The Secret Costs to Selling Your Greater Toronto Area Home to an iBuyer

The Secret Costs to Selling Your Greater Toronto Area Home to an iBuyer

If you’ve been thinking about selling your home, you’ve probably come across a bunch of websites that promise an instant (or almost instant) offer for your property — all without having ever to list with a real estate agent. These services are referred to as “iBuyers,” a nod to their existence as online companies and since the sites function as the buyers in the transaction. 

While many sellers who are anxious about the process of listing their property may find the idea of quick money an attractive one, iBuyers come with a lot of strings (and costs) attached. Here are just a few reasons why 99.7% of people are still using an expert real estate agent to help sell their home:

You'll Likely Get Less For Your Home

iBuyer services can differ greatly based on their business model and what their plan is for a home. For example, some iBuyer services are designed to find homes for investors to flip. Others are designed to acquire inventory to sell to potential buyers directly. Regardless of the type of buyer, the goal is profit. That means offers for properties trend towards the lower side of fair market value. 

To make an offer, iBuyers use algorithms based on key facts about a property, such as age, location, and type of home. Often, iBuyer services consider photos, questionnaires, and in-person visits from an agent to decide on your home’s value. Didn’t get around to making improvements before the agent comes by? Expect the current “condition” to affect value. Or, did you update your kitchen, but the iBuyer is backed by flippers who are looking to redo everything? You may not see any return on your own investment. 

Since algorithms are kept secret, it isn’t easy to estimate how much less a seller makes on iBuyer offers versus the open market. However, a recent study by MarketWatch found that the average iBuyer offer is 11% less than selling the traditional way.

Your Sold Price is Out of Your Hands

Real estate agents have a responsibility and an incentive to make sure your home sells for as much as possible. Our goal is happy sellers and buyers. This is why real estate agents will take the time to develop a strategy for pricing, making key improvements, and staging to entice buyers to offer more. 

However, iBuyers aren’t invested in a local community and have the competing goal of making sure they can make money off your property. This combination of interests means that iBuyer offers are lower — but there’s usually no ability for any wiggle room to improve their offer significantly. 

In fact, you may even get less money after making improvements with certain iBuyers, who may require you to do certain repairs in order to accept their offer. The catch? The iBuyer has their own contractors, who may set higher rates — and their cost is deducted from your offer. 

Further, you may not even get an offer in the first place. Some iBuyers are specifically looking for undervalued homes (or undervalued locations). Others may not consider homes older than a few decades, while others aren’t interested in homes above a certain value.

Not Sure Where to Start?

Beginning your home search can feel like an overwhelming and nerve-wracking task. We know how to effectively attract, not chase, the right buyers and sellers at exactly the right time.

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