I love it when the real estate industry gets nervous about the newest shiny object and all kinds of theories start flowing about how ibuyers will take over our Miami real estate market. I am here to put doubts to rest and inform you about this not so "latest" trend.
What is an iBuyer?
An iBuyer is a company or investor that uses Automated Valuation Models (AVMs) to make instant offers on homes. It allows sellers to close on a property quickly. Once sold, the company then turns around and resells the home for a profit.
Does this sound familiar to you? "Flipping Houses", "We Buy Ugly Houses", "Investors" ? This is not at all new and has been around since real estate has been exchanged. Someone buys your house for under market pricing and resells for a profit after minor updates.
Who is the audience for an iBuyer?
If convenience and timing are your main motivators and you don't mind losing money on the sale of your home, this may be a good option for you. As real estate agents, it's our job to give you options but our main goal is to get you the maximum value for your property, so discount buying is very secondary in our book.
South Florida Business Journal Interview
I was recently interviewed for a story about iBuyers by The South Florida Business Journal, and wanted to share my answers to the interview, since it wasn't completely published.
How do you believe the entrance of iBuyers like Zillow Offers will impact the real estate market in Miami-Dade?
Although "iBuyers" have become the new buzz in real estate, these buyers have always been around under different names and don't expect them to have any impact in our real estate market. IBuyers, whether Zillow, Opendoor, Knock, Offerpad or any other of the major companies with a similar program, are fueled by cash and based on a very particular model that depends on quick profitability based on buying properties under market prices. Miami-Dade real estate market stats continue to show appreciation and don't expect this model to affect us at all.
Might it increase the volume of home sales? Or decrease the time to closing?
According to Mike DelPrete's ibuyer report, only 0.2% of all sales nationally in 2018, were ibuyer sales. Sellers that choose to sell through these programs are not looking at profitability but instead quick closings for an obvious loss.
Are agents usually eager to recommend iBuyers or are they mindful that their clients could find better offers elsewhere?
Personally, I have not encountered any sellers that are willing to lose money for the sake of time and convenience. I can, on the other hand, as these become more popular, foresee real estate agents becoming well versed in the process and able to explain pros and cons of ibuyer vs, traditional sales, to their prospective clients.
Call a REALTOR either way!
Please note that as REALTORS, we have the ability to counsel you into making the right decision. Our job is to offer the best representation and create clients for life, so even if you are considering selling for less, we would like the opportunity to meet with you to help you compare options.
Lastly, I will leave you with a graphic someone recently shared with me about the "real cost of convenience" - our apologies for not having a source. As soon as we have one, we will credit appropriately. Also, if you've had an experience with iBuyers, we would like hear about it (whether negative or positive).