Pros & Cons of Guaranteed Offers
Guaranteed offers and iBuyer services are currently the trend throughout the real estate industry. These are not new ideas, but rather an evolution of the “We Buy Houses” real estate investor strategy. The way that it works is instead of calling the phone number on the yellow postcard you received in the mail, you go to a website, enter your address, and get an instant offer on your home!
Sounds easy and exciting, right? It can be for certain homeowners, but the vast majority of homeowners will not see those same benefits. Here are some pros and cons of guaranteed offers.
Pros
Quick Closing – Guaranteed offers usually have less restrictions on funding than the majority of buyers in the market. This means that an iBuyer can usually get to the closing table quicker than the average buyer.
No Showings – Not having potential buyers in and out of your house all day means less cleaning and no strangers going through your stuff.
No Repairs – While most guaranteed offers will still require inspections, they will not ask a seller to complete any repairs. This eliminates the stress on a seller to find affordable and quality vendors to complete the work correctly and on time.
No Appraisal – Some guaranteed offers do not require an appraisal, which can ease a seller’s fear that the home may not appraise for the amount offered.
Cons
Less Money at Closing – By accepting a guaranteed offer, you have eliminated other buyers from getting a chance to make an offer. A larger pool of buyers increases your chances of getting a better offer.
Longer Closing Period – A conventional buyer will more than likely take longer to close than a cash buyer. However, it doesn’t usually take much more than a few weeks longer. It’s important to weigh if a few weeks is worth less money. In some scenarios it may be the wise choice to take less money and close quick.
Heavy Repair Discounts – An iBuyer will not ask you to complete any repairs, but will expect a price reduction to cover repairs. These price reductions usually come at a heavy repair cost. It’s not uncommon to see reductions such as $50 to change a single light bulb or other unreasonable requests that you would not typically see from a conventional buyer.
Fees – iBuyers may offer to charge the seller a reduced or no commission, and then make up for it by adding on “fees”. They are quick to point out that these fees aren’t commissions, but at the end of the day it is still money out of the seller’s pocket. Do your homework, as some of these services charge the seller upwards of 11% to complete the sale.