You may have heard these ads stating “Receive an Instant Offer on your home, you go online and…..”
So what’s the scoop about Instant Offers? Whether you heard an ad like this from Zillow, OfferPad, Open Door, or We Buy Ugly Homes, it’s all the same. They are companies that give home sellers cash offers. They determine your homes value by using algorithms by just typing in your address. Their program determines what the average price per square foot is in the area and spits out a value without even seeing the home. As a real estate professional, there are many factors that determine a homes value such the location in the community, upgrades, lay out of home, landscaping, curb appeal, condition of the home and the sellers time frame. Algorithms can’t determine that by simply looking at numbers online and not the full picture.
What are the fees with these cash instant offers? Each company is different but they claim that there are no broker fees and title fees. They do however charge a large fee- up to 10%! So if you receive a $300,000 cash offer from one of these companies, you’ll end up paying $30,000 in fees. However, if you were to hire your own Realtor and sell your home (more than likely for well over the cash instant offered amount), you’d pay $18,000 in broker commissions and approx another $2500 in title/ closing fees netting you approximately $9500 more! That is if you sell your home for the same amount as the cash instant offer. Keep in mind, these companies are buying low and selling high. So you’d be selling your home for less than comparable homes.
What if your home needs repairs? These instant offer companies do hire home inspectors. If they find issues, they’ll reduce the cash offer price to have the items repaired.
What these instant offer companies provide is convenience. You don’t have to worry about cleaning your home and preparing it for showings. You get your cash offer, you move out and the home closes. You don’t have to worry about appraisals, negotiating repairs and under writing with a standard sale. However, there is a price for convenience. Keep in mind, they are buying low and selling high. They would go out of business (and very quickly) if they bought high and sold high. That’s not how this works. These companies are wholesale investors. They buy homes, slap on fresh neutral paint, possibly add the cheapest granite count tops they can find and turn around and sell it at a premium. Simple as that.
So if convenience is worth thousands if not tens of thousands of dollars to you, then these companies might be the right fit.
For everyone else that would rather keep money in your pocket and go through a standard transaction, contact a real estate professional. Keep your money!
For more Real Estate information, please contact me at 480-229-5861