Fees
There is also the issue of fees. Real estate agents typically charge a 5 to 6 percent commission, which is always negotiable. Zillow does not have its fees listed on its website, saying that all fees are disclosed with its offer, but it has been reported that it charges an average service fee of 7 percent, while Offerpad charges between 6 and 12 percent. . of the sale price. The Opendoor website says it charges an average service fee of 6 to 8 percent. You’ll also pay closing costs, just as you would in a traditional home sale. These can be from 1 to 3 percent of the price of the house.
Obviously, these companies have to make a profit, so they are increasing their margins along with the listing fee percentage.
Companies often point out that they are saving you from having to pay 1 to 2 percent in concessions to buyers, but that will depend on the real estate market. In a seller’s market, you may not have any concessions.
Selling can sometimes be daunting
Selling a house can seem daunting. Repairing it, painting it, and keeping it clean for prospective buyers sounds like a lot of work. Go to “iBuyers,” companies that make you an offer on your home without setting foot on it.
Sounds like the perfect solution, right? Or maybe too good to be true? Let’s take a look at how these companies work, and then you can decide if the process is right for you.
How do “iBuyers” work?
First, some basic concepts. The best known players in the “iBuyer” market are Opendoor, Offerpad and Zillow Offers. The details of each company vary, but the basics are the same: Using an online questionnaire, provide information about your home, such as square footage and whether you’ve made any improvements. Then upload some photos. The company typically responds within 48 hours with an offer based on computer algorithms that compare your home to others in the area.
If you accept the company’s offer, an appraiser will come to your home to confirm the information you provided. Once satisfied, the company buys your house, repairs it and puts it on the market.
The professionals
The advantages are obvious: little hassle, no strangers in your house, close the deal and get your cash in a couple of weeks. The house price is held in escrow until closing and then transferred to your bank account. For someone who needs to sell a home quickly, for example, to move for a new job or to avoid foreclosure, an “iBuyer” company may be the answer.
If you decide to try “instant buy,” get offers from more than one company to maximize your chances of getting a good deal.
The cons of “instant purchase”
The biggest drawback to accepting an offer from Zillow Offers or Opendoor, or any of the many companies that offer “instant purchase,” is the amount of money you could leave on the table. When your house is not on the open market, there is no chance of multiple offers and getting more than its asking price. There is also little room to bargain with instant buy companies about their offers or the costs of any repairs that need to be done. (It should be noted that you are not required to accept an offer).
They also point out that you won’t have to pay for repairs up front. That’s true, but you also can’t negotiate the cost of those repairs like you can with a traditional sale, and the costs ultimately come out of the sale price. You may also have to pay for an inspection of your property.
You also shouldn’t assume that you won’t be working with a real estate agent and therefore won’t pay them. Both Opendoor and Zillow Offers encourage sellers to have representation.
The bottom line
Whether you’re selling your home with an “iBuyer” or proceeding with a traditional sale, make sure you understand all the fees you’ll be responsible for and study the health of the real estate market in your area. By having a reasonable idea of how much homes like yours are selling for in your neighborhood, you can make an informed decision.
