What is an iBuying?
iBuying is a somewhat new concept, and one that has taken the real estate industry by storm. According to Opendoor, a current leader in the industry, “iBuying is a company that uses technology to make an offer on your home instantly.” This has disrupted the traditional home-selling process and offered a solution for those seeking an expedited and simpler selling process. But iBuying does beg the question, “Is the convenience and ease of this service worth its price tag?”
What is iBuying?
Each iBuyer offers a different business model and thus, operates according to a certain set of standards. Companies like Opendoor market themselves as a “full-service real estate company where you can buy, sell and trade in a home”, while also integrating other services such as title, insurance, repairs, and financing, all of which decrease moving costs and contribute to a more efficient home selling process overall. Generally speaking, though, iBuying means a seller opts for a company to determine the value of their home and subsequently make an offer on it. Once this transaction is complete, the iBuyer who has purchased the home is now responsible for owning, marketing and selling it. While convenient, this poses considerable risk for homeowners looking to sell their home.
Pros of iBuying
iBuying mirrors the traditional sales process of selling and buying a home. Many iBuying companies will pay an honest market price for a home (during the time of sale) and charge anywhere from 6-7% in service fees. As a result, the seller is given a competitive offer and is swiftly positioned to take the next step in their respective home-selling process.
The main appeal of iBuying is that it puts cash in hand quickly and gives the person selling their home more control over when they move, according to Opendoor. Moreover, if you are a distressed seller or relocating for a job, iBuying could be a perfect fit for you. Ultimately, iBuying is ideal for those seeking to “speed up” the aspects of selling a home that traditionally consume time, but as seamless as this process sounds, it doesn’t always measure up to the traditional model of selling a home. Below we will explore why.
Cons of iBuying
One of the biggest downfalls of iBuying is the potential risk involved with putting one of the most important transactions of your life in the hands of an investor or a company. The middle man, also known as the realtor, is cut out completely. Moreover, iBuying can be a considerable chunk of change, with closing costs as high as 10%, compared to the standard 5-6%. Transaction costs can add up very quickly and doesn’t always make convenience worth it. As good as technology can get, it will never replace the face-to-face interactions and care offered by a realtor. As Ben Casselman and Conor Dougherty of the New York Times put it, “The biggest headwind to this getting mass traction is human psychology,” he said. “The bigger the potential downside, the more risk averse they are.”
At the end of the day, iBuying simply lacks the personal touch that a realtor offers. There are a few potential benefits of saving time and (sometimes) saving money, but for many, the risk of using iBuyer far outweighs the potential benefits.
Renting vs. Buying
Homeownership is a huge milestone in adult life. It can also be a financially overwhelming prospect for those considering it. Luckily, there are some potential options for helping with your down payment, and there are plenty of benefits to purchasing instead of renting.
Benefits of Buying As Early As Possible
Purchasing a home may feel daunting at first, especially if you have a history of renting, but there are plenty of reasons to consider it. Firstly, if you know you will be living in a certain area for at least three to five years, buying a home should be on your radar. Here’s why:
- The home is completely yours. You have free reign to do with it what you please. (Yes, even if that includes painting the walls your favorite shade of green.)
- You can sell when you’re ready. Without a binding contract or lease, you don’t have to worry about a specific timeline. Sell when you feel ready.
- Stop paying rent. While you’ll continue to pay monthly costs with your home, the money you’re spending through ownership is much more of an investment than renting.
Ultimately, homeownership gets easier over time. Generally, the biggest deterring factor is the initial down payment. After all, according to U.S. News, 61.7% of millennials say they cannot afford it. But what if we told you there’s hope for that?
Potential Down Payment Help For Buying
With the creation of down payment assistance programs, those who once thought they weren’t adequately prepared for homeownership now have the help they need, and can more fully transition from renters to homeowners. Down payment assistance programs take three forms:
- Down payment grants. This generally involves providing grants for closing cost funds so they do not have to be repaid.
- Forgivable second mortgage programs. Traditional second mortgage programs generally charge interest, but with forgivable second mortgage programs, there is a possibility for a zero percent interest loan when certain requirements are met.
- Matched savings program. Open a new bank account dedicated to saving for your down payment. A designated entity will make a contribution that matches yours.
While you must be qualified in order to receive any of the above, it’s certainly worth looking into. Eligibility is generally determined by income and where you live.
Start Small, Grow Over Time
Buying your first home can be exciting and is often a memorable experience. But it’s also important to weigh the costs and not overextend yourself on your first home purchase. Buying a smaller home is advantageous for a few reasons:
- With a smaller home, less can go wrong. You can find comfort in knowing that with less square footage, you’ll likely be spending less in maintenance costs.
- Smaller monthly payments. If you’re accustomed to a monthly rent amount, see if you can get a lender to secure a similar number for your mortgage payment so you’re not suddenly overwhelmed by higher costs.
- Home value declines. As a general rule of thumb, homes increase in value by 3-5% per year, but they can always decline in value as well. So while there is potential risk involved, starting small is one way to err on the side of caution while still reaping the benefits of home ownership.
Consider your plans for the future, your budget, and your current lifestyle. This should tell you what you need to know about your being ready to buy a home. If you feel prepared to take the next step, know there is very realistic hope for you financially. And get excited, because this is one of the best and smartest decisions you can make for your future.
13 Ways to Prep Your Home for Selling on the Spring Market
The spring season has always been a great time to sell a home. The clouds are finally starting to part, flowers are blooming, and people are wanting to settle in to their new home before the next school year. But the season alone can’t sell your house. Here are 13 ways to prep your home for selling on the spring market.
1. Add barkdust to your yard and improve overall landscaping.
Mow your lawn, trim the bushes, make sure there are no leaves on the street and tend to your garden. There’s nothing better than fresh flowers in springtime! Spicing up your curb appeal frames your house in an appealing way.
2. Buy a new welcome mat and make the front door inviting.
The front door area serves as a buyer’s first entry point into your home. Let buyers know they are welcome.
3. Pressure wash everything.
Freshening closeby pathways, decks, sidewalks, and your driveway by pressure washing brightens the areas surrounding your home and attracts buyers.
4. Clear your roof and gutters.
Grab a ladder, blow off the roof, and clear out your gutters. It’s not the most fun job but it’s a great way to increase curb appeal and show that your house has been well maintained. It’s easy to let this step fall through the cracks, but cleaning up your exterior is critical for presentation.
5. Neutralize odors.
The first smell to meet a buyer’s nose also forms a lasting impression. Make sure there are no lingering odors throughout your home and spray air neutralizer to freshen things up.
6. Make interior cosmetic updates.
Give your home a fresh coat of paint, attend to worn carpet, and fix any knicks and scratches throughout your home. These small details are things that you are used to, but your buyers will notice.
7. Update light fixtures.
Unless the lights in your home are original period pieces intended to make a statement, replacing light fixtures is an economical way to update your home and truly make things shine.
8. Do a full cleaning of your home.
Vacuum everything, mop your floors, clean bathrooms, wipe down kitchen counters and other surfaces, and make every surface shine. It should sparkle!
9. Remove any and all clutter + depersonalize.
It’s important for potential buyers to be able to picture themselves in a home, and the best way to do that is to strategically place furniture. Buyers want to envision themselves and their own furniture in your home. Paint the walls of your house a neutral color and keep decor simple so you can attract a wide range of buyers. The idea here is for your house to look like a model home.
10. Organize closets and drawers.
Similar to decluttering, you want to make sure that things are organized when buyers look into certain spaces. Consider renting a storage unit for your extra belongings while you are showing your house.
11. Clean the basement.
Believe it or not, people do check your basement. Tidying up and making certain there are no lingering odors is crucial.
12. Make repairs.
Making necessary and noticeable repairs is crucial to the presentation of your home. Attend to major defects like a broken window or missing blinds. These seemingly small defects can be giant roadblocks in the buyer’s eyes.
13. A personal touch goes a long way.
Bake chocolate chip cookies (and maybe some gluten free ones too) before a showing and put out a fresh bouquet of flowers. Your home will be that much more inviting, and everyone loves cookies!
Is It a Good Fixer-Upper or a Rotten One? How to Tell
Reality television has added some glitz and glam to the idea of buying a fixer-upper, turning it into your dream home, and living happily ever after. However, the truth is that it’s never as easy as it looks on TV. It takes time, money, and a whole lot of hard work to turn a fixer-upper into a dream home. But it can also be extremely rewarding, if you buy a home that’s a good candidate for being fixed up—here’s what to look for. Continue reading “Is It a Good Fixer-Upper or a Rotten One? How to Tell”
What You Need to Know About Buying an Older Home in Portland
There are a lot of good reasons to buy older homes in Portland, like established neighborhoods, high-quality construction, price, and character. But a stunning older home is a little bit like a well-preserved celebrity—it’s hard to be sure exactly what work has been done to keep up appearances. Continue reading “What You Need to Know About Buying an Older Home in Portland”