The Pros and Cons of Using an iBuyer to Sell Your House

“Looking to move? We will pay instant cash for your home! Call ……”

You might have seen that kind of offer on a billboard or a homemade sign posted to a telephone pole.

The concept has been around for years. Want to sell your home fast? There’s usually someone willing to buy it – as long as you’re willing to take less than market value.

The newest take on this type of online house flipping is called iBuying – an automated, much more formal method of selling your home quickly. Many companies in the online real estate industry, like Opendoor, Redfin, Offerpad and Zillow have jumped in the iBuyer game, with mixed results.

For Zillow, the results have been disastrous.

The company shut down its iBuyer program, Zillow Offers, this month – less than two years after it launched – after buying thousands of homes above current asking price and losing $304 million due to the program during Q3 2021.

So what does that mean for the iBuying business?

Joshua Roberson is a lead data analyst at the Texas Real Estate Research Center at Texas A&M University. In an article he recently wrote for Barron’s, Roberson said, “iBuying is here to stay, but it’s not for everyone, nor is it likely intended to be . . . Zillow may be under a cloud, but elsewhere, the sun is shining.”

Whether or not the sun is shining on the iBuyer business may be entirely up to home sellers. If you’re looking to sell a home, and considering using other major iBuyer companies like Redfin or Opendoor instead of a local real estate agent, here are a few things to consider.

Who buys ugly houses anyway? Here’s the process behind those roadside signs.

The Pros and Cons of iBuying

Some benefits of using an iBuyer:

Low Hassle

iBuying is convenient. Unlike in a traditional real estate transaction, when selling to an iBuyer you don’t need to worry about staging and glamming up the curbside appeal. You don’t have to worry about giving up your Sundays to open houses or leaving every time the real estate agent wants to show. You simply sell your home to the iBuyer, and they take care of the rest after you’re gone.

Quick Sell

The uncertainty of selling a home is one of the most difficult aspects of the process. You don’t really have the cash to buy a new home until you sell your old home, right? But you still want to look for that new home to get an idea of what’s available. And what if you find that “perfect” house before you’ve sold your old house…what, then? This is even more complicated if you’re making longer moves to different states or across the country. An iBuyer takes all those variables out of play. The iBuyer makes an all cash offer, which is usually good for at least a week, you accept or reject it and move on.

Very Predictable

You know you’re going to get an offer. You know when you’ll get an offer, and when you’ll have to move. You know exactly when the movers need to arrive. You don’t have to worry about the purchaser’s refinancing falling through. You don’t have to oversee a bidding war or haggle with the buyer’s agent (though you can negotiate with the iBuyer). The iBuying process is very clear cut and takes a lot of stress out of the selling process.

Some reasons you might want to reconsider using an iBuyer:

Uncertain Sales Price

iBuyers use algorithms, called an automated valuation model, to determine a house’s value. They’ll tell you they offer “fair market value,” but it’s hard to really know if that’s true. In Zillow’s case, they actually overpaid for a lot of homes during the pandemic, but that seems to have been an exception in the iBuyer business model. iBuyers will want to purchase your home at lower cost so they can turn it around and make a profit quickly. So, usually, you’ll be accepting a lower offer than if you sold through a real estate agent.

Some Restrictions

You’ll need to be in a real estate market an iBuyer is interested in, and you’ll also need to have the right type of home an iBuyer wants. The “right” type of home is dependent on the market and what qualifies as a typical home in that area.  iBuyers tend to focus more on larger cities, so if you live in a rural part of the country you may be out of luck.

Other Costs

With an iBuyer, you’re trading convenience and speed for the possibility of a lower offer, paying more fees, and taking another hit if your house needs repairs. One study said that iBuyers typically charge a service fee of anywhere from 6% to 9%, which is several percentage points higher than licensed real estate agents charge. Also, after you accept an iBuyer’s offer, they’ll do an assessment on your house. Any repairs needed could be taken out of the final sale price.

Should You Use An iBuyer Instead of a Real Estate Agent?

That’s a question only you can answer.

Though Zillow has closed its iBuying program, other iBuyers like Opendoor, Offerpad, and Redfin are still out there going strong. You’ll likely enjoy the convenience an iBuyer offers, but that will come at a price.

Do your research and weigh the pros and cons to determine if an iBuyer is right for you. Selling your home is one of the biggest financial transactions you’ll ever make, so make sure you know what you’re getting into – whether you use a traditional real estate agent or an iBuyer.

Pro Tip

Three questions to ask real estate agents before hiring one.

Robert Bruce is a Senior Writer for The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Dear Penny: Should I Be Mad That My Husband Left Me Off the Mortgage?

Dear Penny,

My husband and I recently bought a house. In the flurry of paperwork, I didn’t realize that he had applied for the loan in his name only until it was all settled. I’m on the title with him, but not the loan.

Aside from being mad that he made the decision unilaterally, how mad should I be about the repercussions of this decision? Rather, what are the pros and cons about not being named on our home loan?

-L.

Dear L.,

Sometimes a married couple can save money by only financing a home purchase in one spouse’s name. This typically occurs when one spouse has a low credit score or has substantial debt that’s in their name only. Obtaining a mortgage in the more creditworthy spouse’s name only could result in a lower interest rate, provided that they qualify based on their income alone.

Of course, this is a decision that spouses should make together. I trust that you’ve asked your husband why he didn’t talk this through with you and that you’re satisfied with the answer.



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But you didn’t ask how angry you should be at your husband. Your question is: How mad should I be about the repercussions?

I don’t see any dire consequences for you as the result of his decision. Theoretically, this could even work in your favor. Because you’re on the deed of the house, you own 50%. But because you’re not on the mortgage, you’re not liable for this debt.

Realistically, though, I’m not sure how much that matters. Since the two of you bought the house while married, it would probably be divided up in court with other assets and debts you acquired during the marriage should the two of you divorce.

Otherwise, I can think of two possible drawbacks for you. The first is that you’ll probably need to go through your husband to communicate with the lender since only his name is on the account. He should give you his log-in credentials so you can confirm that payments are being made on time.

The second is that even if you’re both contributing toward mortgage payments, he’s the only one who’s on record as making those payments in the eyes of the credit bureaus. If you’re trying to improve your credit, you’ll have to do so with an account that has your name on it.

If not having your name on the mortgage bothers you, you could always look into refinancing it in both of your names after at least six months have passed. But that will be up to the bank’s discretion. Since your name is on the deed, I’m assuming your husband went the solo route for the interest savings. I doubt you’d want to refinance if it results in paying more — and keep in mind that by the time you’re able to refinance, interest rates could very well be higher.

Regardless, it’s essential that you maintain a credit history in your own name. If you don’t already have one, you should open a credit card in your name and pay off the balance in full each month.

I hope this dilemma has prompted you to set some ground rules about how the two of you make decisions about money. Financing a purchase in one spouse’s name makes sense in some circumstances. But both spouses need to be comfortable with that arrangement.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Dear Penny: Can I Refuse to Inherit My Mom’s Dump of a Property?

Dear Penny,

My siblings and I are being bequeathed our family home in my mom’s will when she passes. My siblings currently live in apartments on the property. They are several years in arrears for rent they owe and do not maintain the property. 

I have clearly stated for several years that I do not want to be a part of the shared property due to what I’ve witnessed over the years and the resulting personal and financial exposure that comes with it. Unfortunately, my mom didn’t remove my name. She now has a cognitive impairment that prevents her from doing so.

Is there a way of removing my name from the asset and/or limiting the potential financial and personal liability that comes with it?

-D.

Dear D.,

You can’t get your name out of your mother’s will, but you’ll be able to disclaim your inheritance when your mother dies. By doing so, you’re simply refusing to accept your stake in the property that she bequeathed to you.

Disclaiming an inheritance isn’t that unusual. People choose to do so for a host of reasons: They’re buried in debt and they don’t want creditors to seize the asset, or they’re worried that the asset could make it harder for them to qualify for college financial aid, Medicaid or other benefits. Wealthy people sometimes disclaim an inheritance to reduce the size of their taxable estate.

Not wanting to own a poorly maintained property with potentially hairy family issues is as good a reason as any. In fact, you don’t need to provide any reason for disclaiming.



Have A Money Question?

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financial planner and the voice of Dear Penny.

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There’s really nothing for you to do right now since your mother is still living and unable to revise her will. You’ve been clear about the fact that you don’t want this property, but if you do decide to disclaim it, you may want to communicate that plan to your siblings. That way, at least they’ll know upfront that they’ll be on their own for taxes and long-deferred maintenance. They can also plan accordingly in case inheriting a larger share than they expected jeopardizes any assistance they receive.

When your mom dies, you’ll have to disclaim the property in writing within nine months. You’ll need to provide a copy of the disclaimer to the executor of your mother’s estate and the IRS, as well as file a copy at the courthouse in the county where your mother is living at the time of her death.

Once you’ve disclaimed the property, you won’t be able to direct what happens to your share. It’s important to note that disclaiming an inheritance is irrevocable, meaning that you can’t change your mind later on. That doesn’t sound like an issue since it’s pretty clear you know this is the right decision.

Because the rules can get complex, I’d suggest consulting with an estate planning attorney when your mother dies. You want to make sure everything is handled appropriately so that you can be confident you’re in no way liable for the property.

Inheritances can be the source of major family tension. Fortunately, it sounds like you can avoid any drama by walking away from your stake.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com or chat with her in The Penny Hoarder Community.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

3 Questions to Ask Real Estate Agent Before Signing Contract

Real estate is a rapidly evolving industry, and unless you’re an old hand at buying and selling a house, you might need guidance about how to find the right real estate agent.

Where do you start looking for an agent, and how do you go about interviewing them?

We’ve compiled the top three questions to ask a real estate agent that will help you find the best one for the job. These are essential questions to ask any agent before you hire them, plus a few tips on where to find the most qualified agents in your zip code.

1.What’s Your Relevant Experience?

While you may have heard that it’s important to find an agent with X many years of experience or X many sold houses in the last year, there’s a better way to find out if an agent is the right fit for you. Ask about their experience.

“Do you have experience working with my type of buyer?” That’s the No. 1 question people should ask prospective agents, according to James McGrath, co-founder of the NYC real estate brokerage Yoreevo.

“Every agent is presumably doing deals, but if they usually work with retired couples, they might not be a great fit for a first-time home buyer,” said McGrath.

“Probe deeper and ask about the last two buyers (like you) that they worked with,” he added.

This is important because high sales and years on the job can be largely irrelevant if the agent hasn’t worked with a client like you before.

“Years of experience does not translate into deals of experience,” McGrath said. Buyer or seller, be sure to ask prospective agents about their last clients. It’s sure to quickly give you an idea about their ability to meet your expectations.

2. How Do You Plan to Market My Home?

If you’re a seller in today’s market, plan on asking your agent how your listing will be promoted. This isn’t simply a matter of advertising in all the right channels, but also making sure your home looks really good online.

According to a study from the National Association of Realtors, 97% of buyers search online for homes — which makes having a strong digital presence a must.

“A house being marketed today needs to be similar to a magazine layout,” said home stager Karen Gray-Plaisted of Design Solutions KPG. “The key is to find an agent who believes in ensuring the house is presented well in all the marketing they do.”

This might mean finding an agent who works with stagers and photographers, and quite possibly even a few marketing gurus. Since most agents offer marketing services on one level or another, focus on finding out exactly how their team operates, and use that info to gauge their ability to make your home irresistible to buyers.

3. How Has the Pandemic Changed the Way You Do Business?

This one isn’t so much about the coronavirus as it is about finding out what’s permanently changed in your area with regards to buying and selling, and if you and the agent are on the same page as far as health precautions. Depending on your pandemic experience, you may not want a bunch of strangers stomping all over your house to check it out. On the contrary, you might hate online meetings — something a lot of agents are still doing.

“While the number of precautions has gone down here in Wisconsin, you’ll still see a lot more virtual services, like listing appointments, closings, etc. happening online,” said Realtor Al Wisnefske of the Land & Legacy Group.

Another change that seems to be sticking around? Appointment-only open houses. This is a good one to know about, since you may not be able to just “pop in” and see a house whenever you want.

“We are in NYC where COVID is under control, at least for the moment,” said McGrath. “Everyone is still wearing masks (more out of courtesy than an actual requirement), but one big change that happened during COVID is that 90% of open houses are still by appointment only.”

Depending on the current restrictions in your area, it’s a good thing to ask any agent you interview what their process looks like, and be sure you’re comfortable with that protocol.

A real estate agent smiles.

How to Find the Right Agent

Now that you know the key questions to ask, here are a few ideas for finding the ideal agent.

Get a Referral

Referrals are hands-down the best (and easiest) way to find a real estate agent who will make you happy. Why? Because if they made your friends happy (and your situation is anything like theirs) then chances are they can help you too.

“Word of mouth is a great place to start,” said Christopher Totaro of Warburg Realty. “Having a referral from a person who has worked with an agent gives you the ability to get real insight as to how that agent performed.”

It will also help you find out how they handle marketing strategies, and if recent enough — how they’re helping clients navigate deals during the pandemic.

Check Online Reviews

This might sound too easy, and that’s because it is. Just like your favorite restaurants, Yelp and Google Maps are both really great places to find out if people like working with certain agents or not.

“The best way to find an agent is to ask friends for a referral,” said John Gluch, founder of the Gluch Group. “The second-best way is searching Yelp. Yelp does a great job of ensuring reviews are legitimate and that the recommended agents on Yelp have truly earned it.”

Before hiring an agent, do a quick online search to see what others have to say about them.

Other Considerations

A lot goes into buying or selling a home, and the process will get easier the more prepared you are. If you’re planning to buy a home in the near future, then you might want to consider things like your credit score, and if you’ll qualify for the mortgage you need. If you’re selling, be sure to ask your agent how saturated the market is, and how to make your listing a competitive one.

As always, take the time to consider all of your options before diving into anything— and don’t be afraid to stay put if the timing doesn’t feel right.

Contributor Larissa Runkle specializes in finance, real estate and lifestyle topics. She is a regular contributor to The Penny Hoarder.  

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

The Housing Market’s Crazy. Before You Buy a Home, Do These 6 Things.

The housing market is turbocharged these days because of a shortage of homes for sale is leading to heavy competition between home buyers. That keeps pushing home prices higher and higher.

If you’re looking to buy a home, you better buckle up.

The housing market remains hot, even though things might be starting to slow down just a little bit, according to news sources like CNBC and The Wall Street Journal, among others. Low mortgage rates continue to spur robust demand, and the number of houses for sale is well below normal.

If you want to buy your own home, you’ll need to be smart and strategic about it. Consider these six tips:

1. Boost Your Credit Score

Looking to buy a home? Then there’s something you need to start thinking about right now: Your credit score. We know that sounds boring, but it’s actually super important, if you’re going to be signing up for a mortgage sometime in the future.

The higher your score is, the better deal you’ll likely get on your loan. So a good credit score can save you tens of thousands of dollars over the life of a 30-year mortgage.

If you’re looking to get your credit score back on track — or if you just want to bump it up some more — try using a free platform called Credit Sesame.

Within a couple minutes, you’ll be able to see your credit score, as well as a breakdown of what factors are contributing to your score and personalized tips on how to manage your credit better. With a couple of strategic decisions, you can improve your credit, saving you thousands.

2. Grow Your Money 16x Faster — Without Risking It

To buy a home, you’re going to need to start saving up money for a down payment.

A debit card called Aspiration lets you earn up to 5% cash back every time you swipe the card and up to 16 times the average interest on the money in your account. Plus, you’ll never pay a monthly account maintenance fee.

To see how much you could earn, enter your email address here, link your bank account and add at least $10 to your account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”

3. Get Paid Every Time You Buy Toilet Paper

To save up that down payment, you’re going to want to find new ways to save money on everything else. For example, groceries account for a good chunk of your budget. Everybody’s got to eat. You may as well earn a little money back while your groceries are being bagged up.

A free app called Fetch Rewards will reward you with gift cards just for buying toilet paper and more than 250 other items at the grocery store.

Here’s how it works: After you’ve downloaded the app, just take a picture of your receipt showing you purchased an item from one of the brands listed in Fetch. For your efforts, you’ll earn gift cards to places like Amazon or Walmart.

You can download the free Fetch Rewards app here to start getting free gift cards. Over a million people already have, so they must be onto something.

4. Stop Overpaying for Stuff Online

Here’s another way to save money. Wouldn’t it be nice if you got an alert any time you’re shopping on Amazon or Walmart.com and you’re about to get ripped off?

That’s exactly what this free service does.

Just add it to your browser for free, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper. Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.

Let’s say you’re shopping for a new pair of shoes, and you assume you’ve found the best price. Here’s when you’ll get a pop up letting you know if that exact pair of shoes is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.

In the last year, this has saved people $160 million. You can get started in just a few clicks to see if you’re overpaying online.

5. Knock $540/Year From Your Car Insurance in Minutes

When it comes to saving up for a down payment, cutting your other bills can make a huge difference. So when’s the last time you checked car insurance prices?

You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $540 a year. That could be money back in your pocket just for taking a few minutes to look at your options.

6. Stop Paying Your Credit Card Company

Getting a mortgage for a house is a form of debt. But credit card debt is the most expensive kind of debt there is, and your credit card company is just getting rich by ripping you off with high interest rates. However, a website called AmOne can help you fight back.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

It takes two minutes to see if you qualify for up to $50,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

Buying a home is a major step in life. If you follow these strategies, you’ll get closer to your goal.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He’s a homeowner.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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