There is a trend in our market, with wholesale investor companies like Offer Pad and Open Door. I’m often asked about these companies, so I thought I would share my thoughts…
They are wholesale companies. Their business model is to purchase a property at or below market value, then turn around and sell the property to another buyer. They advertise Hassle Free listing… sell your home to them so you can skip the hassle of listing, showings, and months of uncertainty. Move when you are ready and close with certainty.
My opinion is that if you have more money than time, one of these companies could be an option for you. They typically offer you at or slightly below fair market value for your property, but then they charge a “deduction” to cover their operating costs. Based on my clients’ experiences, that fee is right around 9-10%. They often ask for additional deductions after they do an inspection on the property.
I have two clients who considered offers from an “O” company.
The first was one of my listings. We were listed at $425k. It’s had an odd floor plan, and although we had over 50 showings on the house, we hadn’t received a satisfactory offer. They approached Open Door, just out of curiosity. Open Door wrote us an offer for $29k below our listing price, and charged another $29,700 “deduction” to cover their operating costs. Although it would have been a cash offer, closing in 3 weeks, my clients decided to stick with the traditional process.
We had the house staged professionally, and two weeks later, my clients accepted an offer for $415k, and at close of escrow, after all closing costs, my clients received $52,487 more than they would have with the OpenDoor offer.
I have another client who opted to sell to an O company. She’s a busy executive who just didn’t want to deal with showings and a potential double mortgage when she bought her new house, so she sold to them. After closing escrow, “O” turned around and sold it for $25,500 more than they paid her. For her, maybe it was worth it, but for most sellers, $25k is a lot of money.
A third client was listed with our brokerage. An “O” company offered very close to asking price, but wanted 4% towards their closing costs, in addition to the 3% that was being offered as the Realtor incentive. At the time of the inspection, they asked for another 6% off the house for repairs. The escrow was cancelled when it was verified that several of the requested repairs weren’t even legitimate, and the few that were needed were fixed for less than 1% of the sales price.
Selling to a cash wholesale company is no different than selling to any investor. It’s a business transaction. It’s not good, bad or indifferent. It’s a tool that you can use to sell your home… however… not all Realtors are the same.
If experience is important to you, find an agent who strives to put a personal touch on every transaction. Several Ravenswood Realty Realtors hold a master certified negotiation expert certification and our goal is to get you the most money possible, with the fewest number of issues, in the quickest time possible. We are a full-service real estate brokerage. Our personal touch and professional approach equal positive results.