The Surprising Way Real Estate Agents Cope with “iBuyers” Buying Homes Direct from Sellers

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One of the biggest trends in the residential real estate industry in recent years has been the introduction of so-called “iBuyer” companies like Opendoor, OfferPad and Zillow Offers which buy homes directly from owners and then resell the homes.

Phoenix is ​​the zero point of the iBuyer’s explosion. The two largest iBuyer companies, Opendoor and OfferPad, have started buying and selling homes in Phoenix. The third largest iBuyer, Zillow Offers, is also very active in Phoenix. Today, Phoenix is ​​the largest market for iBuyers with between 5% and 6% of homes purchased by iBuyers in recent months according to a real estate technology expert. Mike DelPrete. That’s over 1,000 homes per month.

How Phoenix realtors have adapted to iBuyers may foreshadow the future of many other markets, so let’s see what happens in Phoenix.

But first, if you’re not familiar with iBuyers, an owner can fill out an online form and get an offer a day or two or three later from the iBuyers, including the price that the iBuyers are ready for. to pay for the house.

If the homeowner accepts / signs the ‘instant’ offer, the iBuyer will send home inspectors and come back with a list of repairs and estimated costs for any repairs the iBuyer wishes to do to the home before completing the purchase. . The seller can make the repairs or the seller can agree to the cost of the repairs being added to the fees that the seller will pay to the buyer at closing.

A common complaint from realtors about iBuyers is that iBuyers tend to charge a lot more for repairs and a lot more money for repairs than traditional buyers. The seller can usually cancel the contract if he cannot agree with the Buyer on the repairs.

Each iBuyer has a different set of fees that they charge the seller and there are other differences between different iBuyers that make it difficult for homeowners to compare two or more iBuyer offers, or to compare them to selling the home of. the traditional way (by hiring a real estate agent and listing the house in the local MLS).

Traditional sale = more money

The only huge benefit of selling the traditional way is that the seller usually makes a lot more money.

My impression from looking at the Phoenix Realtor Online Forums is that the most common complaints against iBuyers are that iBuyers tend to offer lower prices, have high fees, and demand higher repair fees. than in traditional sales. That is, Phoenix real estate agents tend to complain that home sellers make a lot less money when they sell to iBuyers.

Sell ​​to iBuyer = more practical

While bottom line isn’t usually one of them, there are several benefits to selling the iBuyer way.

  • You don’t need to prepare the house for sale, no disruption to the family living in a house being painted, installing new carpet, etc.
  • You don’t have any presentation to potential buyers like in a traditional sale. This means that you don’t need to have the house in top shape at all times and be prepared to leave the house for short-term visits. Screening can be overwhelming, especially if the family has young children, someone with special needs living in the house, or if they have a lot of pets.
  • You can often choose the exact closing date. You don’t have to bypass the buyer’s schedule, you can choose the date that works best for you.
  • Some iBuyers allow you to stay in the house for a little while after it closes, so the move is less rushed and less stressful.
  • No possibility of evaluation. In a typical sale, a low valuation usually revives price negotiations which is stressful and sometimes ends up killing the sale.
  • No possibility of funding. Perhaps the biggest nightmare of selling a home the traditional way is when you find out just before closing that the buyer can’t get a mortgage for some reason and the deal is called off. If the seller has already moved out of the house, it’s an even bigger nightmare. Fortunately, this nightmare is rare, but when you sell to an iBuyer it is not a possibility as there is no possibility of funding in the purchase contract.

Real estate agents adapt to iBuyers

Okay, back to Phoenix. Some realtors have told stories of going to listing appointments with landlords often and getting questions about selling to iBuyers, or the landlord has already printed an offer from an iBuyer and asked. the question to the agent. Or, sometimes the owner never brought up the subject of iBuyers, but a little later the agent noticed that he had sold the house to an iBuyer.

Buyer’s companies spend huge sums of money on advertising and owners get the message and ask questions. Mike DelPrete, mentioned above, estimates that around 40% of Phoenix sellers will receive an iBuyer offer before they put their home up for sale.

The attitude of realtors in Phoenix seems to have shifted over the past year to, “We need to get this under control and become experts on all the different ways homeowners can sell their homes so that we can give every home seller a gift. the information he needs. must make the best decision for their particular situation – whether to sell to one of the iBuyers, and if so, help them decide which one, or whether to sell the house the traditional way.

So the new thing that seems to be evolving in Phoenix is ​​that realtors represent the seller, get a bunch of iBuyer offers on behalf of the owner, analyze the offers and advise the owner on options, and coordinate everything with the iBuyer. according to the seller’s instructions, including repair negotiations.

It also looks like the system is evolving, so commission agents charge home sellers to represent them, this is less when the seller sells to an iBuyer, as there is less work for the agent when the seller sells to an iBuyer.

Some iBuyers will actually pay sellers’ agents a 1% referral commission. Or, of course, the seller and owner can sign an agreement before starting for the seller to pay the agent to represent them for a fee of X% if the seller sells to these iBuyers, Y% if the seller sells to these iBuyers, and Z% if the seller decides to list the house in MLS and sell it the traditional way.

This idea of ​​real estate agents becoming iBuyer experts as well as traditional home selling experts has become common enough in Phoenix that a few agents Classes to teach agents how to do it.

In a future post, I’ll talk about the other end of the deal and give you some tips on buying D’iBuyers homes. After all, iBuyers don’t just buy over a thousand homes per month in Phoenix, they also sell over a thousand homes per month in Phoenix, and they behave differently than your average home seller.

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