In the last year or so, a number of “new kid” real estate firms have moved into the Triangle. They have names like OpenDoor, Offerpad, and Knock. Their entry into the market has been accompanied by an enormous advertising budget – on TV, radio, billboards, and social media. Their image is polished and their message, slick. They will buy your home so that you don’t have to go through the process of a traditional home sale – no open houses, no showings, no “haggling” over the price. Sounds pretty sweet – an easy solution to the “hassle” of selling your home, right? That’s enough to turn your head and sellers are questioning why they should go with a traditional brokerage instead of this promise of a one-stop, no hassle transaction.
Well, there is a bit of background that we think is important to know about these newcomers before making a decision on how to list your home. Did you know that they are not really “real estate firms” as we know them? They are, rather, investor-based tech “disruptors”.
Here’s how it works. A potential seller goes to a website and fills in the information about their home on an online form. Then, the company does an assessment/appraisal based on comps and tax information and makes an offer on the home. If it sounds reasonable, the seller accepts it and moves toward closing.
Easy peasy? Well, it’s not quite as simple as it sounds, however. These companies have pretty strict criteria that your home has to meet. There can’t be any unpermitted space. If you finished the attic or added a bedroom yourself without a permit, you’ll be out of luck. The home can’t have polybutylene pipes which are very common in our area. Also, the home cannot be in an age-restricted neighborhood such as Del Webb. If it’s in poor repair with a lot of “deferred maintenance”, they’ll likely decline. So, your home will have to pass muster before they’ll consider making an offer.
Should an offer be made to and accepted by the seller, the company then performs its own appraisal and conducts a rigorous inspection. Any repairs they deem necessary will be deducted from the original offer.
It is important for sellers to know that:
- They will offer you a lower price for your home. They have to make a substantial profit on each home. Quick, high profit yield turnover is their business model.
- They charge high fees. There is no negotiating on price, fees, or repairs.
- They don’t know your home. They use tax records and comps only for the valuation. Your completed renovations are not considered in the offer.
- Most don’t know the local market. They could undervalue your home by thousands.
- It is a one-sided transaction in which a seller could leave a lot of money on the table.
These companies might be useful in a sluggish market where homes languish but that is not what we have here in the Triangle. Their system could help sellers who might be going to foreclosure, who cannot keep up with payments, or those who have a new job and need to leave quickly and have large amounts of equity in their home.
As alluring as the new kids might appear, the reality is that, for most sellers, a traditional brokerage will bring the best price and conditions even with commissions considered. Also, by “shopping local”, they’ll invest in their community and get the best, most personalized service by someone who understands this market. If you’re considering selling, we’d love to have the chance to show what we can do to ensure you get the best value possible. Give Tom, Cyndi, or Kim a call at 919-612-5296 and we will show you that the “the kids you know” have plenty to offer.
