Our Q&A with RedfinNow to reveal tips on how to close quickly on your dream home when it’s owned by an iBuyer.
If you’ve sold a home recently, you may have come across the option to sell to an iBuyer.
But when it’s time to buy, it’s also possible that the property you’re eyeing is listed by one. When you purchase a home from an iBuyer, you can visit the property on demand, make an offer without an agent, and move in immediately.
Institutional buyers, known as iBuyers, are companies like RedfinNow, which represent a growing share of home sales. They make instant cash offers to home sellers and close without listings or showings, and then sell those properties direct to consumers.
To learn more about these benefits, we spoke to Jason Aleem, head of real estate operations for RedfinNow.
“Touring a home listed by an iBuyer is an opportunity to experience the latest tech innovations in real estate,” he said. “It represents a new way for consumers to access homes and the best way to start is to get out there and see as much as you can. When you find your dream home, ask questions to make sure you have the answers you need to buy the house. It’s important to hold iBuyers accountable and make sure you’re getting what you paid for.”
Jason answered some common questions on iBuying, and offers advice on what you should consider when purchasing from an iBuyer:
1. How is accessing an iBuyer-owned home different than a traditional home?
“Viewing a property listed by an iBuyer can be easier than touring a traditional home in terms of access and ease. It’s a whole new way to shop for a home. If you’re looking at one owned by RedfinNow, you have direct access to see a home without an agent. Once you register with Redfin, you can see a home typically from 8am to 8pm. This is incredibly convenient as you have the option to visit as many times as you like, bring back friends or family, and accommodate multiple schedules. This also empowers more informed thinking as you’re not basing a huge decision on just one viewing. You should visit any home you’re thinking of buying at different times of the day and week to get a sense of how the neighborhood feels–does it get loud or busy on weekends? You’re not confined to traditional rules around when the home is available to tour.”
2. Do homes sold by iBuyers require renovation?
“When RedfinNow purchases a home, we renovate it before putting it back on the market. When an individual sells a home, many times the renovation was done to fit their taste, not the buyer. Or, the seller may have decided to forego any work, leaving that burden on the buyer. Either way, both outcomes will likely delay the buyer from moving in while they spend more money to improve the house to their liking.
Our in-house professionals are experts in renovating homes. They know how to ensure a sound product that’s livable, devoid of any major issues, and a clean slate so there’s less work after move-in. We usually paint the walls into a neutral tan or white so the buyer may personalize the home, as opposed to moving into one customized by the previous owner.”
3. How is buying from an iBuyer less complicated than purchasing from an individual?
“Home sale negotiations and transactions can become personal, complicated by the fact that the seller may conflate the home’s sentimental value with its market value. An iBuyer sale on the other hand, is a straightforward business transaction. We care, for sure, but look at it like a builder or investor would, rather than someone with a personal history in the home. An emotional bond can also affect negotiation and timing, as the seller might have trouble moving on from the house they’ve lived in for so long. That’s absent in an iBuyer.”
4. Can you negotiate?
“Yes, there’s definitely room to negotiate. In fact, I think there’s more room at times because an iBuyer is typically trying to hit a certain sales target or quota. If you’re looking to buy a home owned by an iBuyer, I’d recommend finding a sweet spot. Come in early with a strong offer that is clean, with a short closing window, and not a ton of contingencies. iBuyers think about both price and total days on the market, and will be happy to ensure a quick sale.
If an iBuyer property has been on the market a while, there will come a point when they want to move on from the property. That will be a time when there is more room to negotiate as the iBuyer will want to accept a reasonable offer that allows them to offload the property. It’s also important to think about the buying and selling seasons in your local area when considering what offer you want to make. iBuyers may be more open to negotiation when the market slows down, and on the flip side, may be hesitant to budge on pricing when things are heating up.
And just like in a traditional sale, if an inspection reveals a major problem that needs fixing, the buyer can negotiate it be fixed, or ask for a credit to complete the repair at their convenience, which can impact the final sale price.”
5. Is closing a home with an iBuyer faster than a traditional sale?
“Yes, because the mindset of an iBuyer as a seller is different from that of a traditional seller. Selling quickly is iBuyers’ preference as the homes they own are usually vacant. As such, the closing process is faster. There’s less back and forth among the buyer, seller, agents, lenders and title/escrow companies because one side of the equation is removed entirely. With fewer parties involved, the closing process tends to be simpler and faster. Additionally, a traditional seller might want a move date based around their schedule. For iBuyers, homes are either staged or empty, and as such, can close quite quickly through the escrow and financial process. This all means the buyer can move in quickly.”
6. How fast does an iBuyer home go under contract?
“Fast, considering most iBuyers have a sales target they are trying to reach for all of their properties. Sometimes this is going to be based on price, or it could be days on market. Most iBuyers will be flexible, but they won’t give away a hot property garnering really high demand, such as one that will result in a bidding war and close above asking price. If we have an offer that comes close to or exceeds our asking price, we’re usually going to take it seriously. Don’t wait around as the likelihood that an iBuyer is going to make a decision and move forward once they receive a good offer is high. However, it can’t move too fast. In some situations, there are Federal Housing Administration (FHA) guidelines restricting iBuyers from selling homes to customers before 90 days of ownership.”
7. How can I purchase a home unrepresented?
“You don’t need an agent to see or buy a home listed by RedfinNow. We work with you to make sure you have the information you need to purchase the home directly, should you choose.”
8. Where am I most likely to encounter an iBuyer-owned home?
“It’s not always obvious when a home is sold by an iBuyer. Since the industry is so new, there’s not a standard demarcation or notice letting buyers know a home is being sold by one. If you’re not sure if the home you’re interested in buying is being sold by an iBuyer, just ask the listing agent. Additionally, neighborhoods in places like Phoenix and Dallas see many iBuyers buying and selling a large share of homes that hit the market. iBuyers are also really popular in the north suburbs Dallas-Fort Worth, in places like Plano, Frisco, Little Elm.”
9. What’s coming next for iBuyers?
“I expect we may soon be able to show iBuyer homes earlier in the renovation process. This way, you’d have an opportunity to ask for custom upgrades, much like you would when buying a new home from a builder. Also be on the lookout for increased opportunities to access and purchase more iBuyer-owned homes without the help of an agent.
Updated on July 15th, 2019