How much does Convenience Cost?
December 30, 2020
Convenience at a Cost
The convenience of selling your home without the hassle of getting it ready, putting it on the market, showings, open houses, negotiations and repairs comes at a cost … a significant part of your equity.
The companies, referred to as iBuyers, that buy homes from sellers are for-profit organizations. They expect to make a profit from sellers who are willing to discount the proceeds they’ll realize as an alternative to the conventional method of selling a home for people who need a quick sale.
The promotions for these companies generally state that you can receive a cash offer in a few minutes after putting your address online. The discount can be between 10 to 18% compared to normal selling costs from 6 to 9%. The cost to a person with a $100,000 equity could be as much as ten thousand dollars.
Even after you have accepted an offer, there can be contingencies in the contract that allow the company to inspect the home to discover the condition and reassess the offer to possibly make even more deductions. If the seller isn’t willing to accept them, the buyer can withdraw from the sale without penalty.
This appears on the surface to be a friendly, accommodating service but it can be an adversarial situation. The seller wants to maximize their proceeds and the buyer wants to buy it as cheap as possible.
Compare this to working directly with a real estate professional acting as your agent. They have to put your interests above their own. They have a fiduciary duty of care, integrity, honesty and loyalty in their dealings with you. Other duties include confidentiality, disclosure, obedience and accounting to the seller.
In this traditional model, your agent will provide you with the facts of what homes have sold for in the area and their opinion and recommendations on what the most likely sales price will be. Your agent will provide you an estimate of the sales expenses based on different sales possibilities.
They can advise you on work to be done prior to putting the home on the market, staging so your home will show at its best and estimate the time it will be on the market. Based on low inventories in some price ranges, it could be surprisingly short.
As an owner, you made an investment in your home in cash and maintenance. You are entitled to maximize your proceeds based on the risk taken to purchase a home instead of renting. The convenience of a quick offer has a cost to it. You need to compare the two alternatives to see which one benefits you the most based on your individual situation.
For more information, download the Sellers Guide.