IBuyers are one of the few true innovations to hit the real estate industry in recent years. Yet consumers haven't fully embraced them because of misconceptions about how iBuyers work, and what types of problems they resolve for sellers and buyers.
But iBuyers don't pay significantly less than the market price, said Mike DelPrete, a real estate tech strategist and scholar in residence at the University of Colorado at Boulder."The biggest potential misconception is that iBuyers are gonna rip you off, and they're gonna give you a lowball offer and you're leaving money on the table," DelPrete told the personal finance website NerdWallet.
This hypothesis disregards human nature: When you buy a home, you'll ignore the price paid by the only buyer who overpaid. You'll pay attention to the prices that are consistent with fair market value. For iBuyers to push prices artificially high, they would need to control a big chunk of the market, and they seldom do. According to DelPrete's research, iBuyers accounted for 1.6% of U.S. homes bought in the third quarter, or around 28,000. IBuyers are busier in some markets than others, though. They bought 10.8% of the homes purchased in the Phoenix metro area in the third quarter.There's some truth to this belief, so it's more exaggeration than myth.
An Offerpad spokesman told NerdWallet in an email that the company typically sells 10% to 20% of its homes to institutional investors. Opendoor's head of real estate, Kerry Melcher, didn't give percentages, but said in an email:"Some homes we purchase are resold to REITs; the vast majority are put back on the market and go to everyday consumers."
"It makes those estimates real," Aleem said. He explains that getting an iBuyer offer can establish a baseline asking price even if you ultimately decide not to take it and opt for a traditional home listing instead.More substantively, selling to an iBuyer appeals to homeowners who prize convenience, need to sell quickly, and want to be certain that the buyer will consummate the transaction and not flake out.