iBuyer [noun]: A company that uses algorithms and technology to buy and resell homes quickly via all-cash offers. Sounds pretty decent, huh? Not so fast. iBuyer giants like Opendoor have become hugely popular through their use of cutting-edge technology that “saves consumers money” (you’ll see why we put this in quotations later) compared to the traditional home sales process, but plenty of new information has come to light in recent weeks that fully counters this claim. Our takeaway? Using a real estate agent to sell your home is the ultimate tried-and-true solution. Below, we’ve outlined the swift rise and fall of iBuyers, and revealed just why the traditional method will always come out on top.
The allure: Quick and efficient home-selling.
There’s no doubt technology has changed the way we all do business — and real estate is no exception. In the last few years, iBuyers have grown in serious popularity due to the allure of haste and efficiency. If you choose to accept an all-cash offer from an iBuyer, you can be done with the sales process almost instantly. Plus, you can completely forego inspections, repairs, showings, staging — all those little details of home-selling.
Opendoor is currently the largest iBuyer with a first-quarter revenue of $5.2 billion this year, and Zillow Group is now tacking on. Just recently, the Seattle real estate giant forewent their in-house iBuyer business, Zillow Offers (since they were unable to accurately forecast the price of homes and the process required too much capital), and partnered with Opendoor to facilitate instant cash offers. Sounds a bit dodgy, right? Keep reading…
The problem: Deceptive information and less profit.
Technology isn’t perfect, but we didn’t have to tell you that. In August, the Federal Trade Commission took action against Opendoor for tricking potential home sellers into thinking they could make more money selling their home via Opendoor than using the traditional sales process. They’ve alleged that Opendoor has lured potential sellers via misleading and highly deceptive information while, in reality, most people who sell on Opendoor have made thousands of dollars less than they would have made using a real estate agent.
The punishment? Opendoor has to pay $62 million and put an end to their deceitful marketing that claims all fees are bundled together. Plus, Opendoor has paid below market values for homes, giving them an increased profit. And, to no one’s surprise, Opendoor released a statement saying they “strongly disagree” with the allegations, even though they’ve gone ahead to settle the case. Algorithms can falter, but you know what doesn’t? A seasoned real estate expert.
The solution: Opting for the traditional process.
Selling your home quickly and efficiently might sound nice, but there’s a reason why nearly 90% of sellers still opt for the traditional approach. If you choose the right real estate agent who can price and prepare your home properly while bringing professionalism and prime negotiation to the table, you truly can’t go wrong. An iBuyer offer, on the other hand, has minimal wiggle room when it comes to pricing and has historically added in hidden fees that make the process look “cheaper” in comparison to hiring an agent.
So, for those looking for the biggest bang for their buck (because who isn’t?), you’ll want to take the human approach. Here at Smith & Berg Partners, we’re entirely dedicated to getting you the best price while making your home-selling journey as effortless and enjoyable as possible (we’re a pretty good time, if we don’t say so ourselves). If you’re ready to put your home on the market, we’re here to get the job done. Send us an email at email@example.com today and let’s chat.