There are several reasons why someone may want their house sold as quickly as possible. Maybe you’ve found your dream home but need to sell your current house before you can close. Or maybe you’ve received a great job offer in a different state and need to move quickly.
Instant offer real estate deals, in which buyers use information about your home and data about recent nearby real estate transactions to make a quick offer on your house, can be a good solution to these types of situations.
Cash sales from instant offer real estate deals for non-first-time homebuyers have grown since 2019, according to the National Association of Realtors®. As of September 2022, cash sales represented 22% of home purchases. Cash buyers typically offer less for homes than market value, and iProperty Management finds that some buyers, particularly instant buyers (“iBuyers”), “offered an average 86% of market value for homes in the first quarter of 2022.”
Nevertheless, the possibility of a lower price may be outweighed by instant offer real estate transactions’ convenience, speed, certainty, and low stress levels for sellers.
This guide explains how instant offer real estate deals work in order to help you ascertain if this route is right for you.
Who provides instant offers?
The following types of real estate companies can make instant offer real estate deals.
About 71,000 homes were bought by iBuyers in 2021, but began falling in early 2022 as economic conditions became more challenging. Selling to an iBuyer may be beneficial for owners on a tight deadline who cannot, or do not want to, deal with factors such as contingencies or other problems that could arise with buyers on the open market. iBuyers are also great for sellers who do not want to invest time and money into repairs, upgrades, or staging.
Top San Diego real estate agent Glen Henderson, who is also a HomeLight Home Loans and HomeLight Simple Sale specialist, states that iBuyers may also be great for those who do not want to schedule open houses because of time constraints or because they are uncomfortable with strangers in their home.
Small investors and flippers
Small investors and flippers focus on a specific territory and buy fewer homes per year than iBuyers.
“They operate on entirely different margins,” says Cleve Gaddis whose Atlanta-based real estate team rakes in an average of $20 million in annual sales. Gaddis says that for the small investor, “the margins have to be large enough because that’s how the person has to make a living on the five or ten” homes they buy each year.
Small investors and flippers are beneficial for a seller looking to stay local and who likes the idea of the home getting a beautification for its next step in its journey. Flippers may also be a good option if the seller’s home is in rough shape — something that is highly desired by flippers.
Some people want to sell their homes quickly in order to acquire funds to purchase their new dream homes. This is where trade-in companies and programs, such as HomeLight Trade-In, can help ease the process of buying one home while selling another.
For trade-ins, a company offers to buy your current home. This allows you to use the offer to buy your new home without a sale contingency, which strengthens your offer. With HomeLight Trade-In (currently available in Arizona, California, Colorado, Florida, and Texas), you’re able to focus on your next move instead of simultaneously worrying about selling your current house.
These investors look for market-ready homes to purchase for competitive prices, because they want to turn the houses into rental properties. This purchase type consisted of up to 20% of instant offer real estate deals by late 2022, representing a rising market share heading into 2023.
Buy-and-hold investors are great for those sellers who have well-maintained homes and want quick cash offers at market-competitive prices.
How do instant offers in real estate work?
It’s easy and fast to sell your home to instant offer real estate buyers. Here’s how the process works:
Request an offer by providing details about your home
First, request a no-obligation offer on the company’s website by entering your address and answering a few questions about your home.
With HomeLight’s Simple Sale platform, clients are matched with cash offers that allow them to sell in days, not months.
Henderson has worked with clients using HomeLight’s Simple Sale and praises the platform for its “simplicity” and “straightforwardness.” He also likes that there are “no fees for the seller. And so once that offer is accepted, the seller knows that’s what they’re going to get.” Thus, sellers are not hit by surprise credits or repair contingencies by buyers when using HomeLight’s Simple Sale.
Receive an offer
Generally, you can expect an offer within a few days. Some companies may respond within 24-48 hours.
Review and respond to an offer. The offer will include the offer price, seller closing costs, and any transaction fees.
Henderson warns that sellers should not necessarily take the first offer that comes to them. Rather, they should compare multiple offers, and this is where working with a real estate agent can be especially beneficial.
“I always feel that anybody that is thinking about selling, even if they’re selling to an investor or iBuyer, should still be consulting with an agent just to evaluate,” says Henderson. This is so that agents can act as guides and to help sellers evaluate their options and choose the best solution for the seller’s situation.
Typically, negotiation is reduced or eliminated with instant offer real estate deals. However, Henderson states that agents are great for seeing if there is any room for negotiation in the contract. Agents can then engage in those discussions with potential buyers on behalf of their clients.
After you receive an offer that you feel comfortable with, look closely at your instant offer terms before you accept, advises Cyndie Gawain, who is a Dallas agent with more than 20 years of experience. For example, iBuyer companies may have a maximum number of leaseback days that may not work your desired timeframe.
Schedule a home assessment and review any repair adjustments
If you accept an instant offer, you’ll then typically schedule an in-home assessment with the company. The inspector will verify the home’s condition and identify any necessary repairs.
If repairs are needed, the buyer creates a cost estimate and deducts the amount from your offer as a seller credit.
Choose a closing date that works for you
You should choose an offer that works with your moving timeline. iBuyers typically offer flexible closing options.
Once you have accepted your cash offer and have chosen your move date, HomeLight’s Simple Sale aims to get your payment to you within 10 days.
What makes the modern instant offer unique?
iBuying companies are unique because they use technology to make offers on homes faster and to streamline the closing process. Here’s how they do it:
Automated valuations (AVMs). Use of an AVM is one of the defining characteristics of an iBuyer company, which uses proprietary algorithms and models to determine what a home is worth before making an instant offer. The company employs software to aggregate numerous data points pulled from public records, property listings, and other databases. An algorithm uses the data to predict a property’s market value in mere moments.
Digital closing. In addition to offering homeowners an alternative to a traditional home sale, much of closing your sale with an iBuyer may be digital with electronic signatures and contracts. In some states, homeowners can remotely notarize their documents.
Selling a home in excellent condition. iBuyers prefer homes in great condition since they want to sell the home for profit with little time or investment on their parts.
Speed and convenience. While house flippers often make offers on homes that need some work, iBuyers generally aren’t focused solely on homeowners who need a bailout. Instead, iBuyers offer a digital alternative to sell your home. Oftentimes, your timeline and your house’s condition will help you choose which offer is best for you.
What are the pros and cons?
Henderson states that you first need to examine your current situation in order to find the best option and instant offer real estate deal for you. Thus, you should be aware of some of the potential benefits and drawbacks of instant offer real estate deals.
Benefits. Instant offer real estate transactions come with the benefits of speed, convenience, and flexibility. If you need to move quickly or need cash fast, then instant cash offers would speak to your goals.
You can also choose to skip repairs if you do not have the time, energy, or money for them. This is useful for properties that have fallen into disrepair, are inherited, or are not physically close to you.
Drawbacks. A possible downside of an instant offer real estate deal is that you could be selling your home for less compared to if it were on the traditional open market and you were working with a top agent.
There is also less possibility for negotiation than with traditional open market sales, which means that there is more room for potential buyers to inflate their repair costs. This risk may be increased if you do not have a real estate agent to comb through the costs, according to Henderson. There is also a possibility of getting scammed or working with buyers who may not be forthright about their buying abilities.
Where can I get an instant offer?
In the Atlanta area, Gaddis estimates that as many as 3% of homes are bought by iBuyers. “That’s a big number, but it’s also a small number,” he says. The National Association of Realtors® finds that about 2% of homes represented by a Realtor® were bought by iBuyers in 2021. The organization estimates that this percentage will increase as the housing supply is expected to remain limited for the next 10 years.
Yet, iBuyers aren’t available for every market. iBuyers tend to make instant offers in areas where homes are similar, such as tract home neighborhoods, because communities where homes are newer and have a similar build make market value determination more predictable.
Thinking about selling to an iBuyer?
“Compare, compare, compare,” says Gaddis. Weigh different offers and estimate the amount you could receive on the traditional open market for your home. Decide whether or not the difference in net proceeds between an instant offer real estate deal and a traditional sale makes the instant offer worthwhile. You can always use HomeLight’s Simple Sale to help you obtain the necessary information (at no cost to you) that will help you to make an informed decision, and you can consult a top agent for guidance as well.
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