Getting Your Head Around Today’s Digital Real Estate Options
Selling property today represents a totally different situation than has classically been the case. Real estate need not necessarily involve the services of a realtor. Remember, a realtor is going to get a percentage of your property’s value. If you’re selling a house for $100k, expect the realtor to keep about $6k of that, and around $4k in associated fees.
You’ll be looking at around $90k prior taxes for a sale that’s worth $100k—if you go through a realtor. Now if you immediately turn that money into another property, you can effect a “1031 Exchange”, and skip around a substantial amount of taxes. Essentially, you’re rolling your profit right into another property. You’re not really making money, just shuffling it around.
Well, when it comes to digital sales, there are likewise similar ways you can reduce associated collateral costs in the home sale and acquisition process. Essentially, an iBuyer works very similar to how a used car dealer does.
Getting An Idea How iBuyer’s Work
So imagine you’ve got a vehicle that, according to Kelley Blue Book, is worth about $10k. Now say you sell that car to a used car dealer, or use it for trade-in value. The used car dealer has to keep food on the table and cash in the bank. What does he do? He lowballs you. But he’s not really lowballing you, this is just his fee for easing your sale.
If you had sold the vehicle yourself, you would have to list it, and show it, and post Craigslist ads—etc. Eventually you’d get the job done, but it may take you a couple months, and you may have to spend a lot of time doing the work. Furthermore, you might get an underhanded buyer who convinces you to take a check that bounces.
So the used car dealer’s lowball price is, one, something that covers that. Two, that used car dealer likely has to effect repairs of some variety that may cost him a little bit. When you drive by his lot later, the car will be listed for more than you could have sold it for. He may give you $8k cash, fix the car up, then turn around and sell it for $13k, being willing to haggle to $11k.
He makes about $2k in profit after repairs and associated fees. Meanwhile, you lose a few thousand directly, but save in terms of associated hassle. Well, going with an iBuyer to sell your home is very much the same thing, only instead of a used car dealer, you’re going through an internet site.
Factors Which May Influence Your Decision To Use An iBuyer
If you’ve got a home worth $100k, the iBuyer may give you $95k in cash for it, or $90k; depending on its value. Instead of having to show your home to multiple potential buyers and the like, you simply get the money. Depending on your particular situation, and the value of your property, this could be more or less than you would lose through a traditional realtor.
With the help of this iBuyers guide can assist you in acquiring the best sale-to-profit balance for your particular situation. It’s basically like one of those “We Buy Ugly Houses” businesses, the difference being that iBuyer options deal in all sorts of properties—ones that are quite valuable, and those being sold “as is”.
When you’re deciding if you should go this route, your wisest bet will be considering what you stand to lose by going another route. Firstly, can you sell the property on your own without any sort of realtor or iBuyer? This is entirely possible; it’s just a lot more difficult, and tends to take a lot more time. Even so, taking out an ad can move the home.
Are Realtors Going To Do The Best For You?
For most, though, this just isn’t a realistic way to go about moving a property. So when you realize you’ve got to work with a seller of some variety, suddenly online options and physical options are on the table. Online options include iBuyer groups, “physical” options include your local realtor. But your local realtor may not be your best friend.
See, if you hold out for another month with a higher price, you may make a few grand more, but your realtor won’t. For example, say your realtor quotes you $100k for the value of the house, but you’re pretty sure you can get $150k for it. Well, your realtor is going to argue. See, he knows he gets $6k if you sell it at $100k, but he gets that money now.
He’ll get $9k at the higher price, but it could take a few months to move the house. He wants the money now; he can make more money with other properties during the intervening months. It’s more than likely you’re being pressured into selling lower and quicker than is strictly necessary because the realtor can make more money in the long run that way.
By contrast, an iBuyer won’t do that to you; they’ll just assess your property, determine what they can make at what threshold, then make you an offer. If you like it, take it, and forget about the old property. If you don’t, then you don’t have to take the offer, and you can pursue other means of selling. So in short, the answer to whether or not you should use an iBuyer depends on your specific situation.