If you’ve been reading up on real estate news, you’ve probably heard of iBuyers – that is, instant buyers for your home who will make the purchase without going through the traditional process. But how does it work when you want to sell your home to an iBuyer, and can you make a decent profit? This guide explains.
The Complete Guide to Selling to an iBuyer
This guide covers:
- What is an iBuyer, and what are the benefits of selling to one?
- How does the process work, and what do you have to prepare for it?
- What are the risks involved in selling to an iBuyer, and how can you minimize them?
- How much money can you expect to get from an iBuyer sale, and what are the tax implications involved?
- Are there any other ways to sell your home that might be a better option for you?
What is an iBuyer, and What Are the Benefits of Selling Your Home to One?
An iBuyer is a company that will buy your home instantly, without going through the traditional process. Some advantages of selling to an iBuyer include:
- You don’t have to worry about showings or open houses.
- The sale is usually finalized within a few weeks.
- You don’t have to make any repairs or upgrades to your home.
- The iBuyer sometimes pays all of your closing costs.
The downside is that you won’t get top dollar for your home, as iBuyers typically offer about 5 to 10% less than what your home would sell for on the open market.
How Does the iBuying Process Work, and What Do You Have to Prepare for It?
If you’re interested in selling your home to an iBuyer, the first step is to get an offer from the iBuyer. This is usually done online, and you’ll enter information about your home (such as the address, square footage, number of bedrooms and bathrooms, and any other relevant information).
After you’ve submitted your information, the iBuyer will make you an offer. If you accept the offer, the iBuyer will then send an inspector to your home to verify the condition of the property.
If everything checks out, the iBuyer will then send a team to your home to take photos and measurements. This is usually done within a few days.
After the iBuyer has all of the necessary information, you’ll sign a contract and set a closing date. The iBuyer will then wire the money to your bank account, and you’ll sign over the deed to the property.
The whole process usually takes about a month, from start to finish.
There are three main approaches iBuyers take:
Related: 5 Tips for Getting the Highest Possible Price for Your Home
- Traditional iBuying for sellers who want to sell quickly. For example, if you need to move fast because you’re relocating to another city, a traditional iBuyer gives you a fast cash offer. You can use the cash you get to rent or buy a new home in your new city.
- Trade-ins for sellers who want to buy and sell at the same time. Some iBuyers will make an all-cash offer on a new home that you want to buy; if the seller accepts the offer, you move into the home while the iBuyer works on selling your old house. You pay the iBuyer the difference in cost from preparing your old home for sale and the price the iBuyer sold it for, and then the iBuyer transfers your new home into your name.
- Bridge financing for sellers who want to buy and sell while maximizing profits. iBuyers that specialize in this process give you the money to buy a new house, but after you move in, you lease the house from the iBuyer and list your home with a traditional real estate agent. If you don’t sell your old home within a certain period of time, the iBuyer purchases it from you (at a previously agreed-upon price) so you can get a traditional mortgage and end your lease.
What Are the Risks Involved in Selling to an iBuyer, and How Can You Minimize Them?
The biggest risk involved in selling to an iBuyer is that you won’t get as much money for your home as you would if you sold it on the open market. This is because iBuyers typically offer 5 to 10% less than what your home would sell for on the open market.
Another risk is that you may not have as much control over the sale process. For example, if you’re selling your home to an iBuyer so you can move quickly, you may not be able to choose the closing date or the terms of the sale.
To minimize these risks, it’s important to do your research and compare offers from multiple iBuyers. It’s also a good idea to get an estimate of what your home is worth on the open market, so you have a frame of reference for the offers you receive.
How Much Money Can You Expect to Get from an iBuyer Sale, and What Are the Tax Implications Involved?
When you sell your home to an iBuyer, you’ll typically get about 5 to 10% less than what your home would sell for on the open market. However, you will get paid in cash, and the sale will usually close within a month.
The tax implications of selling to an iBuyer depend on how much you profit from the sale. If you sell your home for less than you paid for it, you may be able to deduct the loss from your taxes. If you sell your home for more than you paid for it, you’ll have to pay capital gains tax on the profit.
Are There Any Other Ways to Sell Your Home That Might Be a Better Option for You?
If you’re not in a hurry to sell your home and you want to get the most money possible, selling on the open market is usually the best option. However, if you need to sell quickly and you’re okay with getting less money for your home, selling to an iBuyer may be the best option for you.
Another option to consider is selling your home to a real estate investment company. These companies typically make all-cash offers, and they can close on the sale of your home within a week. However, you will likely get even less money for your home than you would if you sold it to an iBuyer.
If you’re not sure what the best option is for you, it’s a good idea to speak with a real estate agent or attorney who can help you understand your options and make the best decision for your situation.