Gary Keller of Keller Williams (Credit: iStock and Wikipedia)
Real estate companies from Zillow Group to Keller Williams have jumped on the nascent iBuying craze. But what’s the cost to home sellers who sell their homes with these services?
An extra 13 to 15 percent.
That’s according to a new study from data firm Collateral Analytics, which aimed to put a price tag on the cost of using iBuying platforms, which allow buyers to purchase homes instantly online, Inman reported.
However, if selling a home with an iBuying company may tack on extra fees compared to traditional brokerages, among other costs, the service may be worth it. “For some sellers, needing to move or requiring quick extraction of equity, this is certainly worthwhile, but what percentage of the market will want this service remains to be seen,” the study concluded.
Demand for the service is a question playing out in real time, as traditional brokerages like Keller Williams work to launch their own iBuying platforms in an effort to cash in on the craze, pioneered by startup Opendoor.
In the second quarter, Zillow’s revenues ballooned 84 percent to almost $600 million, thanks in part to the launch last year of its iBuying program, Zillow Offers. But the new product also had a cost for Zillow, which saw its losses come in at $72 million in the second quarter, versus $3 million in 2018.
Instant homebuying also has some risks, the study found. These include vacant properties becoming more susceptible to break-ins and the portals’ valuation models overvaluing properties owned by more informed sellers. [Inman] — Mary Diduch