What to Expect if You Sell Your Home to an I-Buyer

It's not uncommon today, for a home buyer to buy a house without ever seeing it in person. This happens with military men and women often because they must move whenever they are re-assigned.

Many others in business also must relocate quickly and may not have the time to find a buyer before they relocate. Carrying a mortgage on two properties can be difficult and if you're not there to find a buyer, it can become a stressful situation.

Not only will most home sellers count on the funds from the sale for the down payment on their next home, but they may also struggle to get approved while carrying another mortgage. The answer, for some, maybe to sell to an I-buyer.

What is an I-buyer?

An I-buyer is a company online willing to make an offer on your home without wasting much time. Often, they will make an offer sight unseen, based on the valuation model for the home. While these types of buyers are usually larger companies looking to flip the property, sometimes, they are individual buyers.

An I-buyer can be defined as someone that only saw your property online and is willing to make an offer very quickly. Maybe they are in a similar situation as you and need to relocate quickly. In other circumstances, it could be a company in the business of buying homes sight unseen, putting in a little work, and reselling the home.

Convenience: The Major Benefit Provided By I-Buyers

I-buyers provide many benefits to those needing to sell their home quickly. However, the main benefit they provide is convenience. When you need to move your home quickly, an I-buyer can step in and make this possible.

Typically, when you sell a home, you take the time to hire a real estate agent, make repairs, do a little remodeling, stage the home, have pictures taken, and list the home for sale. This gives you the best option to sell the home for the highest amount and may attract competing offers to drive the price up even higher.

However, this process takes time and for some, it may take months. If you don't have time to invest in your property, an I-buyer may offer a solution you can live with. The convenience this type of buyer provides allows you to get an offer quickly without putting any additional time or money into the property.

The tradeoff is simple. The offer you receive will not be the top market value. It may come in at the bottom of the spectrum or somewhere in the middle, depending on what the property needs and what the I-buyer determines to be a fair price based on the risk they may be taking.

No Need for Repairs or Remodeling

Another huge benefit the I-buyer offers is the simple fact that you don’t have to go through repairs or remodeling. Maybe you know your property needs some repairs and some cosmetic work. It may require you to refinance your mortgage, drain your savings account, or take out a second mortgage to get the necessary work done.

With an I-buyer, you don't have to worry about doing any of this work or refinancing your home. Instead, you just accept an offer below the top of the market value and move on with your life. Could you get more if you put work into the property? Probably, but when you don't have the time to invest, an I-buyer may be the solution you need.

Difference Between an I-Buyer and a Traditional Sale

When you sell a home with a real estate agent, you'll pay approximately a 6% commission. This is based on the sale price of the home. Most I-buyer programs charge a similar amount, but the sale is guaranteed.

The biggest difference is the simple fact that you don't have to do any work and if you're relocating quickly, you won't have to carry two mortgages. However, you will take a hit on the price, which can be rather significant, depending on your situation.

Using an I-buyer isn't for everybody and the difference in price can be enough to make many go back to a traditional sale. In fact, according to Zillow, 90% of sellers engaging in their Instant Offer platform chose to hire a traditional agent instead of taking the offer. However, that does leave 10% of sellers that did use an I-buyer because it fit their specific needs.

How to Decide if an I-Buyer is Right for You

The easiest way to figure out if an I-buyer is right for you is to get an offer. Then, do a cost comparison. Would it cost you more to pay the traditional real estate commission and take care of any repairs/upgrades necessary to sell the home compared to the I-buyer offer?

For example, if you could sell your home for $400K with a traditional agent, after investing $20,000 into repairs and upgrades, you'd end up with a net of $356K after the commission and the repairs. If an I-buyer is willing to offer you $375K and the fee is similar to a real estate commission, it may be worth it as you'd have a net of about $352K.

While you may not make as much off the property, losing $4,000 may make sense for the convenience of selling your home quickly without making repairs. However, if going the traditional route will net you tens of thousands more compared to an I-buyer, you probably want to hire a good real estate agent and listen to their advice.

An I-buyer program may work for some, but it's not the right choice for most. If you have a few months before you have to sell your home, it's best to choose a traditional real estate agent and let them help you get the most for your property. However, if you need to move very quickly, an I-buyer might be a better way to go, depending on the equity you have built up in the home and the repairs needed to get it ready for listing.

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