‘We Buy Houses for Cash’
Real Estate Investors have been buying houses for cash for a long time. You’ve seen their signs on telephone poles or billboards along the road. ‘We Buy Ugly Houses’ and ‘We Buy Houses for Cash’ or ‘We Buy Houses Fast’. They are often local investors that will offer you a percentage of what the home is worth in hopes of sprucing up the house and selling it for more than what they paid you for it to realize a profit. While you will sell your home for less than you would get on the open market, many find this approach appealing because it provides speed of sale and convenience. Someone will visit you at your home and do a thorough inspection of your property. Then they will analyze your property against other homes that are on the market and have sold in the past 90 days to determine a price for your home. They will provide you with a cash offer and generally offer to close quickly and as is. You don’t have to spend money and time getting your home market ready. You don’t have to live through the listing period when you have to be ready at moment’s notice for someone to walk through your home. This can be especially appealing for elderly people who might have a spouse that is ill or not as mobile. It takes the stress out of the home sale process if you can afford it.
Instant Buyer or iBuyer
iBuyer (Instant Buyer) is a relatively new form of real estate investment that got their start with OpenDoor in 2014. iBuyers use proprietary technology and huge amounts of capital to buy homes more efficiently or cash. Algorithms are used to determine the value of the home and make an offer instantaneously. Like Real Estate Investors, the iBuyers will generally do some minor repairs and maintenance after acquisition and then quickly list it on the open market to sell it for a profit. iBuyers have been able to generate large amounts of capital on Wall Street and have used it to scale their solutions. While the typical real estate investor is a local business, iBuyers flow of capital has allowed them to expand into receptive markets. You can have an offer within 24 hours and close on your time frame. The goal is to reduce friction in the real estate process by speeding it up and relieving the homeowner of the burden of selling their home on the open market. This allows people to buy their dream home when it comes on the market, get out from under a fixer upper, or free up equity in order to move into a Senior Living Community.
Are iBuyers a trend or are they here to stay?
According to the December Realtor Confidence Survey, which the National Association of Realtors (NAR) compiles based on thousands of survey response, 2 percent of sellers who worked with a realtor sold to an iBuyer in November and December of 2021. While that doesn’t sound like a lot of activity iBuy sales have more than doubled since 2019 and it continues to grow. They are a disruptor in real estate responding to a market need for convenience and speed.