, Vol. 73 Issue 4, p12).  She explained that iBuyer service fees range from 6 to 13 percent, which exceed Realtor commissions that typically range in today\u2019s market from 3.5 to 5 percent!<\/p>\n\n\n\n

Currently, most iBuyers are exclusive to specific markets that make the model financially sound.  However, new iBuyer companies are throwing their hats into the ring and expanding the model in new markets nationwide.  An article from the California Association of Realtors\u2019 magazine<\/a> (The Era of iBUYERS?; California Real Estate. <\/em>September 2018, Vol. 98 Issue 6, p22-25) discusses the pros and cons of iBuyers and explains that the phenomenon is still in its \u201cinfancy.\u201d  Meaning that iBuyer companies are still cautiously expanding in hot markets.  Furthermore, you should be wary of real estate brokers who engage in making iBuyer (or similar) offers as part of their listing service because it could be in conflict of their fiduciary duties to you.   <\/p>\n\n\n\n

If you\u2019re wanting to get top dollar on your home,\nyou probably will go the traditional route and list on the MLS.  But, if you\u2019re looking for a quick sale,\nexplore all of your options.  Solicit and\ncompare iBuyer offers to local real estate investor offers.  Also, consult with several real estate agents\nto not only get a picture of your home\u2019s value, but they may have buyers for\nyour home too.  <\/p>\n\n\n\n

Original published at https:\/\/dankrell.com\/blog\/2019\/05\/13\/ibuyers-are-just-house-flippers<\/p>\n\n\n\n

By Dan Krell
Copyright \u00a9 2019<\/p>\n\n\n\n

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Disclaimer<\/a>.\n This article is not intended to provide nor should it be relied upon \nfor legal and financial advice. Readers should not rely solely on the \ninformation contained herein, as it does not purport to be comprehensive\n or render specific advice. Readers should consult with an attorney \nregarding local real estate laws and customs as they vary by state and \njurisdiction. Using this article without permission is a violation of \ncopyright laws.<\/p>\n","protected":false},"excerpt":{"rendered":"

Disruption in the marketplace seems to be the standard these days. So, it should not come as a surprise that the iBuyer phenomenon has taken hold of the real estate industry and is expanding.  What started out as an experiment in limited markets has grown into the internet version of \u201cI Buy Houses.\u201d (You\u2019ve probably … <\/p>\n

Continue reading “iBuyers are Just House Flippers”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[317,586,419,469,401,140,13,1192],"tags":[974,926,936,871,1194,797,1193],"class_list":["post-4438","post","type-post","status-publish","format-standard","hentry","category-flipping","category-home-flipping","category-home-owner","category-home-prices","category-home-value","category-home-values","category-real-estate","category-real-estate-investor","tag-home-flipping","tag-home-owner","tag-home-prices","tag-home-values","tag-ibuyer","tag-real-estate","tag-real-estate-investor"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1VZLf-19A","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/4438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/comments?post=4438"}],"version-history":[{"count":6,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/4438\/revisions"}],"predecessor-version":[{"id":6584,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/4438\/revisions\/6584"}],"wp:attachment":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/media?parent=4438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/categories?post=4438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/tags?post=4438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}