You Can Sell Your Home Without A Realtor Through Instant Buyer Companies Companies such as Opendoor, RedfinNow and Zillow will pay cash for your house and buy it quickly. New numbers show these types of sales are growing very quickly, but is it a good idea?
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Who Needs A Realtor? iBuyers Pay Instant Cash For Your House

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Who Needs A Realtor? iBuyers Pay Instant Cash For Your House

Who Needs A Realtor? iBuyers Pay Instant Cash For Your House

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DAVID GREENE, HOST:

So if you're looking to sell your house and you don't want to deal with realtors, maybe you don't want people tromping through your living room, well, there is another option. Companies called iBuyers use these computer algorithms to determine an offer price. The downside of this - it is typically a lower figure than if you went with the traditional route. Here's NPR's Chris Arnold.

CHRIS ARNOLD, BYLINE: Janet Jenkins and her husband recently separated. She moved across the country to North Carolina, and they decided to sell their home outside of Los Angeles. And doing open houses to show the place was problematic, in part because Jenkins has a lot of pets, as in parrots and dogs and peacocks, and her husband was still living in the house with some of them.

JANET JENKINS: This is Wrangler. Wrangler is an eclectus parrot.

(SOUNDBITE OF PARROT SQUAWKING)

JENKINS: He gets into a lot of mischief.

(SOUNDBITE OF PARROT SQUAWKING)

JENKINS: And then, of course, you had the dog crate and you had the bird cages, and it was just not the best environment.

(SOUNDBITE OF DOG BARKING)

ARNOLD: You could kind of hear right now how it might get a little chaotic showing the place.

JENKINS: People - my friends refer to my place as the zoo (laughter).

ARNOLD: She knew the realtors would want the animals and her estranged husband out of the house, which would mean him catching the bird each time.

JENKINS: The parrot is not my husband's favorite pet.

(SOUNDBITE OF PARROT SQUAWKING)

ARNOLD: The house also needed some repainting and carpeting to get it really ready to show, and she didn't want to deal with that.

JENKINS: And so I started looking up home buying services and ran into Redfin.

ARNOLD: Instant buyer, or iBuyer, services are growing very quickly in parts of the country. Companies such as Redfin, Zillow, Opendoor and Offerpad will give you an offer to buy your house in about a day. Then they'll send an inspector by to take a closer look.

DARYL FAIRWEATHER: Redfin now can get you the money for your home in as quickly as a week.

ARNOLD: Daryl Fairweather is Redfin's chief economist. She says iBuying companies also offer flexibility so you can time the selling of your house perfectly to work with buying a new house and moving. The iBuyers then spruce up the houses that they buy and sell them again. Redfin today is releasing a report on all the homes being sold this way around the country.

FAIRWEATHER: In Raleigh, N.C., more than 7% of sales in 2019 were iBuyer sales, so it's becoming quite prevalent there. And then in markets like Phoenix, Charlotte, Atlanta, it's more than 5% of sales.

ARNOLD: And Fairweather says in many of those places, iBuyer sales doubled from the year before. Redfin is also buying homes in Southern California. In Janet Jenkins' case, she went online, answered some questions about her house and Redfin's computers ran their algorithms and offered her around $500,000. She actually thought that was a bit low and so did two of her friends who are realtors.

JENKINS: So I pushed back.

ARNOLD: Redfin then made her a better offer, and they had a deal. Jenkins says she thinks she could have made more, maybe $10,000, if she took the time to fix up the house herself and sold it the traditional way.

JENKINS: You do leave money on the table. And while we did, we didn't leave that much.

ARNOLD: Redfin does get a fee like a regular realtor commission. The company wouldn't say what its average profit per home is. So is it a good idea to try to sell your house this way? William Wheaton is a housing economist at MIT. He says the key to this whole thing is that it works in places where many houses are similar, places where a lot of these iBuyer sales are - Phoenix, Las Vegas. You have sprawling subdivisions where houses are almost identical.

WILLIAM WHEATON: There's not a lot of difficulty in pricing those houses. The ones with a swimming pool are worth a little more than the ones without. But you can do statistical modeling of that and just nail it, be 99% correct in predicting the price.

ARNOLD: And that means iBuyers can offer you just a little less than what the house is worth and still be confident that they can sell it for a little profit. But in areas where houses are not similar, say, older cities where some homes are newer, some are old, some are renovated, some are not, prices are all over the place, in those areas...

WHEATON: The iBuyers have to be really, really careful.

ARNOLD: So Wheaton says they're likely to offer you a very lowball price because they aren't really sure what the house is worth, and they don't want to lose money.

WHEATON: Exactly.

ARNOLD: That's why the iBuying companies so far are focusing on places with a lot of similar housing. Still, Wheaton says, in places like that, he thinks iBuyers could really change the way homes are sold in large parts of the country. Chris Arnold, NPR News.

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