Will COVID-19 be the End of iBuying or will it boost iBuying?

The effects of the coronavirus pandemic are being felt far and wide, but there is one area, in particular, that is starting to feel the squeeze — the real estate iBuying market. COVID-19 Crisis be the End of iBuying? With the stock market experiencing significant drops and the wave of uncertainty that is spreading throughout the world, buyers and sellers alike are taking a step back from their activities to ensure they are making the best decisions during these ambiguous times. While real estate agents and brokers are at the forefront of the challenges being felt in the industry, there’s another group of companies that may not survive the massive shifts that are happening every day: the iBuyers. Coronavirus Crisis might be an end to iBuying.

What is iBuying and will change during the COVID-19?

The concept of iBuying is not new, but it has been expanding rapidly in recent years. In an iBuying scenario, a real estate holding company purchases your home directly and provides you with the full selling price upfront. This allows the seller to have immediate access to the equity in their home and may reduce the stress and pressure of finding a new home before selling your current home. In this scenario, iBuyers, such as Redfin, Opendoor, or Zillow — also known as instant buyers — provide advantages such as a quick closing window, fast offers, and the ability to sell the home in an as-is condition without spending money on staging or upgrades before a move. While buyers may recognize a slightly lower price than fair market value for their home, working with an iBuyer offers a fast and low-stress option for guaranteed home sales. After purchasing a home, an iBuyer will generally add value through upgrades and staging before listing the home for sale at a higher price. 

Pros and Cons of iBuying for Sellers during COVID-19

There are no perfect solutions for buying or selling a home, and iBuying is simply another option that buyers can consider when they’re ready to put their home on the market. With rapidly changing home prices COVID-19 could either be the end of iBuying or could boost it as people move to different States.

Pros of Selling to an iBuyer  during COVID-19

One of the key frustrations that home sellers mention is the need to have their home tidy, clean, and well-staged — often for months at a time. If there is a buyer that wants to come to look at your home, sellers must often clear out, regardless of the time of day or night. This can be intensely disruptive to your home life, particularly for individuals will small children or those who work from home. Boxing up all of your personal moments and any clutter takes time, too. When you add in the costs of repainting rooms, upgrading flooring, doing any landscaping, and more, you can easily spend several thousand dollars on upgrades simply to help sell your home. 

With iBuying, there is no need to stage your home or even get it particularly clean before you work towards a sale. You’ll be able to quickly get a cash offer, saving money on closings and also getting you one step closer to moving to a new home. You may even find that your iBuyer offer is closer to the fair market value of your home than you would expect. iBuyers use an automated valuation model (AVM) to help them quickly make an offer on your home based on comparable properties in your area. While it doesn’t hurt to check how close the offer is to the median market value, you may be pleasantly surprised to find the two prices are close enough to offset the time and frustration of using a traditional listing tool. 

Cons of Selling to an iBuyer during COVID-19

One downside of selling to an iBuyer is that there are no guarantees that the offer you receive will be competitive in your market. These offers are generally automated based on comparables in your area, but may not take into consideration any new upgrades or additions to your home that are not visible in a listing. Companies that practice iBuying are not available throughout the country, and are generally localized around fast-moving markets in larger cities. Even if iBuyers are active in your markets, not every home will qualify to receive an offer. It’s also important to note that there are often fees associated with working with an iBuyer that might eat into your profits, even up to the 6% that you would generally pay a real estate broker for listing and selling your home. With this new model of buying it would appear the COVID-19 is changing the behavior of selling and COVID-19 could boost iBuying rather than end this method of transacting.

Effect of COVID-19 Pandemic on iBuyers 

The real estate market is being particularly hard hit by the coronavirus pandemic, as brokers, sellers, and buyers all wait to see what will be happening in the future and the coronavirus crisis may be the End of iBuying or it could rapidly increase this method of transactions. During this period of insecurity in the market, it’s likely that iBuyers will be reducing their offers for homes in an attempt to assure that homes purchased can be sold at a reasonable profit. While the economic downturn associated with the coronavirus epidemic is still expected to be short-lived, it may still cut quite deep into real estate profits. However, experts note that this may be the ideal time to list your home for sale, although some buyers are already beginning to question their decisions on making a move. Record low mortgage rates may provide the impetus buyers need to take the leap and make a home purchase. 

While there are significant benefits associated with working with an iBuyer agency, you are often better off selling your home directly. One of the challenges that “for sale by owner” sellers experience is the difficulty of getting their home listed on the main MLS service that is used exclusively by real estate agents. Having your home as part of the MLS listing ensures that agents in your area and across the country are able to view your property at the same time as properties that are traditionally listed through a real estate agent — but without the 6% commission that’s often required by seller’s agents! Using the Richr website to add your free 

MLS listing helps reduce your overall administrative costs for selling your home while still ensuring that you are getting the best visibility with local realtors who are actively looking for the right location for their clients. There are only a few simple steps to get started, and no obligations to use the Richr software. In either case, if choose to sell your home yourself or use an iBuyer, COVID-19 has given more options to the marketplace and whether COVID-19 puts an end or boosts iBuying is yet to be determined.