With the pandemic hitting 2020 hard, the debate still 🔥 rages on whether iBuyer program could fully replace real estate agents.
The constant scrutiny of a real estate agent’s commission continues to be 😲 relentless and unforgiven.
With so much money pouring from VC into tech companies, it’s no wonder why real estate is getting so much attention. From tech companies thinking it’s simple as removing the 6% “expense” to real estate agents sabotaging their industry by offering 1%, to media companies not conveying the true work behind the biggest transaction of a person’s life.
[agents pay attention to this] My journey started over a year ago debating if I should sell a rental property I owned. Being in this industry and having many connections, it was easy to see what agents are doing.
(Watch this video to see the battle between an iBuyer and Real Estate Agent)
Read the full article here: LinkedIn Article
Michael Lam (00:00):
No. Right. So you’re here because you want to know the difference between a I buyer versus a real estate agent. So who won in his battle? Look, I’ve said this before, and I’ve said this continuous times at conventions conferences, I broker offices, I’ve spoken at agents. We’ll never get replaced by technology, but agents will get replaced by agents. Embracing technology. Think about that. We’ll cut right to it. The real estate agent want in this scenario. It was a home that I was thinking about selling and I eventually did sell, using a real estate agent made up using both meaning. I did use an, I buy a program and a real estate agent. When I was thinking about selling, I needed a baseline and typical millennial style is I’m not calling an agent. I went on Zillow. I went on Redfin to get an estimate.
Michael Lam (00:59):
And I knew those estimates are a lot of times off, but you know, you put your finger in the air and it gives you a general idea. It gives you a little bit pulse and you look at how the home sold around the area. And again, it gives you a general idea, but nothing is really tangible, meaning you don’t really have something to go off concretely, but with an IBR program, you get an actual offer pretty quickly. So I chose open door in this scenario and I, you know, that’s, the process was actually pretty simple. I didn’t have to talk to anybody. I just filled out my address, my name of the year, it was built and some basic information. And then they ended up responding, saying that after I filled out the form, they said they, they apologize that my home wasn’t eligible.
Michael Lam 1 (01:44):
This was after they already live, captured me and got all of my information. So I thought that was pretty clever on their part, but it was dissatisfying on my part because I just went and spent like two minutes filling out information. And granted it’s only two minutes, but we live in a day and age where everything is instantaneous. Your time is just limited. So I was frustrated. I was immediately frustrated. I, they should’ve just told me upfront that day, that my house wasn’t going to be eligible, but they ended up really capturing me. And then they sent me a follow-up email saying, Hey, we have a partner that we can connect you with. And then they can make an offer. The reason why my house wasn’t qualified because it was built before 1960. So they do have pre that you need to meet before they actually could put in an offer in place.
Michael Lam (02:30):
So I’ll drop a link after this video type of homes that open door buys, but it’s actually some of this stuff. There were interesting. For example, if you have a solar lease on your home, they won’t buy it. It needs to be paid at full homeless built before 1960s. They won’t look at any generally by homeless from 100 to 500,000. I’ve never lost Pandora turned me down. And then I went to another IBR program. It gives another offer for less than it’s 14 day closed but was a 60,000 below market rate, 60,000 below market rate. So it was a real flipper coming in, knocking off 30%, 23% of the true value. And and on top of it, I didn’t even see the property. So when they did a walk through, they’re going to see additional damages and I, you know, it wasn’t set in stone.
Michael Lam (03:19):
They might come back with more money to be re reduced, ask myself, do I want to take a $60,000 discount because I want to sell my house right away, or can I be patient and get this money back. Eventually I decided to talk to a realtor, a friend of mine who is a realtor who actually helped me find properties in the past. So I reached out to him and say, Hey, can we talk to me about this property? And you know, what are the strategies we can employ? Because actually I want it to sell the house with the tenants, but we actually tried to do that. I, you know, because I, by my insistence, I said, you know what? I really want to get rid of this property. I don’t want to deal with it. I had it. So we put on the market and unfortunately we had no opera and it was right.
Michael Lam (04:08):
This appoint agent did warn me. He told me straight up like, Mike, you must, you know, it’s going to be really hard to sell your house with the tenants in there, especially in the condition it’s in. So we said, you know what, let’s go. You know, he walked me through the plan and we said, go ahead. Let’s just go ahead and get the tenants leave. We’ll have the tenants go. And then once a tenant leaves, we’ll do some basic repairs. And this is where agent really helped me out. Cause as I told him, I didn’t want to spend any money on the repairs, any money. And I really needed to know what I could do at the minimum to get the most money. And he basically said two things. All you need to do is one, paint your house. And then give yourself new carpets and maybe gets us new toilets.
Michael Lam (04:45):
That was it. That’s all you needed to do and nothing else. And I liked that. So we ended up prepared and I ended up spending about 7,000 total on renovation. We put on that market. And first week we get bought three offers in and within, you know, a couple of weeks we already had like over five offers over listing price. It was amazing, but a lot of these offers were really high and they weren’t the type of offers I was looking for. So as a homeowner I, and this is really important for anyone who’s watching this. And if you’re a homeowner thinking about selling or of your buyer, actually, you know, in this market, you got to also understand that it’s not always about the price. It’s not about offering the highest price because the highest price doesn’t really do anything.
Michael Lam (05:31):
Especially if you’re dealing with someone who knows the market. The highest prices mean anything because it all depends on the appraisal. I mean, the market says it’s worth, you know, 300,000, then it’s worth 300,000. You put in an offer for three 50, meaning are you willing to cough up $50,000 extra to, to cut, to, to, to make that difference? Or are you going to renegotiate to put that price down to 300,000 as a home owner, as a seller? I knew that if you’re going to come in at a high offer, I wasn’t going to hold my breasts, that breath, that you’re going to actually come up with the difference. So I didn’t care. It was a high offer. What I killed most as a seller is could you actually close the deal? That was the most important thing. And I wanted a fair price, which was, you know, my list price.
Michael Lam (06:22):
It was a fair deal. It wasn’t over less. It was priced right in that area. And you know, we had like five offers over list price. We ended up selecting one pick us. It was a, an opera week now Matt had a very high chance of closing and eventually it ended up falling through meaning it did not close. They were some damages that they did not want to do repairs. I knew there was some damages and I was, I didn’t want to do those repairs. And I was willing to negotiate those. But unfortunately they didn’t, they didn’t want that. They wanted a house that was more moving ready. So that was really disappointing. And you know, Megan and I, we talked about what’s our next step. Do we actually go back and actually do the repairs and ended up doing there?
Michael Lam (07:10):
They decided, you know, I’m going to go to back to my place. I’m going to do the repairs. And then we’re going to put it back on the market. And then literally the day before I was going to drive up to the house to the rental, I get a call from my agent saying, Hey, Mike, we got a cash offer as well is seven day close. And it was only like three, 3000, 4,000 off the list price. I was ecstatic. I was already going to spend 6,000. So for me, that was a, win-win no brainer. So we ended up signing the deal and we closed in seven days and I could not be even happier. I mean, it was a, it was one of those situations where this whole process is very stressful. It is. But having an agent by your side to kind of keep that emotion in check is I would say it’s pretty invaluable.
Michael Lam (08:02):
Because if it, if you, if you don’t have those emotions in check, you’re going to be irrational on what you want to do. Cause I wanted to get rid of this property. I want him to get rid of it. I didn’t want to deal with it. I, my agents like, no, we got, you know, this is the plan. This is the price. We’re not going to try to Lorde anymore. I actually asked them, let’s go drop the price. Let’s just drop the price and let’s just get more activity on on the house. And he was like, Nope, let’s just do this. And I trusted him. Nevertheless, I’m happy. I trusted him. I’m happy. I went with a realtor because I ended up saving $60,000. If I have not used him. And I used this IBR program, I would have lost about $60,000 on this deal.
Michael Lam (08:41):
Now I think there’s a lot of, you know, throughout this entire process. And, and as I reflect back, as, you know, as someone who was very tech savvy, who didn’t go through route, I calling someone or interviewing agents, I need doing any of that. And there was no listing presentation. None of that. I think a lot of people are in my position where, who, who are thinking about selling, but the content that they see online and the narrative that they’re seeing online is it’s not benefiting realtors. Okay. And what I mean by that is I think agents need to do, in my opinion, a better job explaining this process, that emotional side of selling, because a lot of sellers don’t understand this, like when the lockups, the first time selling a house. So they think as simple as what, like what, like these IBR programs is, you know, if I don’t choose you, you as a realtor, I’m, I’m going to pay you X amount of commission.
Michael Lam (09:41):
I’m going to expect the same level of smoothness. That’s what they expect. This is what I expected. I’m not expecting to use an agent and be more stress, right? So ages needs to be able to understand that and convey and tell them the story about how you as an agent are, are removing that stress from yourself. I think that’s very important. We, I don’t see enough of that. And I see them advertise and they talk about their brand, but they don’t talk about the stories behind those transactions. And I think that’s very important to understand as a realtor and if you want to sustain yourself this year and going forward, because you know, technology is not going to stop for nobody, and they’re going to continue to disrupt this industry. And unfortunately, if you’re not keeping up with how consumers are behaving and buying and selling, unfortunately you’re going to be, you’re going to be basically battling for a very small market share while the biggest companies are eating up more of the share. You know what you know, that makes sense. Recap, this look, I buyers great if you don’t got time, but if you want the most money, use a real estate agent, you know what they say, time is money.