ExpressOffers
Questions and Answers
What is an “iBuyer”?
An “iBuyer’’ is generally known in the real estate industry as a real estate investment company that uses an automated valuation model and other technology to identify, and then purchase, homes like yours that meet its purchasing investment criteria. After identifying homes that meet its investment criteria, an iBuyer may provide homeowners with written offers to purchase their homes (what we refer to as “Express Offers” in our Express Offers program), often on terms that may be favorable to a homeowner in certain circumstances, as described below in question, "What are the benefits to a homeowner for selling to an iBuyer?" A homeowner is never obligated to accept an iBuyer’s offer. If a homeowner accepts an iBuyer’s offer, then the homeowner and iBuyer enter into a purchase contract for the sale of the homeowners home to the iBuyer.
After an iBuyer purchases a home, it may make improvements and/or repairs to the home, and/or shortly thereafter resell the home to a third-party buyer for a profit, or rent the home to tenants. It is our experience that most iBuyers choose to resell the homes they purchase to third-parties for a profit, while only some choose to rent the home to tenants.
What are the benefits to a homeowner for selling to an iBuyer?
Before an iBuyer submits an Express Offer to a homeowner, it may first notify the homeowner of its proposed purchase price, estimated closing date, and other important purchase terms. These terms will be contained in a document referred to as a Letter of Intent. The homeowner will have the freedom of conveniently accepting or rejecting (and in some instances, countering) the iBuyer’s proposed terms. If the homeowner approves of the iBuyer’s proposed sale terms, then the iBuyer and homeowner will enter into a written purchase agreement. If the homeowner counters the iBuyer’s proposed terms and the iBuyer accepts, then the iBuyer and homeowner will enter into a written purchase agreement based on the homeowner’s counter-offered terms.
Oftentimes, an Express Offer is presented to a homeowner without the iBuyer ever walking through the home it wants to purchase. Removing that step in the process avoids many “staging” and other inconveniences such as having potential buyers frequenting the home to view it, and the homeowner having to hastily clean up and leave their home when potential buyers come to see it. An Express Offer provides other conveniences to a homeowner, such as reducing logistical issues involved with coordinating the timing of the closing on the sale of their current home with the closing on the purchase of their new home, and/or coordinating the time of their move, that are often experienced by homeowners in the traditional home selling process.
In addition, an Express Offer will often provide for a quicker than typical closing time frame, a sale of the home in its as-is condition (meaning the homeowner does not have to make any repairs or improvements to the home before the iBuyer will agree to buy the home), a waiver of some or all of the iBuyer’s rights to cancel the purchase contract for reasons relating to the condition of your home and/or the neighborhood that your home is situated in, and an all cash offer (meaning, the iBuyer does not have to wait to get approved for a mortgage loan from a lending institution that may also require an appraisal and/or termite inspection, etc.). These are each additional risks that the iBuyer is willing to accept, and there is a certain monetary value to the iBuyer for accepting these risks that the iBuyer attempts to make up for by offering to pay an amount of money for a home that some homeowners might consider to be less than the fair market value for that home. The benefit to a homeowner is that a purchase offer from an iBuyer typically makes it much less likely for the sale to fall apart (resulting in a waste of a homeowner’s time, money, and disappointment) due to a buyer’s dissatisfaction with the condition of the home, or inability to qualify for financing.
It is our experience that homeowners find that selling to an iBuyer eliminates their risks of uncertainty due to fluctuations in real estate markets and interest rates. We also find that because these transactions are less likely to fall out of escrow, there is less of an adverse emotional impact on homeowners resulting from transactions that fall apart. In addition, we find that a sale to an iBuyer is ideal for a risk-averse homeowner, a homeowner needing to quickly relocate for career purposes, an authorized executor desiring to quickly sell the former home of a deceased homeowner as part of liquidating a deceased person’s estate, or a homeowner that simply wishes to sell their home quickly without the emotional wait andsee rollercoaster that is often associated with the traditional sales and negotiating model. This option gives sellers a greater degree of certainty, convenience and sense of control over their home selling transaction.
How does eXp Realty’s Express Offers work?
First, we enter into written contracts with our iBuyers establishing the terms under which the iBuyer may use our proprietary Express Offers web platform. Then, an iBuyer will send us its home buying investment criteria through our web platform where our agents will be able to view it. Our agents will then endeavor to locate homes that meet the iBuyer’s investment criteria that are or may soon become available for sale.
After locating suitable homes, one of our agents will approach a homeowner1 whose home has been identified, introduce him/ herself and make the homeowner aware of our Express Offers program. If the homeowner is interested, our agent will provide the homeowner with this Express Offers Questions and Answers, and Agreement to Introduce Potential iBuyers and Participate in eXp Realty’s Express Offers.
In addition, and if the homeowners state laws allow it, our agent will also ask the homeowner to allow eXp Realty to represent them as a dual agent2, since the iBuyer will also be represented by the same agent in the transaction. This type of representation is typically referred to as dual representation, or limited dual agency. Our agent then provides the homeowner with a real estate listing agreement, dual agency disclosure forms, standard agency disclosure forms, and any other required forms.
However, if state laws preclude dual agency or if the homeowner prefers to be unrepresented, then our agent will not provide the homeowner with our listing agreement and dual agency disclosure forms, but will instead provide the homeowner with our unrepresented seller form. Our unrepresented seller form states that we do not represent the homeowner and that the homeowner has no representation in the transaction, and also defines the terms under which the homeowner agrees to compensate us for the closing of the transaction; the homeowner would become obligated to pay us a commission solely in our capacity as the iBuyer’s real estate agent, much like a finder’s fee for finding a buyer to purchase the homeowner’s home.
The homeowner will review the provided forms, and if acceptable and they are interested in our Express Offers program, then they will sign the forms and return them to our agent. After our agent receives all of the homeowner’s signed forms, he will gather basic information about the home and submit it to our iBuyers through our web platform; any of our iBuyers that are looking for homes like the homeowner’s will receive the information provided by our agent and be informed that the home is available to purchase.
Our iBuyers may submit a non-legally binding Letter of Intent with the terms that they would be willing to purchase the home. These proposed terms will typically include a purchase price, estimated closing date, and any other important terms that, if accepted, will become the terms presented in the formal written purchase offer, that is, an Express Offer.
After receiving the iBuyer’s Letter of Intent, our agent will present it to the homeowner for their consideration. If the terms proposed in the Letter of Intent are acceptable to the homeowner, our agent will notify the iBuyer and the iBuyer will have our agent prepare an Express Offer based on those terms. Alternatively, if the terms proposed in the iBuyer’s Letter of Intent are not acceptable to the homeowner, then the homeowner may either reject the iBuyer’s proposed terms and proceed to locate another buyer for their home, or, where allowed by an iBuyer, the homeowner may present a counter-offer that our agent will relay to the iBuyer through our web platform. If the iBuyer accepts the counter-offer, then our agent will notify the homeowner that their counter-offer has been accepted. (Note that, in situations where a homeowner has elected to be an unrepresented seller, just because one of our agents relays a homeowner’s counteroffer to the iBuyer, doing so does not make us that homeowner’s agent, and we are not that homeowner’s agent unless/until a formal dual agency relationship is established.)
After our agent notifies the iBuyer that the homeowner accepts the proposed terms, or alternatively, the iBuyer accepts the proposed terms in the homeowner’s counter-offer, our agent will draft a purchase agreement for the sale of the homeowner’s home at the agreed upon purchase price and terms. The homeowner and iBuyer will sign and exchange that agreement.
At the closing, the iBuyer will pay eXp Realty a transaction fee. The homeowner will pay the amount of commission that was agreed upon between our agent and the homeowner, as was specified in either the listing agreement or unrepresented seller form, as applicable. After the closing, the homeowner will have successfully sold their home to an iBuyer.
After the closing, the iBuyer may make some improvements to the home, and then rent it out or list it for sale for a higher price (with the intent of selling the home for a quick profit) using eXp Realty and the very same eXp agent that represented the iBuyer in the purchase of the home. In instances where the home is listed for sale, the iBuyer may have prenegotiated paying a lower commission rate for listing the home for sale through eXp Realty.