Stay Instant Buyer Informed: 3 Things to Consider
For buyers and sellers looking to depart from the traditional, arduous, and often stressful experience of traditional homebuying, using an “instant buyer” web service may be an excellent option. These companies have harnessed technology to bring a transformative new option to the homebuying process.
The instant buyer process is accelerated using computers to make quick calculations, analyzing hundreds of comps instantaneously, to determine fair market value. Punctuated at key points with human intervention – inspections to suggest minor repairs, for example – the orchestrated process focuses on ready-to-move homes in good condition and makes fair offers within what a traditional buyer would offer.
While instant buyers were responsible for only 1% of homes sold in 2019 across more than 200 U.S. metro areas, they’re a hot emerging player in today’s marketplace and a convenient alternative for sellers looking for speed and convenience. In some markets they’re responsible for over 5% of purchases, with popularity increasing at a steady clip.
These technology-fueled transactions are also set up to work within the current agent-driven space. While each company collaborates differently with agents, they often have arrangements for agent-assisted selling and buying that shares a percentage of the proceeds with agents. While it might be less than the average 6% agents are accustomed to, the opportunity for bulk transactions and relative ease could be attractive to agents as well.
Sellers may take a hit. The average instant buyer fee charged to sellers is 7.5% – a full 1.5% more than standard broker commission for a home sale. However, the instantaneous sale of the home may make up for this cost – as sitting on the market for an average of three months amounts to between 1% and 2.5% of the total home value. It’s also noteworthy that instant buyer-brokered deals are typically a bit lower than average traditional offers.
Trade-ins could be a big perk. Some instant buyers offer a trade in model, similar to the way many consumers buy cars today. Buyers are able to apply the value of their current home toward the cost of their new home, without the tricky task of juggling multiple mortgages and contingent offers. Simultaneous buying and selling with ease will certainly appeal to those looking to make a seamless transition from one property to the next.
Bypass cleaning, staging, and showing? You had me at hello. Particularly as the U.S. enters cold and flu season in a pandemic environment, cutting down the foot traffic to the home is a major perk. People have endured a prolonged period of stress and are already focused on cleaning every square inch of their relative existence. If they can avoid having to make their home picture perfect just to inspire a sale – why not?
Consumer demand for digitally driven convenience likely means disruptors like instant buyers are here to stay. Consider the perks and prepare for how this option may impact your business. If 2020 has taught us anything, maybe it’s that major change is the order of business right now. I think that we might benefit from spending a little time together and discuss what we’re noticing about the changing trends in our industries – and how we can help each other benefit from them.
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Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207