As you may know, the most common way to sell and purchase a home would be through a Real Estate Agent. Now, thanks to the ever-changing technology and social media, sellers and buyers have a multitude of options when it comes to real estate transactions.
iBuyer is an online service marketed as a one-stop shop for selling your home which provides fast home sales without showings or listings. Cutting-edge technology such as iBuyer and trade-in schemes claim to save you money, time, and hassle. As good as that may sound, it raises the question: Is iBuyer the better alternative than the traditional realtor? What are the pros and cons to both?
Listing your home on the market with a Real Estate Agent benefits sellers as selling on the open market allows sellers to obtain a higher offer price. iBuyer typically offers below market value for the properties listed on their platform.
The closing costs are the mandatory fees when working with both a Realtor and iBuyer. These fees may include Title insurance, Escrow Fees, Prorated taxes, etc.
Commission vs. Service fee
A realtor's commission is the fee they receive for helping you sell or buy a home. It's usually a percentage of the purchase price of the home. iBuyer does not charge a fee or commission when selling your home, however, they do charge a service fee in lieu of the commission. The service fee can range from 6% to 11%.
When working with a Realtor, repairs can be negotiated or it can even be excluded from the sale if listed as the property will be sold “as is”. iBuyer conducts its own thorough inspection of the property and also requires a non-negotiable charge for the repairs.
Holding costs are the fees for owning a property. The longer you are in your home the more these fees will accumulate. iBuyer benefits sellers as you are pretty much guaranteed a quick closing. When working with a real estate agent, you may not be able to close as quickly while trying to get top dollar for your home.
The net proceeds is the final amount the homeowner walks away after the sale of the property once factoring in all the price and additional costs.