Is iBuying a Great Deal for the Seller or the iBuyer?

iBuying is the latest tech disrupter that promises convenience for home sellers with quick transactions and all cash deals. But homeowners selling to iBuyers could be leaving money on the table, as much as 11% compared with owners who sold their homes on the open market, according to one study.

As the entire iBuyer business model is predicated on delivering convenience to the homeowner at a cost, coupled with the belief that they themselves can re-sell the property at a higher price, there is an inherent risk every iBuyer takes on with each property purchase: the risk that the home actually will sell at a higher price, writes Forbes contributor, Kent Cloothier, CEO of Real Estate Worldwide. To offset the risk, iBuyers charge a number of fees, either transparent or hidden, that are absorbed by the seller. The net cost for a transparent fee can range anywhere from 7–10%, depending on the provider.

And, while one would think that the fees associated with traditional brokerages would go away with iBuyers, as these fees have become increasingly hard to justify as consumers are more equipped than ever to self-serve their own needs in real estate, think again. With iBuyers, the standard 6% real estate commission could be considered a bargain.

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