If you are a homeowner, you have probably been inundated with calls, texts, and mail from investors wanting to buy your home.  You may have even seen Zillow’s new billboards asking you to take the easy way and sell to them.  Today we are going to talk about off-market investors and how to tell when they may be a good option for you. 

There have always been real estate investors looking to flip properties or find good rentals.  In the past decade though, we have seen the birth of a larger, wallstreet run investor called an iBuyer. Popular iBuyers include Opendoor, Zillowoffers, and RedFin Now.  An iBuyer is a company that purchase homes outright, directly from the owner. The seller doesn’t have to pay an agent, list the home, stage it, market it, or even show it to potential buyers. The offers tend to be cash, offer a quick close, and purchase the property as-is. Sounds great, right?

The key thing to remember is: iBuyers are in the market to make money.  They are not purchasing your home out of the goodness of their heart to make your life easier. When an iBuyer wants to buy your home, they typically are giving you an offer below market value.  If they cannot make money off your home, they would not be purchasing it.  As a homeowner, you need to consider if you are okay leaving that money on the table and letting the iBuyer earn it rather than you. 

These are 4 things I would do when considering an iBuyer offer:

1. Figure out the true value of your home.  And I am not talking about a Zestimate. Remember, Zillow is now an iBuyer.  That means it benefits them to undervalue your home on a Zestimate.  Just from experience, I have sold homes for $50,000 above the online Zestimate.  I recommend interviewing 3 top Realtors from your area to give you an opinion on the value of your home, suggested repairs to put it on the market, and your net profit after all closing costs including commission.  This will give you the most informed perspective on the value of your home before talking to an iBuyer, and enable you to compare apples-to-apples between the two routes. 
2. Consider what is your main motivator for selling.  Are you going through a divorce and just need to sell quickly? Are you trying to get the most value out of your home to retire or upgrade? With iBuyers, the biggest advantage is speed and no repairs. If you don’t want to do any work or you needed it sold last week, iBuyers can be a great option. 
3. You need to consider what market you are in.  Right now we are in a very competitive seller’s market.  Sellers are calling the shots and getting cash offers with no inspection period. Even with financed offers, buyers are paying cash out of pocket above appraisal value. This is a great market to be in as a seller and can lead to fast close, as-is, cash offers from other buyers, such as people who will actually be living in the property.  In a strong market like this, you could get a better offer from a non-iBuyer with the same advatanges.  This would not be the case if we were in a buyer’s market like after the 2008 housing crash.  A buyer’s market would be a great time to sell to an iBuyer….but personally I think they will be bowing out of the market during a downturn. 
4. Shop around and shop local. There are a lot of iBuyers out there right now.  Don’t just talk to one.  Get a quote from Zillow and Opendoor.  Figure out who the top local investors in your area are like Yellowbird and talk to them.  I have personally found local investors will sometimes pay more because they are more hands on and know the market better than a bigger iBuyer.  It is your home and yes, an iBuyer can be an easier way to sell.  But that doesn’t mean you have to take the first iBuyer deal they give you.   

If you are considering an iBuyer, I hope you find these tips helpful.  The key thing to remember is your home is one of your biggest investments.  Don’t just give it away.  If you put in the research, you can still make more money even if you prefer an iBuyer option.  Feel free to reach out if you want a valuation on your home to see if an iBuyer option is the best route for you.

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