How would you feel if you sold your house and the buyer turned around and sold it for a profit of $30,000 or more? This is happening to hundreds of sellers in Metro Atlanta right now. Watch the rest of this video to find out how you can avoid losing money on your home sale!
Welcome to Real Estate Redefined. I am Dan Forsman.
Last month, we reported on a new group of companies making offers to buy homes called iBuyers. Companies like Opendoor, OfferPad, Knock and now Zillow are advertising heavily that they will pay cash for your property. Another local company revised their former “If I can’t sell your house, I will buy it with cash” promotion and is now heavily advertising a “Guaranteed Offer.” More on that in a moment.
iBuyers make their money based on their high commissions and fees plus any profit on the buying and selling of the homes purchased. Their motivation is to get the seller to pay for improvements and repairs so the property is most attractive when they put it back on the market.
The market segment that iBuyers are targeting are homes in the $100,000 to $500,000 price range. Trendgraphix reports that in 2018, homes in this price segments closed for 98.5% of list price in 39 days. This is a hot market segment with sellers often receiving multiple offers and closing at or above list price.
When evaluating iBuyers, you need to consider the offer price, all commissions and fees plus repair or improvement costs. None of the iBuyers are promoting that they will pay top dollar or even market price for homes. iBuyers are motivated to get the seller to pay for repairs and improvements so they can turn the property and put it back on the market in the best condition. Some consumers have agreed to an offer price and moved forward on another purchase – only to be surprised with significant costs for repairs. The most common repair requests relate to foundations, flooring, roofing, plumbing, and HVAC systems. Read the fine print and be aware!
Today, let’s look at 2 real examples.
Example #1 is a property in Norcross Georgia that was purchased by an iBuyer for $129,800. The iBuyer fees are estimated to be $9,086 plus repair fees estimated at $5000. The net for the seller would be $115,714. That same property was listed by the iBuyer for $152,000. It was under contract in 12 days for $153,000 – above the list price. If the seller had listed the property originally with one of our professional REALTORS, they would have paid $9180 in fees plus the same $5000 in repairs. The net would have been $138,820 – a difference of $23,106 versus selling to the iBuyer.
Now, let’s look at example #2 – the Guaranteed Offer.
A client recently shared their “Guaranteed Offer” and here is what we found. First, the buyer was Opendoor – not the real estate company promoting the guaranteed offer. To begin with, the offer was 88% of estimated market value. This company was charging a 4% listing commission plus a $495 transaction fee. Opendoor was charging a 7% fee. The estimated repair costs were $4952. The net to seller would be $214,917. 11% commissions and fees plus a $495 transaction fee plus repair costs? That is a terrible deal for the seller! The market value was estimated to be $280,000. Assuming normal fees at 6% and the estimated $4952 in repairs, the net to seller would be $258,248. That is a $43,331 difference!
This seller did the math. They were so offended by the Guaranteed Offer that they declined to do business with this company and listed with our agent.
This real estate company used to say in their advertisements that they never had to buy a house. The truth is that the old deal was so bad that nobody would ever take it. This new Guaranteed Offer appears to be just a new advertising gimmick to try to win a traditional listings.
Clearly, there is a market segment for iBuyers. Some people need to sell a property fast and are less concerned about their net proceeds. For those sellers, we are happy to help them get iBuyer quotes and provide them professional guidance during the process.
The moral of this story is simple – DO THE MATH. There are hundreds of consumers getting iBuyer offers and not doing the math. Our professional REALTORS can help.
Exposing your property to the full market – especially in such an active market segment should always provide the highest net proceeds to the seller. And nobody does that better than our associates! Contact one of our local experts to learn about our Advanced Property Marketing to over 40,000 websites including the Wall Street Journal global network and top priority on Zillow Searches. Ask about our extensive social and digital advertising for our listings and MEGA Open House Events that generate more local buyers. Ask about the many companies moving to Atlanta and how our leadership in corporate relocation can attract those buyers. There is a reason that Trendgraphix ranks our company #1 in homes sold. It would be our honor to be your guide to the next amazing journey in your life. And by achieving the highest net proceeds on your home sale, you will have more money in your bank account!
Thank you for watching this episode of Real Estate Redefined. 2019 is going to be an exciting year! And Remember … every day… in every way … YOU can get better and better!