iBuyer Archives

4 Ways To Sell Your House

A house for sale with a dog in the front yard

When it comes time to sell you house you have options. Some more expensive than others and an actual free option. There are actually 4 ways to sell your house. I’m going to discuss those different ways here and the cons and pros of each.

Using A Real Estate Agent/Realtor To Sell Your House

Hiring a real estate broker and using one of their agents is by far the most popular and well known way to sell your house. Often the first thing that comes to a potential home sellers mind is hiring a Realtor. Hiring a Realtor is effective and will get a home sold but it’s also one of the most expensive.

If one does go the Realtor route make sure you shop around. With all of the real estate market and listing information free to the public, experience isn’t as important as it used to be. Commissions are important because that’s what eats up your profits. You can find agents that will list your house for less than the usual 6%. Keep in mind when interviewing agents that we are trained to convince you that we are worth it.

Whether or not you hire a real estate agent or not has to do with your personal opportunity cost. According to Zillow the average home price in the U.S. in August of 2021 is $304,000. Assuming you have an average priced home a 6% commission will cost you $18,240. Is the time it will take you to sell your house worth more than $18,240? If so then you should consider hiring someone to sell your house for you.

Pros

The pros to hiring a real estate agent are an agent will do most of the paperwork for you. An agent will help you to price your house and let you know what you should do to get your house ready to sell. Realtors guide you through the process and help to schedule inspections, appraisals and closings.

Cons

The cons to hiring a real estate agent are, of course, the huge expense.

While not so much a con, but a realization, you should know an agent will let you know what you need to do to get your home ready to sell but it’s still up to you to do it. That means repairs, updates, cleaning and anything else that needs to be done is still on you.

An Ibuyer Will Buy Your House

Ibuyer companies to help sell your houase

An Ibuyer will buy your house directly from you outright avoiding the anxiety of listing. With an Ibuyer you avoid opening your home to strangers for showings, unknown repairs during the inspection process, waiting for the home appraisal and fretting over your buyers financing. No need to sell your house on the open market when using an Ibuyer

Don’t mistake these for the many flippers that are working the real estate market. Ibuyers are not flippers. You see those signs on the side of the road that say we buy houses. It’s not those people. An Ibuyer will give you close to market value for your house, maybe a little less than you could sell on the open market. There is a service fee that averages around 5%.

An Ibuyer will make you an offer. If you accept there will be an inspection of the property and then a final offer including any repairs that the Ibuyer deems necessary. Sometimes Ibuyer’s can be a little more expensive than a real estate agent after repairs and everything is said and done but there’s no doubt they are super convenient.

Ibuyers are starting to gain traction in major US cities. Home sellers are attracted to the stress free aspect of selling a home using an Ibuyer.

Pros

The pros to using an Ibuyer are the convenience, speed and the assurance of the final price without the anxiety of waiting for offers as you sell your house.

Cons

The cons to using Ibuyers, again, is the cost. Ibuyers can be expensive and you may get less money for your house.

Wholesalers Will Buy Your House (We Buy Houses)

Wholesalers are another group that will buy your house outright. The difference between wholesalers and Ibuyers is wholesalers want to buy your house for a lot less than what it is worth. Their goal is to buy a house as cheap as they can get it and resale it, or “flip” it at a significantly higher price.

Wholesalers mostly look for homeowners that are in distress such as being close to foreclosure or underwater. Sometimes the more unscrupulous sort will prey on older people, new widows or widowers or folks that are in desperate financial stress.

When dealing with wholesalers make sure you fully understand the contract you’re signing and the implications it can have on you in the future. Many times the homes are “bought” and the house is still in your name but sold or rented to someone else. Wholesalers make your mortgage payment while collecting the difference as profit. The clause in the contract can be left open so the wholesaler has no deadline to get the mortgage paid off and taken out of your name. It’s like a free ride for them but ties up your credit.

If you can’t sell your house because your underwater consider renting it out and using the rent to pay down the mortgage until you can pay it off.

Pros

Using a wholesaler will get your home sold fast. If your underwater or in financial stress a wholesaler can really be a big help.

Cons

Some wholesalers can be unscrupulous and not fully explain the implications of the process. Getting involved with this type of home sale can tie up your credit for years. It is highly recommended that you hire an attorney to look over your contract and explain it to you.

The wholesalers goal is to buy your house as cheaply as possible. Make sure you know what your house is actually worth.

Sell Your House Yourself

For sale by owner sign in front of a house

By far the best option when it come time to sell your house is to do it yourself. That’s where you’ll make the most money with the least expense generating the most profit. When it comes to disrupting the real estate industry that is what’ll do it. When regular people figure out how easy it is to sell a house.

Real estate agents know how easy it is. That’s why there are so many of us. Easy money.

New agents aren’t taught how to sell a house. Selling a house is easy. Mostly what we learn in real estate school is real estate law. Real estate coaches and brokers teach us how to fill out paperwork and to convince you that it’s difficult to sell a house and why you need us.

Most people shopping for homes find them on their own on sites like Zillow. When you sell your house yourself and market it on Zillow home shoppers will find it and call you directly.

Some home sellers think that the MLS is the way to go. By hiring a real estate agent you can get your house on the MLS but there is also a less expensive way. Hire a flat fee service. A flat fee service will list your home on the mls for a fraction of the cost that a listing agent will charge you. Keep in mind that using a flat fee service means you are willing to pay a buyers agent, usually 3% of the contract price unless you can negotiate a better deal.

Pros

When you sell your house yourself you get to keep all your money. It’s the most profitable way.

Cons

When you sell your house yourself you have to do all the work. While it’s not hard to sell a house it can be time consuming.

Ibuyers vs Realtors

by Joel Weihe

When it’s time to sell a house most people automatically think of hiring a Realtor and have never heard of Ibuyers. There are other options even though they often aren’t considered. Choosing how to sell your house comes down to how much it costs and/or convenience. Check out this video to learn which is the best option for you? To sell it fast and hassle free, hire someone to sell it for you or sell it yourself and make the most money.

The most well known and popular way to sell a house is to hire a real estate agent. Hiring an agent can be expensive, often as much as 6 or 7 percent of the contract price. For a $320,000 house that could be more than $19,000. That’s a lot of money.

The most popular up and coming real estate disruptor are the Ibuyers. Ibuyers are companies that will buy your house directly from you at a fair market value or just slightly below fair market value price. Using an Ibuyer is definitely more convenient for a faster less stressful sale but can get expensive too.

Watch the video above to learn the specific advantages, disadvantages and costs associated with Realtors and Ibuyers.

For Sale By Owner

And of course you can always sell your home yourself and make the most money by not paying anyone. Using Ibuyers or Realtors can be expensive and really cut into your profits and future plans. The reason most people never even consider a For Sale By Owner is lack of knowledge, they simply think it would be too difficult. I’m not saying it doesn’t take some time and effort. Sometimes problems will come up. Buyers can be demanding. But when it’s all said and done the savings, the money you get to keep, makes it all worth it.

Sell your house yourself! Click here to learn how.

Why The Real Estate Industry Will Change

by Joel Weihe

aerial view of Neighborhood houses depicting coming changes in the real estate industry. — Disruption in the real estate industry.

There are a lot of industries being changed irrevocably by technology and entrepreneurs. It’s what they call disruption. So far the real estate industry has fought off outside intrusion and kept the status quo. Control of inventory and high commissions are the norm. But for how long? There are a number of reasons why the real estate industry will change and won’t last in its present form. One of those is you learning to sell your home yourself.

The Cost Of Doing Business Will Change

It’s expensive to sell a house. The biggest expense are the commissions but there’s also a host of taxes, fees, and other costs.

According to The Economist Americans paid out 75 billion dollars in real estate commissions in 2019. That’s with only about 7% of homes changing hands. It might not sound like a big number in the context of the entire country but when it’s $13,608 of your money it’s a different story. Zillow.com estimates the average cost of a house in the United States is $226, 800. Some states that cost will be much more, some states it will be less. The average price to hire a Realtor is 6% of the sale price.

Add to that cost the federal and state taxes, closing fees, title insurance, mortgage fees and the cost of moving it can add up to more than 10% of the cost of the house. That really eats into your profits.

The commissions are by far the largest expense. You can avoid those high commissions if you sell your home yourself.

The taxes are unavoidable. It’s the government. The title company that provides title insurance and in some states handles the closing has to be paid. A necessary cost. Depending on how much stuff you have determines how much it will cost you to move. That leaves the commissions. Are they necessary? Sellers are becoming more and more fed up.

Those commissions can strip away your profits. Many home sellers are realizing they can save commission costs by selling their homes themselves. The real estate industry will change from this fact alone.

The Disrupters Changing The industry

Technology has moved in on the taxi industry, run video stores out of business, changed the way we trade the stock market and done away with travel agencies.

We still do real estate the old fashion way. The middleman, or broker, brings buyers and sellers together and takes a significant part of the sellers’ proceeds. It’s not that there haven’t been attempts to overthrow the traditional real estate agent, it’s just that nothing has stuck nationwide.

The main “threat” and most likely to succeed are the iBuyers.

iBuyers

One reason the real estate industry will change are iBuyers. iBuyers are companies, mostly investor funded startups, that buy a home directly from the homeowner. The attraction to iBuyers is no listing time, no real estate broker fees, no staging or marketing and no waiting.

They make money by buying a house and reselling it. The ibuyer uses local data and their own algorithms to determine a home’s value. Then the iBuyer will make a cash offer. If accepted the house can close whenever the seller wants to.

But…as good as all that sounds the iBuyer still needs to turn a profit. They do that by offering less than market value so they can make money on the sale. Or charging a commission. It still cost the seller money, sometimes even more. The attraction is the process is convenient and fast for the seller with none of the usual anxiety associated with selling a house the traditional way using a broker.

Some of the more popular iBuyers are:

Opendoor

Opendoor has its own automated valuation model (AVM) system so it can make offers quickly. The allure to Opendoor as mentioned is speed and convenience. The downside is the 7% commission. Yes, the 7% commission which is even more than a traditional broker charges. Opendoor is starting to gain traction in several cities and has plans for expanding to more.

Knock

Knock helps people that are selling and buying. People that want to move. They do this by buying the new home for them so the client can move and then selling their old home for them once they’re settled in to the new place. Knock also charges a commission of 6%.

Offerpad

Offerpad represents the true ibuyer philosophy. They literally buy your home from you outright then sell it at a profit. You’ll be getting less than full value for your property because that’s how they make money. Buy low and sell high.

Redfin Now

Redfin is a real estate company that in the beginning was hostile to the real estate business. They bragged that they were going to change the way people did real estate by upending the traditional model. The ambitious plan didn’t work out quite as dramatically as they prophesized and in the end they were just another discount brokerage. Redfin Now is an extension of the original company that will make offers and buy homes outright for resell.

Zillow

Zillow is the original real estate disrupter. In the beginning Zillow sold advertising and leads to real estate agents to make money and that’s still the brunt of their business. What Zillow did was insert itself in between the real estate agent and the consumer. They offered a simple way for buyers to browse real estate listings without the need of an agent and then “sold” those buyer leads to agents when they needed help. Zillow made real estate agents nervous because they attracted a lot of attention, but swore up and down that agents had nothing to worry about. Zillow was agent friendly and needed real estate agents to be profitable.

Recently Zillow has ventured into the ibuyer space, positioning itself for whatever happens in the future. Zillow is playing both sides of the fence, a very good move. Again Zillow swears they are only testing the iBuyer path and agents have nothing to worry about but whichever way the business shifts Zillow will be ready. Zillow is truly the 800-pound gorilla in the new real estate paradigm.

Discount Brokerages

Discount brokers are just what they sound like. Some discount brokerages use a flat fee model. They presumably offer real estate services cheaper than mainstream brokerages. They’ve been around forever but recently have been trying to differentiate themselves into something unique and new with complicated pricing structures.

Purple Bricks

Purple bricks makes money by charging a flat upfront fee and then the remainder being paid after the house sells. If the house doesn’t sell the upfront fee is non refundable. It still costs between $8,000 and $10,000 to sell a home through purple bricks but can be less expensive than using a traditional brokerage. The problem with this model is the nonrefundable upfront fee. Purple Bricks is a UK company that tried and failed in the US and Australia.

Simple Showing

Simple Showing is yet another investor funded startup that offers low commission fees, 1% listing fee and 3% buyer agency fee with an up to $5000 buyer rebate. The seller pays a 4% fee in total.

Redfin

Redfin offers a 1% listing fee when you sell and buy through them. That 1% listing fee doesn’t include the buyer’s agent commission, which is generally 3%. Your overall cost will be closer to 4%.

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This is certainly not an exhaustive list of iBuyers or discount brokerages, but enough to give you an idea of what’s coming for the traditional real estate business.

The success of these types of brokerages rests on lower commissions and flat fees, which means less money for the agents doing the work. What makes a career in real estate attractive is the amount of money that can be made. If that money is reduced substantially the field of experienced agents will dwindle. This in turn runs the risk of reducing an agent’s true fiduciary towards the client which is somewhat of a problem in real estate now.

After the investor money runs out time will tell if these types of new real estate brokerages will last and be profitable. We must wait and see if these companies are what will make the real estate industry change.

The Law Is After Real Estate

Courts and government are taking a hard look at what some think are anti-competitive practices. The real estate industry will change drastically if the Government wants change despite the millions spent on lobbying efforts to keep the status quo.

The Trump administration DOJ is investigating the real estate industry. If that course of action is pursued the real estate industry will change, but no one can really predict how just yet.

Some sellers question why they have to pay a buyer’s realtor. Sellers are forced to pay for both their own agent and the buyer agent. A commission is charged to the seller and that commission is split between the sellers’ agent and the buyers’ agent. There have actually been class action lawsuits by sellers against their agents claiming anti-competitive behavior.

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No one knows and no one can be sure what will take hold and what will not but change is inevitable. Antiquated real estate practices are being challenged from all sides. The problem with iBuyers is cost. They offer convenience but don’t address the expense of selling a house. The discount brokerages are offering savings but so are many real estate agents due to competition among themselves. Even so, it’s still a lot of money to sell your house. Money that should be profits for you, the home seller.

What I think will come to pass is more people will realize that with a little education it’s really not that difficult to sell a house. Many thousands of brand new untrained agents do it every day. 10 years ago when I sold my first house I hadn’t a clue what I was doing and just sort of stumbled through it. Since then I have sold hundreds of homes and figured it all out. I know how to sell a house fast and for the most money. And people still pay me a lot of money to do that.

Whatever happens in the long run for the real estate industry happens but what needs to happen for home sellers is profit. They say real estate is the best investment you can make…and it can be.

Sell your house yourself.

Let me show you how you can save thousands of dollars of your own money. Click here!

Joel