Wall Street recently decided that they wanted in on real estate commissions paid to agents. Like a 4 year old left alone with a candy jar, they can’t stop gorging themselves on new ideas designed to destroy established business models.
iBuyer Programs
One of the ways they came after commissions was with the introduction of iBuyer programs. These simple programs offered a quick, no frill sale, for less than market value but with none of the complexities of a traditional sale. That in and of itself is a decent business model, but Wall Street, having a never-ending satiated thirst for increased profits, thought they could dupe enough people to change how homes are sold. iBuyers started to bash agents and lie that you would get more money if you sold directly to them. Many people fell for this during the hottest part of the Covid market. Why have Typhoid Mary touching your home with her Covid covered hands when you could quickly sell it for more to an eager iBuyer? Then the Federal Trade Commission (FTC) discovered that iBuyers paid 17% less for a home compared to a sale through the traditional model. Oops!
High Price to Pay
A recent study by Bright MLS (Bright MLS is the 2nd largest MLS in the country with over 18% of the total listings for sale in the country) showed that on average OFF MARKET sales, meaning iBuyer sales, sold for 17% less than comparable homes sold with an agent. The study looked at 442,829 comparable home sales spanning the Bright region, over a 2 year span.
The FTC has rules against praying on unsuspecting people by making claims with no basis in fact. They came down hard on the biggest iBuyer in the country to the tune of a $62 Million Dollar settlement. Wall Street can trip itself up on its bags of money once in a while.
Lessons Learned
Two lessons come to mind about the current situation in the real estate market. The first is that if something sounds too good to be true it usually isn’t true. Why do we have to keep learning this lesson over and over? The second lesson is that no matter how many new ideas and models come out of Wall Street, the best way for you to get every penny you should from the sale of your home is to hire a good local agent. Technology companies have a tendency to want to introduce complex computer programs into a situation where the best way is still the traditional way. In this case, hiring a realtor is STILL the best way to sell your home and get the most money for it.
That’s where a trusted real estate agent comes into play for your benefit. Talk to one who knows the market you are looking to buy or sell in and get the real information on what your options are. Dripping Springs Elite is NOT a brokerage. It is a professional organization comprised of top real estate agents in the area from different brokerages who collaborate and work together to make buying and selling in their town the best it can be for their clients. We are also dedicated to building up our community and its nonprofits to strengthen the quality of life for all residents. Contact one of our agents today https://drippingspringselite.com/#agents.
Article created for DS Outlook Sept 2022: https://www.dsoutlook.com/category/current-issue/