Forget 3%, I am talking about (in some cases) a 14% sales commission, average 12%, is being received for selling a property and it is popular and it is growing worldwide - and the seller is not complaining.
How many times do you hear "I didn't get the listing as I wouldn't lower my commission enough" or "the other agent reduced her fee to 1%". So many agents blame the fee for not getting the listing and this model has proven the commission fee is not the reason for not getting the listing. Sellers will pay more if you give more.
Enter the iBuyer and if you aren't aware of them, you better get learning.
In essence, an iBuyer is an entity that buys homes direct from the consumer, bypassing the agency. They make fast cash payments for properties, at near market value and the seller receives their cash instantaneously. Example, a property could go to market at $800,000. Typical agent 2-3% and 30 to 90 days on market. The iBuyer agrees to pay $780,000 instantly and deducts an average 12% (between 10% & 14% depending on the iBuyer) from the total. Instant cash and fast turn around for the vendor.
So what does the seller get when using iBuyer and paying 12% for the privilege? What is it that they are receiving that they don't mind outlaying for the heaving price tag? The answer is instant cash. No stress, no worry and a super fast sale.
It should be clarified that the iBuyer does not name the 12% payment a commission, they instead are calling it a re-marketing fee.
The iBuyer concept was largely made popular by groups such as Opendoor and Offerpad. Recently Zillow, the US' largest property portal has announced it will enter the iBuyer market and Keller Williams, the countries largest franchise group has said it will commence its iBuyer delivery in Q2 2019.
What does this all mean for the property industry? What does a 12% fee for selling a house mean to the industry and does the traditional real estate model work when iBuying becomes the leading form of property sale?
Bernice Ross, of Property TV, recently discussed the role of an iBuyer with Byron Short, of Success Property Brokers in Scottsdale, Arizona, USA. Bryon is facing the largest iBuyer market in the US right now. Watch the episode here ... propertytv.io/news/v/221 It is a very interesting discussion, well worth the watch.
The most important consideration here is not that iBuyeing will take over the industry as the preferred sales option, it is that iBuying needs to be an option for the seller and should be provided by the real estate agent. All agents really should be considering an iBuyer option when speaking to the prospective vendor and let the vendor decide, else, the seller could just decide to use an iBuying service that excludes the agent, completely.
Not all sellers will opt for a 12% fee to sell their property, but some will and there is no better person to offer the services than the real estate agent. "Here you are Mrs Vendor, here is our proposal to sell your property and yes, if you prefer, we have the ability to iBuy as well"...
I think Keller Williams, the US' largest franchise group, has the right strategy, iBuying as part of the traditional offering. www.therealdeal.com/2019/04/23/keller-williams-is-ready-to-unleash-its-ibuyer-program.