iBuying - what’s missing? What’s the deal?
Photo credit - realtor.com
iBuying Zillow, Redfin, Opendoor & whoever else jumps on the trend of moving from Media Source to Brokerage - is it the future of real estate?
Redfin is a top 4 home search media source. Their agent makes a salary & a very low commission. Until Zillow stepped in, they were the only name that I popped into most people's heads with regards to ibuying real estate.
In 2014 the then-Chief Revenue Officer Greg Schwartz said that Zillow is "a media company that helps people find homes”. Translate that to 2021, Zillow Offers was the company's move into iBuying, which is when a company works directly with consumers to provide an instant cash offer to purchase a home outright. In a single step, they created what most are calling the “all-in-one” real estate service - but is convenience the right way for you? Zillow is now a brokerage in its own right. It no longer gets the direct feed from the multiple listing services that it once got. instead it relies on IDX feed And will not pull rental listings at all. In fact, individual agents now have to pay for that weekly. Essentially, Zillow is only accurate for Zillow-produced properties (FSBO). Realtor.com is (and always was!) the most accurate source for your home search.
So, what’s missing from Zillow Homes and Redfin specifically?
1. Well for starters Zillow Homes is only available in certain areas. The drama surrounding it is largely unfounded because many of us - anyone outside of Zillow Homes participating markets (which is still very limited for the time being), have to deal with a real-life agent, not a digital one. Redfin has been in the game longer and has a broader reach. In our specific area, Zillow is still what it has always been - a valuable, albeit a bit inaccurate, source of information for clients. What has changed about that is that now there are fewer listings on Zillow because many realtors are not paying the weekly fee to have their listing uploaded to the Zillow Platform. Up until late 2020, this was a FREE service provided by many MLS’s, now it’s a weekly fee charged by Zillow PER LISTING and so MLS’s have stopped pushing listings to Zillow automatically.
2. Experience in your area. For year's I've been explaining that Zestimates were not accurate. Why? Because someone or something in California (or wherever), who has never seen the inside of your home, has never driven the neighborhood and doesn’t know the inherent details of the town compared to the one next door is not going to be able to tell you what your home’s maximum value is in that market. You know who can do that? A skilled realtor. You know why? Because we are dealing with people every single day that tell us what they value in a home and how much they’d be willing to pay for it.
3. Maximum Value for your home. iBuyers claim that they can sell your home fast and to a preapproved buyer (usually themselves). They never claim to sell it for the maximum amount possible.
4. Marketing - An agent is going to market your home to the best of their ability. Every agent in their MLS is going to have a chance to see it. Every agent and potential buyer they have access to on social media, everyone in their mailing list, and most importantly, everyone in YOUR neighborhood - who knows people who want to live there. iBuyers just aren’t going to do that. They have a formula to see how much your home is worth and they offer that to you - minus the fees.
5. A discount. I know for certain that I am not the only realtor who discounts commissions for friends, family, and most importantly, repeat clients. Zillow charges you a 6% commission fee and a 2.5% Zillow fee. Redfin? If you sell & buy with them they only charge you 1% commission but what about the hidden fees? On their website “**Fees subject to change, minimums apply. Buyer’s agent fee not included, e.g., if buyer’s agent fee is 2.5%, seller will pay a total fee of 3.5%. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us.”
It sounds to me like a lot of smoke in mirrors and all you’d be saving is about or under 1%. When you sell with Redfin, the total real estate commission will likely cost 4-4.5% of your home's sale price. This includes Redfin's1.5% listing fee, as well as 2.5-3% for the buyer's agent commission. ... Buyer's agent fees typically cost 2.5-3% of the home's sale price, but realtor commission is always 100% negotiable.
You will never get the care and attention a local realtor gives you. iBuying brokers are not going to come in and work with you to stage your home and give it the facelift it needs to reach top dollar. They aren’t going to tell you about the different people who are looking at your home and they aren’t going to protect and guide you away from making a wrong decision. It’s a computer and potentially a corporate agent who is strictly guided in what to say, do and offer. So, go with your gut and get the most money for your home.
Don't believe me? Look for yourself.