The iBuyer Buy-Box
My last blog introduced the iBuyer concept. Check it out to see how these companies work and how they compare to traditional home sales.
These investment companies put a restriction on the types of houses they purchase. This is called a buy-box. In other words, it is a list of criteria that the property must meet to be eligible for purchase. The buy-box includes the location of the home - they are only in a few select markets. Most iBuyer companies have a ceiling on the maximum value of the house. (Offerpad has a maximum of $400,000 in DFW and OpenDoor has a maximum of $300,000) Some companies will not purchase a home if it is on a septic system. Other criteria might include the age of the house, HOA costs, and restrictions such as an age-restricted community, or a gated community. Most of them also have a limit on the size of the lot.
Weighing the Pros and the Cons
The buy-box is one of the pitfalls of these programs. You can't blame the investors. They are in business to make money. They need to purchase homes that they can sell.
As I mentioned in my previous blog, these programs are great for some circumstances. I think it is essential to weigh the pros and cons of selling your home to an iBuyer. Below are just a few.