With the rise of businesses going online, you now have more options than ever to sell your home. From estate agents portals like Rightmove or Zoopla to more traditional routes like the open market or property auctions.
In recent times, there has been a new property trend emerging, that of ‘iBuyers’. Originating in the United States, it is beginning to take pace here in the UK. Here, we’ll look at what an iBuyer is, how they work, and more importantly, is it right for you if you’re looking to sell your house fast?
In simple terms, the word ‘iBuyer’ is a combination of ‘instant’ and ‘buyer’. These are high-tech businesses with considerable financial resources that specialise in buying and selling homes quickly. They use algorithms and market trends to provide an “accurate market value offer” for your property in around 24 hours. And, because they are proceedable buyers, they can buy the property quickly without the hassle of viewings or the involvement of estate agents.
In exchange for a fast and convenient sale at “market value”, they charge a service fee that ranges between 6-9% of the property’s price, which is higher than the traditional estate agent fee. It must also be noted that their cash offers, despite their use of data science, tend to be slightly below the open market’s average price. Remember that your property’s worth is not a fixed amount of money defined by one unique buyer, as we’ve discussed in the past, your house is worth the price any buyer is willing to pay for it and you are happy to accept.
So a property worth £200,000 in the open market, might get an offer from an iBuyer of £197,400, from which you would need to deduce an 8% fee, leaving your total price at £181,608 (without including additional costs).
Just as with Vivo, the journey of selling your house starts by answering a few simple questions about your property, and you will receive a no-obligation offer in around one day. Your offer will take into account details your provide such as:
iBuyers’ technology will compile this information and combine it with data of your neighbourhood’s market value to come up with an “accurate cash offer”.
If you decide to go forward, they will then send a surveyor to verify your property’s condition and adjust the cash offer according to what they see. This could lead to repair costs that will impact their final offer. However, any required repairs will be done after you have left the house, staying true to their hassle-free promise.
Finally, once you decide you are happy with the adjustments, you’ll close the sale which will include your final price (their cash offer adjusted after the in-home survey minus their service fee) and you’ll agree to a moving out date.
iBuyers also sell the properties they buy. Similar to traditional estate agents, you will find a listing of properties for sale you when browsing their website. These include properties they’ve purchased and properties advertised by third parties.
The properties they own will be advertised with some sort of perk. For example, Opendoor offers virtual self-tours so you can pop into any of their houses whenever you want by using their app. And they will also facilitate buying any property through their portal by helping you with financial benefits. Offerpad, for example, offers up to £1,000 towards closing costs, and Zillow has its own home loan service.
Just as you can trade your car or a mobile phone for a newer model, iBuyers can offer a property-related version. As they are a hybrid between buyers and sellers, you can use an iBuyer to sell your home initially, and then use the funds for one of their available properties
If you are interested in trading in your house, all you have to do is let the iBuyer know and ask for a cash offer. Once you know how much you can afford you can browse through their listings and find your new house.
Trading your house is quite convenient as it means you can skip the stress of double viewings, double moves and double mortgages.
It may seem that iBuyers are a hybrid of these two services but, despite their similarities, there are some key differences.
The big difference between estate agents and iBuyers falls into convenience and price. Estate agents will put your house in the open market and find buyers which will lead to at least a few months of viewings and negotiations before you accept an offer. On the other hand with iBuyers you’ll have your house sold quickly and hassle-free but their offer will be lower than that from the open market.
Although at first glance it may look like these two businesses are very similar, there are some important differences.
One of the key distinctions is how they communicate their services. While iBuyers give the impression that their ability to make accurate initial offers in 24 hours is down to their ‘revolutionary technology’, fast property buyers have long been using their expertise and data to provide cash offers within the same timeframe. In Vivo’s case, desktop valuations are so detailed and thorough that 96% of our Formal Offers remain at the same level as our initial offers.
The idea of selling a house fast and for its market value is certainly one of iBuyers’ main appeals. However, there is a bit of ambiguity with what the final amount you’ll receive is with iBuyers that doesn’t occur when selling to a fast house buyer. Taking into account their initial “slightly below open market” offer, their service fee, potential adjustments and legal fees, your final price may end up being at a similar level as if you were to sell to a Fast Property Buying Company. Vivo, for example, will offer a certain 85% of market value, with no hidden costs. Let’s see how this translates into an actual sale:
|Service fees up to 9%+ Vat||£25,819||£0|
|Seller receives £169,781||Seller receives £170,000|
As with everything in life, it depends on your needs and circumstances. If you’re in no rush to sell, and happy to wait a bit longer for ‘full market value’, an estate agent may be a better option for you. If you’re keen to sell quickly and are flexible on price, iBuyers or Fast Property Buyers are likely to suit your situation more.
If you’re uneasy about the level of fees involved, prefer a more personal service, or if your property does not fit the iBuyer criteria but you still want to sell with a short turnaround, a fast property buyer may be what you need. You would sell at a below market value price, in return for a speedy and secure transaction. The speed and fee-less approach of companies like Vivo can enable you to plan ahead, whilst knowing the exact amount you will receive upon completion of the sale, and can often save you money in the long-term.
The last disclaimer is that iBuyers are fairly new in the game and their presence in Europe is still small. Maybe in a few years they will offer their services in every corner of the UK but for now, the chances are that they are not yet buying properties in your area.
If you want to sell your house fast and hassle-free, we can help. We are a family run business that can buy houses in any condition, allowing you to have a quick and private sale in as little as 7 days. Submit your details to get your cash offer in 24h – just like an iBuyer. We tend to offer around 85% of the estimated current market value of your property. This package includes all legal fees, clearance, cleaning and refurbishment costs, so there are no fees for you to pay at any stage when we buy your property.
Once you’ve accepted our formal offer, your sale is secured. You’ll know exactly how much you’ll receive and when you’ll receive it. As we buy property using our own cash, we’ll be ready to proceed with your sale straight away.
If you would like to know more, please call us on 0800 773 4922 or fill in our quick contact form.