Changes in Real Estate. A Twist on the Old?
Was the saying “Everything old is new again”? I think so, but frankly, a lot of what is new in the real estate industry is not just a twist on old ideas. In the 1980’s ERA Real Estate Franchise advertised “If we can’t sell your home, we will buy it”. Changes in real estate today involve a multitude of companies (and agents) advertising to buy your home. These are now called “iBuyer” and if you want to know what an IBuyer is, here is a link to housing wire explaining it: https://www.housingwire.com/articles/48852-wth-is-an-ibuyer .
Briefly, this is how it works
“If the seller accepts the offer, they will then receive a visit from an inspector provided by the iBuyer to evaluate the condition of the property. Any problems found that need repair will be itemized and presented to the seller for review. At this point, the client has the option to repair the items from the list or deduct the cost for the repairs from the offer made from the iBuyer. Once the final repairs are complete or the price is adjusted, the home is sold [and] the iBuyer and the seller walk away within just a few days from the start of the process.”
The offer from the iBuyer is a discount from the net market value the seller would receive if they listed and sold the home with a real estate agent. If you are in a hurry to sell, you will accept the discount and move. You will also agree to a discount on the cost of repairs. When I first got into real estate sales, I was taught to ask questions to discover if the seller motivation was time or money. Ibuyer programs are looking for sellers motivated by time and convenience more than money.
For Baby Boomers with a large amount of equity. Their home may have multiple repairs needed to bring their home into marketing condition. Accepting an iBuyer offer may be tempting. Many Boomers have resources, but they may not have a lot of cash available to use and have limited monthly income.
A repair option is companies will partner with sellers to repair the home. The idea is to predetermine the repairs, the cost, agree on what will be done and how much the cost of the repairs will be. The company then hires the contractors, completes the repairs and when the home closes, receives the agreed amount for the cost of repairing. For full details go to this link: https://www.curbio.com/wp-content/uploads/2019/05/Sellers-Guide-to-Curbio.pdf . This link is to Curbio, one company that will work with home sellers to do repairs.
Remember the movie Twilight zone “want to see something really scary”. Analytic companies are determining if you will sell your home in the next year to 24 months and if so, are you motivated by selling quickly or maximizing your net sales price. August 21st and 22nd in Seattle, the National Association of Realtors had a conference bringing together real estate agents, real estate companies tech teams, tech companies, and Wall Street investment companies that invest in real estate technology. The number one technology that wall street is investing in is the analytical companies determining homeowners and small real estate investors motivation. They want to get to these people first to see if you will walk away from some of the equity.
New Changes in Real Estate are Actually New
America is just starting to see a change in the way real estate is bought and sold. The changes in real estate are good for some, but not for all home buyers and sellers. Within the next few years, most home sellers and buyers will be working with real estate agents that use a multitude of programs so they can match your needs more closely. While Wall Street wants to remove the agent from the mix, the analytical companies have determined that both home sellers and home buyers want and need human communication through the process. So, for the foreseeable future (one or two years maybe) expect that you will still work with a human, not a robot or “computer bot” to help you with selling and buying a home. However, you will also have a huge mix of different ways to both buy and sell homes, duplexes and other real estate.
In October, the Northwest Multiple Listing Service will allow the Real Estate companies that are members to post commissions to be paid to selling agents. Many companies will allow buyers to reduce the price by not using an agent to help buy the home or property. If you’re buying a home, you will want to converse with the agent you work with about the fee they will receive.
Today, home sellers have the option to sell at no commission paid by the seller. This program requires the buyer to pay the full fee to both the listing company and the buyer’s agent company. Kind of the opposite of what has been the process.
As these changes in real estate continue to evolve, sellers and buyers will find that most real estate agents are almost as shocked by all the changes as they are. But as the other saying goes, the only thing that is consistent is change.
If you want more information contact Jim Clifford at 253-826-7513 or email at [email protected]. Jim has over 40 years of experience helping clients and customers sell and buy homes, condos, multifamily and vacant land in Washington.
Read more about real estate commission changes.