Are Robots Buying Houses?
No. Well, not exactly. As technology gets more sophisticated, we’re seeing the emergence of something called a real estate “iBuyer,” short for “investor-backed buyers.” Basically, these are groups of investors that pool their money, and then use high-tech software called Automated Valuation Models (AVMs) to find what they believe are good deals and make quick offers to home sellers.
IBuyers like Open Door, Knock, and OfferPad will make offers often accompanied by claims that their transactions are more convenient and have less friction, versus selling your home to a traditional buyer. But it’s important to understand the downside to these transactions as well, and how they come up with their offer price.
The fees on these transactions range from 6-16%, and the offer price may not be fair. AVMs use publicly available information and while some effort is made to consider the individual home, these algorithms are built for mass evaluation and can’t capture real life human curb appeal, condition, or location. Unfortunately, as we explained in last month’s SunCrest Market Update, these AVMs are not known for being accurate, and our niche neighborhood only exacerbates the problem.
Ignoring iBuyers isn’t the answer; there may be certain circumstances when an offer from one would make sense to entertain. They may be convenient, but is it worth the fees involved? What is your home actually worth? Knowing exactly what your home is worth and consulting with a trusted advisor is really the best way to know if an iBuyer’s offer—or any offer, really—is the best way to make sure you don’t leave any money on the table.
Our SunCrest Market Update is a hyper-local analysis of the most up-to-date information regarding the SunCrest real estate market. The previous month’s SunCrest housing information and future editions are released monthly.