iBuyers and Convenience… But is it worth it?
Hey guys, David Edgerton here; “The Edge in Houston Real Estate”. I hope everyone is having a great day. This video is about something new to the real estate market that people have never seen before until recently and that is what we’re calling, “ibuyers or direct buyers”.
In the Houston market right now there’s a couple of companies that are called “OpenDoor” and the other is called “OfferPad”, you probably heard them advertise a lot. I mean they’re spending a lot of money right now, but basically they want to buy your house.
So, part of their advertising spiel is that they want to make the transaction as painless as possible. If you’re just looking to sell, call them and they’ll get you a written offer within 24 to 48 hours and you can pick what day you want to close and they’ll just buy your house.
You don’t have to deal with realtors, or commissions, or getting your house ready, or doing repairs, showing your house to strangers; it’s a painless process.
So, by making it painless you can sell your house to them, however there’s always a “but”, but they’re going to give you significantly less amount than a true market price for your home if you were to sell it on the MLS using a realtor.
So, there’s definitely some disadvantages which is how much it is that you’re going to get for your house. So, as a seller you really need to compare is it worth it or not?
What kind of property do you have that… where it would make sense to just make it easy and sell it to them? Or what’s your situation?
So, that’s really up to you to think about and just to see how it goes. Now these ibuyers, they’re looking for very specific types of properties in Houston.
Generally they’re looking for more cookie cutter type of houses in the suburbs, somewhere between like a $200k, you know, $250,000 price point to maybe like $300,000.
Something like a three or four bedroom, two bath; they’re looking for something that’s maybe built in the late 90s or newer; they’re looking for things that they can just go in and maybe fix some drywall damage, maybe replace some floors or some carpets, add some fresh paint and add some fixtures.
Their goal is to put it back on the market and sell it and make a little bit of a profit. Or they’ll sell it to one of their investors.
They have hedge fund investors that do long term rentals or something like that. So, they make their money by doing a lot of transactions, in volume. They make very little profit margins, but they do a lot of transactions.
So, let’s say you have a house for $250,000, so if you call them they’re going to write you an offer and let’s say that the offer… you’ll probably get it for about $25,000 less than the market price.
So, if your house was well maintained, you know, you’ve took pride of ownership of your house and you’re talking with local realtors and you… and they say, yeah, your house is probably worth around $250k, if you get their offer from OpenDoor, it’s probably going to be around to $225k because, you know, hey, they got to make their money and then they got to factor in some profit in there and for their risk.
Now, they’re also going to charge fees. This is what they don’t really tell you on their ads, that they’re going to charge you anywhere between a 6% and 8% transaction fee.
So, at $250,000, let’s just say it’s 8%, that’s $20,000. Plus the $25,000 you’re going to be looking at a total of let’s say $45,000 in fees, so your net may be $205,000. And then you’re still going to have to pay some of your own closing costs and title fees as well.
So, it could be closer to $200,000. And then, some things like OfferPad, they’re going to help with some of your moving expenses, like up to maybe a $1000, or $2,000.
But, ultimately you really need to consider all of this before you sign a contract and sell your house to them.
Am I really happy with that net amount of money? Or should I just try to sell it with a realtor first, see how it goes and then if I don’t succeed, then maybe I can call one of these ibuyers and see if they’ll buy my house.
I do have personal experience with them. And this is, this scenario, what I’m quoting you is exactly what I’ve seen. So, hopefully this has been helpful.
Part of the reason why I do these videos is for me to get a chance to tell you more about myself and my business.
I am a full service flat fee discount real estate agent here in Houston.
For me it’s not really about charging the full 3% or 6%, it’s just to have the opportunity to work with some great people. I charge less than the going rate.
Ultimately, my goal is to have a win-win experience and win-win transaction with my clients. Right now I am doing a promotion where I will sell someone’s house for free and charge a $0 zero dollar listing fee if they use me to buy their next house. Restrictions apply but you can find out all the details on my website.
If there’s any questions about that or this video, please let me know and I look forward to talking with you and learning more about you. Have a great day.
Remember, right now I am running the “sell your house for free if you use me to buy your next house”. Restrictions apply, but I have that information on my website. Thanks again. Have a great day!