Should I Use a Low Commission Realtor or iBuyer?
Selling to an iBuyer is a convenient option but at what cost? Learn the hidden truths most iBuyers do not want you to know and determine if an instant offer is right for you.
This emerging way to sell a home caters to those who want fast access to cash. The concept is simple: an iBuyer will quickly determine a price for your home, then offer you the option of selling it to them for that amount. Then the iBuyer makes the necessary repairs and updates before they try to sell your home on the market to the end buyer. It’s a streamlined, no-frills home-selling possibility that offers an easy, acceptable transaction.
Pros of using an iBuyer
- Quickest Way to Sell a Home
- Market-Competitive Pricing (not including fees)
- Avoid Hassle of Selling Home on Open Market
Cons of using an iBuyer
- Inflated Commission Fees (12%-17%)
- Sacrifice Highest Sale Price
- Seller Pays for Home Repairs and Updates
iBuyers look to purchase a home, make minimal repairs, then sell it quickly. They usually reject fixer-uppers and houses that need more than a few updates. The question is if they’re buying a house at market value, changing very little, then selling it again, how are they making any money?
First, all this ease comes at a cost to you, the seller. While realtors traditionally take a combined 6% commission on a sale, iBuyers usually take around 12%-17%—call it a convenience fee. Next, after their initial offer, most iBuyers will perform a home assessment, where they inspect your property to determine necessary updates and repairs. They’ll then subtract the cost of these updates from the earlier offer. Basically, you pay for the fixes, and they profit off them. These small but significant impositions on the seller add up to big profits for iBuyers who sell a lot of properties.
Still, many find iBuyers to be an attractive option, especially when they just want to make a clean break from their home. Those who inherit property, live elsewhere, or find themselves going through a divorce often prefer the uncomplicated cash. People selling a rental property might also choose an iBuyer to avoid the headache of repairing and marketing a home still occupied by tenants. If you can endure it, though, going the traditional route is usually the best way to maximize profits.
While realtors do take more time to sell your property, they usually land a much higher sale price. iBuyers make you a reasonable offer and move on, but real estate agents hustle to maximize your upside. Their efforts to stage, advertise, and show your home often lead to competing offers that net you the highest possible sale price. iBuyers also fail to maximize profits by ignoring features that may set your home apart. Their cash offers are mostly based on public data and the sale prices of comparable homes in the area. This evaluation usually ignores distinctive selling points, like a huge deck or state-of-the-art fireplace, that realtors use to entice higher offers. It’s no surprise, then, that sellers with real estate agents usually make about 11% more on the sale of their home than those who use iBuyers. Throw in the higher commission and iBuyers can end up costing you tens of thousands of dollars.
This innovative approach to home-selling offers the full services of a traditional real estate broker, on more seller-friendly terms. They won’t sell faster than an iBuyer, but they make up for it with outstanding savings. These agents set the price of your home, help you stage it, market it, show it, and then handle the final price negotiations and closing—all for a fraction of that traditional 6% commission. Felix Homes, for instance, will handle everything from list to close for a discounted commission of just 1% to the seller’s agent. This provides sellers with the typical realtor experience while saving them thousands of dollars—$8,100 on average to be exact.
Pros of using a Low-Commission Realtor
- Especially Low Commission Fees (1% to the seller's agent)
- Access to Full Service Realtor
- Maximizes Profit
- Expedited Sales Process (average days on market of ~12 days)
Cons of using a Low-Commission Realtor
- Lengthier Sales Process Than iBuyers
- No Guarantee That Home Will Sell
How do they pull this off? First, discount realtors—like iBuyers—find ways to work smarter. Low-commission agents usually wield a tech-savvy approach to home-selling. For example, while traditional realtors may be content to just list properties on the MLS, Felix Homes combines conventional promotions with targeted social media marketing. Felix has also developed our own proprietary search platform where clients can easily post and view local properties. This connects buyers and sellers quickly and inexpensively, which is one of the reasons why Felix charges just 2.5% commission, total, when we facilitate the entire transaction on behalf of the buyer and the seller.
The second factor that allows discount real estate brokers to offer such low fees is volume: they simply sell a lot of properties per agent. While a traditional real estate agent may oversee 12-15 transactions a year, the technology edge helps low-commission agents to successfully complete as many as 5-7 transactions per month. Better efficiency leads to more sales, which leads to more money in the pockets of the seller and the low-commission realtor. Low-commission realtors may not sell quite as quickly as iBuyers, but this efficient turnover model certainly helps close the gap. And when you combine this speed with their profit-maximization, low-commission realtors might offer the best of both worlds.
At Felix Homes, we strive for more sales and more savings, which is why we believe that our low-commission model is the most financially responsible way to sell a house. If you live in the Nashville area and want more information on how you can sell and save, give us a call at 615-422-4277, or send us an email at email@example.com.
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