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iBuyers are cropping up all around the real estate space, but now, a self-defined “anti-iBuyer” is entering the industry, looking to reshape the way instant offers work.
The new company, Kribbz, launched in Phoenix this September (with other markets in the queue), and is banking on the power of fee-free auctions to bolster the FSBO-minded crowd.
“Technology is fundamentally reshaping real estate, making it a different industry today than it was even two years ago. Despite this, long-standing issues remain as homeowners continue to get punished with fees and remain subject to agendas that don’t align with their goals,” said Kent Clothier, co-founder and CEO of Kribbz, in a statement. “By bringing together buyers and sellers in a marketplace environment, Kribbz streamlines and democratizes the entire experience, allowing both sellers and buyers to achieve their goals.”
With plans to expand to additional markets throughout 2019 and 2020, Kribbz features off-market properties on which investors can bid to purchase. The listings are only available for online viewing (no in-person showings offered) within the 24-hour bidding cycle on the company’s website or mobile app.
The service is only fee-free for sellers. Investors must pay to gain access to auctions. The monthly subscription price is currently set at $297, with purported promotional trial rates available. Additionally, should an investor’s offer be accepted, they must pay a $3,500 fee to Kribbz in order to close on the property.
The benefits? According to Kribbz, transactions close and clear escrow in 7-14 days. Photography and property descriptions are provided by the company itself, and the entire process can be done online.
While Kribbz promotes savings in comparison to using an iBuyer or a real estate agent, there are significant downsides. While a lack of showings and a small auction window may be beneficial to sellers who prefer a quick transaction, these benefits come at a cost—the biggest being a severely dwindled buyer pool. Instead of opening up their home to the market, sellers are making their listing visible only to investors who can pay all cash and are comfortable taking on the risk of buying a property sight unseen. Because of this, there is a high chance of receiving very low offers.
But in direct comparison to iBuyers, these auction-to-sell transactions may have more advantages. For example, while iBuyers typically provide sellers with a single offer, with Kribbz, homeowners have the ability to receive multiple bids, with the option of rejecting, accepting or countering. Additionally, sellers can set their own starting price, helping to possibly minimize instant-offer losses.
“Even with the rise of iBuyers, home sellers remain subject to fees and commissions that range from 6 percent to 14 percent of the offer price, which significantly impacts their net takeaways,” states a company release. “Kribbz fee-free, no obligation experience removes after-the-fact charges and expenses for home sellers. Furthermore, by bringing together multiple buyers in a 24-hour bidding process, home sellers can receive several competing offers on their property, giving them added confidence that their instant offer is the best available.”
Kribbz does not currently work alongside brokers or agents—in fact, their online comparison chart goes against traditional transactions. A company representative states that an agent could, however, help their client sell a home via the instant-offer auction, helping to manage the process, and come to their own agreement in regard to commissions.
Sellers and buyers who choose to transact the instant-offer way, specifically with auction services like Kribbz, could be losing out on money as well as putting their transactions at risk. Kribbz takes on the legalities, including title transfer, and without the help of an agent and real estate attorney, consumers are leaving behind the biggest tool: a support system with a fiduciary duty to the client. Since there is no monetary commitment to list, sellers could weigh their options before jumping to sell. If they choose to forgo the auction route after receiving offers, they can simply walk away, keeping the listing photos Kribbz provided with the ability to use them for marketing should they choose to sell another way.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at firstname.lastname@example.org.