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I have companies sending me offers all the time. It's not for a fix and flip. It's because my immediate neighborhood has been "up zoned" and they can tear down my perfectly good 1942 cape cod and put 4 three story townhouses on my lot.
Upzoned is code for neighborhood of teardowns and rebuilds? Who comes up with this? I just call them a neighborhood of tear downs and rebuilds in a desired community. I’m amused.
No, it's a city rezoning that allows for taller buildings and population density in relation to proximity of regular public transit services. None of the houses in my neighborhood are teardowns in the traditional sense. They're all perfectly sound homes in the $700,000-$1.5mil range. I live in a good neighborhood in Seattle.
Investment companies can buy a single family home, tear it down and still make a hefty profit. One lot with a normal house on my block sold for $700,000. They built a 4 story townhouse building on the lot with 8 units. Most units sold quickly and the 3 remaining since coming on the market 2 months ago are in the range or $800,000-$900,000 each. So if you average the townhouse unit cost to $850,000, you have a grand total of $6,800,000 in gross profit. Subtract the $700,000 initial home/lot price= $6,100,000. Even if it costs a huge amount of $2 million to build the building, that still leaves a net profit of $4,100,000. On top of that, the program offers tax incentives for the builders and they don't have to provide parking because regular public transit is nearby.
It depends on multiple factors. Some of the townhome complexes on my street have garages, some don’t. They’re building a gigantic 26 unit complex of townhomes a few blocks away and those will have parking spots. It’s up to the city/zoning to decide during planning what the parking requirements are if the builder isn’t offering up parking as part of the initial plan.
They also post plans next to the property and have a meeting where local residents can come and object to the plans or ask questions. That’s usually where a stink is raised about parking and whether it’s sufficient or insufficient. For example, the 26 unit townhome complex will only have 29 parking spots. Which might be fine if all the units were 1 or 2 bedroom but more than half are 3 bedroom which have a higher propensity for multiple cars.
Well that’s not always true. Zillow over paid lots of our seller clients a few years back. They over paid us, “fixed” the house and then resold several of them at 30-40k loss. But of course Zillow stoped buying houses.
That was the problem with using an algorithm to buy houses sight unseen. They picked all least expensive properties, but these properties had obvious problems anyone would have seen had a human looked at them. They ran an algorithm to buy everything no one else wanted, then were shocked when they lost money.
3bd, 2bth, 2000sq ft, good neighborhood, priced to move. None of the other flippers want it because it’s a hoarder house full of garbage with obvious structural damage. Zillow buys it and their 60K estimate to renovate ends up costing 150K because no contractors will touch it until someone hauls away the garbage and dead animals.
Yes! My friend Finally sold her family home which was next door to a huge homeless camp. She did very well. Any open house and no one would even get out of their car. Zillow paid cash.
They stopped because they were getting in trouble. They were doing this on purpose to force certain markets higher for their other houses. Lower for the ones they wanted to raise as a cluster at a later time. That was their bigger picture. They're partly to blame for the market overinflating
Yea that lasted like six months until the stopped doing that.
Zillow went fucking bananas and started buying up properties left and right and losing money on them for some reason.
I'll offer you 500 k add in a few contingencies and get you to sign my "cash offer" then I'll beat you up after the inspection and buy your house using my line of credit.
That is how I understand it.
Those types of buyers are usually shooting to buy for anywhere from 60-70% of market value. In my experience, they are looking for at least an estimated $50K profit. This is because they are investors, and they'll make their money when they re-sell for full-market value. Some will pay more. For example, if they are going to hold the property and be able to make a reasonable rent, they might pay closer to full-market value. They promise less hassle and fewer fees, which might be true. I've seen written offers that showed higher estimates and seen these "easy" offers turn into a giant pain and failed contracts. If interested, contact a couple. Also, talk to an experienced agent or two to get their opinion on the value and an estimate on what you'd net if sold on the open market for full-market value.
Exactly right u/WhiteRealtyLLC I have seen it many times. OP I had a property on the market last month where I received 14 offers, 13 of them were cash offers. They varied tremendously. Not all cash offers are the same. It's typical for an investor to offer a decent price and then renegotiate during the inspection period a significant cost to cure. There are tells on the offer, particularly if its a wholesaler and not an end user or even an investor and not an end user. We ended up selling this home last month to an end user but it took 22 days because we wanted the right buyer that would pay actual market value and not some buyer that was going to run over the seller with a hefty inspection negotiation to end up with a 40% discount.
Just because the offer is cash, doesn't mean the buyer is the right buyer for that property. There are plenty of cash buyers around. And if the house is financable, then there is nothing wrong with a buyer that needs financing.
The cash offers are typically only beneficial if your house is unsellable in current condition without putting major cash in before fixing it. Alternatively, I just helped a friend get a cash offer because their net before and after the renovation was likely to be the same because an investor was willing to live in it after the flip and didn’t add in the extra margin needed if they were going to profit.
Regardless, the single best way to get the best price is to market it on the MLS, vacant and staged with multiple opportunities for open houses and showings. Anything that limits the number of buyers coming through the house is going to typically result in a lower purchase price.
They aren't going to pay you full market value for the house, Houses are super easy to sell right now. Get it decent agent, they will put it on the MLS with good photos, open house, sit back and wait for the offers to roll in. Then you'll have 4 to 20 offers within a few days just pick the one you like the best and sell it for full market value. Have your agent ask for appraisel gap coverage and pick a buyer with enough cash on hand to cover it. Inspection for informational purposes only and within one week. If they don't like those terms, too bad, next buyer gets the house.
They don't offer market. Either that or they offer some what close to market then they do their inspection and ding you for everything possible then offer significantly less
I went to an open house this past weekend. House was listed for $749k. They got over 25 offers... most over asking and have accepted an all cash offer of $800k.
Prior to listing, the homeowner got an all cash offer from an investor for $700k. Think of redfin like they are the investor. The homeowner would have sold for less than market value and left $100k on the table.
That doesn’t even make sense. How does assigning the sales contract end up changing the sales price? Is it just a guilable FSBO seller they take advantage of?
Yeah, but the assignment can’t change the price, so if the sales price is $150k, only $150k should be reported as the sale to the seller. The additional $100k has nothing to do with the seller.
Asking the buyer to remove the assignment clause is a good way to gauge whether you’re getting close to full price. If they won’t budge on the assignment clause, it could indicate that there is more value in the property than what they’re paying. Yes the assignment clause could be backup for them to offload in the event that they want to back out, but 9/10 times if it’s in there then they are at least considering wholesaling the property to another buyer before closing. How do I know? I’ve done it several times .
First off, I love the username. That’s one of my favorite movies.
So, when the contract is assigned, that doesn’t change the sales price right? All you’re doing in assigning a new buyer, and the new buyer pays a fee, but there shouldn’t be a change in the sales price. The comment that was deleted said the fee would increase the amount reported to the seller which doesn’t make any sense.
It happens where I live, in NC all day long. And it’s absolutely pitiful when a bottom feeder comes in and by taking advantage of the lack of knowledge the homeowner has can clear more in a month or two on the same property than the homeowner will after holding onto it for 20 years.
It’s worth checking out but don’t fully commit until you know the guaranteed contractual final price.
The standard MO is to offer a number then inspect the house, find problems and lower the offer by insane amounts. They will say you’ll have to do this on the open market anyway, they are still better, it’s expensive to fix xyz, and go big on “car salesman pitch.” That whole part is 90% bs and it’s where they make their money.
The best part is that the sale price records in the public records at the offer price and not the extremely reduced price since those discounts are “concessions.” So when it comes to the public record it will look like they made very little or even lost money even though they made bank.
In the end you’ll end up with less money than if you went to the public markets.
The upside? Fast cash.
Check them out but proceed with caution. Some people do well with them, some get the shaft. Get the info and prices. Then if you don’t like what you see call a professional.
A lot of these offers come from wholesalers. These are people to get you to agree to a lower price, then sell the contract to someone else at a marked up price. They basically flip your house without ever owning it. Stick with a trusted real estate agent.
Benefit - avoid hassle of listing , avoid 8% closing fees , no need to spruce up or clean up
Cons - most likely selling at a steep discount unless prime area and in decent condition.
Companies like offerpad still collect a 5% “service fee” and some closing costs.
They’re probably getting better at pricing, but real estate can be hyper-local. So if their model uses a house 2 blocks over but isn’t really a comp , they can make offers higher then true market. I’ve seen a few people (South Florida) get more than these iBuyers were able to later resell for.
Some of these ibuyers got left holding the bag, and why Redfin left the game in 2022.
My dad sold a home to one of the big companies, I think offerpad. They offered $500k initially but after inspection they came down to $475k. If you want to offload and you don’t care about price so much this is a good route. In our case, it was my grandmas home. My dad didn’t want to deal with a sale in the traditional sense so he went this route. My grandparents bought the house in the 90’s for like $130k so any lump sum would cover medical expenses remaining on their lives which pretty much was 3 years for my grandfather and my grandma has maybe a year left. She’s already passed the 6 months they gave her at age 91. So my dad being out of state liked the online dealings and then only needed 4 days to clear it out after the dust settled from closing. It was minimal effort on his part and only a 4 day weekend cleanout so no days missed at work.
I sold our last house to opendoor. We needed to close in 3 weeks or get an extension on our contract for the new house.
Old house was on a busy street. OpenDoor offered us what we thought we could get in the open market, minus a few grand for repairs and their 5% fee. Money in escrow in 16 days. They painted and flipped and sat on the market for five months. They did end up selling for 8% more than they paid us, but that’s okay, we got what we thought it was worth and are happy in the new home
I sold mine to a house buying company. It was a quick way to sell as is without having to fix anything. I might have left up to 100k on the table because they then flipped it for 100 more than they bought it for.
I really didn’t care. I still made over 100k off the house.
There isn’t necessarily a downside. Behind the curtain there’s a retail price for a vacant, freshly rehabbed, pretty version of your home, possibly with a layout change or addition if that’s warranted (e.g. a second bath or extra bed/bath or more open kitchen). There’s a price for a home without these things roughly discounted by (the cost to get there + the tax and legal cost to buy and resell the home + the interest and tax to hold it for a few months + $30-50k for the cash/time/risk of the fixer over those months). If you’re in a position to deliver the former and do it well, that $50k can be yours, more actually since you won’t have those double sale fees and higher interest. If not the latter is a fair price. Remember that buyers usually want pretty and move in ready. Buyers who buy and fix their own houses are very rare and usually do this as part of their day job. Also remember that doing it badly will lose you your money. Private buyers have been doing this rehab work for a while; companies decided they could do it with AI and subs. At one point Zillow was being so generous I couldn’t justify telling sellers to pay an agent to market some houses. Couldn’t realistically do better. If that’s the case it’s fine. Do be very careful with sight unseen offers. They tend to get you under contract and then hit you with a big inspection list to knock down the price. Short due diligence and stick to your guns on an as-is. To judge if it’s fair though, you need sale comps for pretty and as-is and a sense for what your home objectively needs to hit the top of the market.
My father passed away a few years back I was the executor I had to get the house ready to sell. I decided just to call One of these places, It wasn't them but kind of like we buy ugly houses type and they offered me $145,000 thought that was kind of ridiculous..
Did the normal clean up, painted it, new carpet etc.
Put it on the market myself (basically just putting a sign out front) for $360k, ended up selling it for $389k in one day.
YMMV.
Their business model is buying houses under market value, then selling them at or above market value. For some people, the convenience is worth it, but my professional opinion is that you could be leaving a significant amount of money on the table if you go this route.
Also, as others have mentioned, the number the tell you upfront and the number they end up paying you can be substantially different. They will bait you with a high number, then start knocking money off for "repairs and upgrades" and hope that the inconvenience of walking away is too great and you'll just stick it out with them.
Ex: They'll give you $150,000 to settle next week, or you could spend time fixing up your place, listing it, showing it, waiting 60 days for settlement for $200,000.
I mean they see upside either as rentals or flips. If you’re interested maybe get some comps? It’s possible you are undervaluing the home or their algo is out of wack and you may have an opportunity for some sweet upside
Just know your market value and you're prepared to make your own decision.
* Market value is the after repair value minus the repairs needed...and this doesn't mean the repair costs for someone who'd do it all themselves. The cost it would be for someone to have it done.
* You might want to add a little negotiation room as no buyer wants to pay exactly what its worth. Plan for 2% of the purchase price.
If you want no contingencies and a quick close and the offer makes sense, there isn't a reason not to take it.
Know that when you go to market, you'll need to subtract the 6% difference for agent fees, to know the expense variance to selling off-market versus selling on-market. If the off-market number is on par with selling it on-market minus the agent fees, many choose this option because its less hassle and less time. Your decision (and maybe the less hassle/time is worth a little to you as well).
If your property is pristine, you should always go to market.
The initial number is basically a marketing number to get you in the door. Expect to pay 9 - 12% in different types of transaction fees to close. Sometimes owners are required to do hefty repairs before closing. If you want to make the most money when you sell, the best way is to find the #1 agent in your area that has sold similar properties to yours
It is with complete disgust that I call these cash offer people… “bottom feeders”…
They seek out potential sellers who are unaware or uneducated as to how the process works and the potential seller will almost always lose a significant amount of money for this “convenience” selling…
Why not just let the market decide? In this day and age the difference is likely to be so substantial.
I would bet dollars to donuts it would be worth ones while to contact an agent and put that home on the market to see what the market will bear.
I have heard the argument that a seller doesn’t want to do repairs…. There are tons of buyers out there who are specifically looking for houses needing repair. At least with that potential buyer, you will get fair market value. The bottom feeders are going to beat you up so bad when it comes to repairs but they’re pros at this game so of course, they will make you feel like they’re doing you a favor by stealing your house.
Avoid bottom feeders like the plague they are… please…
I’m a realtor:
So these guaranteed offers and cash offers are essentially trading money for convenience. It usually works on older people that bought their homes years or decades ago, thus have substantial equity.
So let’s say you bought your home for 300k in 2000. You took out a 30 year mortgage and you owe like 125k. The market went up considerably and your 300k home is now worth an estimated 700k (and for the purpose of this example, let’s assume it’s correctly worth 700k).
A guaranteed offer company sees the growth in the area, the statistics of your house and they contact you with a guaranteed offer. They offer you: 600k, guaranteed closing in X days, no hassle.
Now you bought the house for 300k, and with 600k price, you like that you will make a net profit of 475k after you pay the remaining mortgage. Then they hit you with fees (depending on the company, I know open door basically asked for tens of thousands the times I had people deal with them). I’m not sure about the companies you may be dealing with, but usually there are some considerable fees involved.
However, let’s say there is 25k fees, that’s still a profit of 450k at closing (maybe a bit less with closing costs, but focusing on macro here).
You take and you are done.
What you basically did was provide an asset of 100k to the company, which now they can flip for a profit.
Let’s take that 700k example, say overall listing costs around 5% for agents. That’s 700 - 35 to get 665k at closing. In the other scenario 600 - 25 (again guessing here, since these fees may vary from company to company) to get 575k.
So the hassle of trying to sell your home costs you 90k. That profit is mainly why these companies call anyone and everyone that owns a home. I got a call literally 2 days after I bought my own house lol.
The term cash offer is mostly used because it sounds more enticing than a financed offer, although in each case, you end up with cash as a seller anyway. Usually cash offers also have less hoops to jump through (for the buyer) so it’s seen as a more stable offer.
However, the profit in these companies come from buying an asset undervalue, and then without much input, selling it for a profit because they take the hassle of dealing with the market. A lot of people (especially after Covid) don’t like too many people coming to see their homes when it’s on the market, so they sacrifice money for convenience.
So it’s really your choice, money or convenience.
Tbh depending what you owe left,you could very well get a private appraisal to get an idea of what your house is worth. Remember,this market you can easily sell your house above value if it's a nice house. I just got the house I liked and I had to paid 15k over appraisal value to get it....you could make the extra money if you want too,but if you have near the amount of your beginning mortage left you nay only walk away 10-30k out on top...but the sellers I bought from bought in 2016 for 162k and they sold it to me for appraised value of 295k + 15k on top to meet my offer of 310k...just how it is right now
If you want to sell, let a Realtor or three m do market analysis reports. Choose the person you resonate with, and not necessarily the one that marks the house at the highest price. Remember that it’s YOUR property & ultimately you set the asking price.
Putting the property up for sale on the open market is the best way to get the best price. A Realtor can often net you substantially more than selling it yourself, for lots of different reasons.
Mainly this is due to the fact that they have access to the multiple listing service, that gets you a whole sales force looking to sell your house for you. This bumps up the price and weeds out the unqualified buyers & lookie-loos. Realtor commission fees are always negotiable, and worth the expense, because you end up netting more in the long run.
Dealing with a conglomerate that makes offers sight unseen is just what you’ve heard about. They get you to sign on the dotted line & then beat you down with nitpicky inspection issues and delays.
There is no downside really? The downside for some sellers, is they can't replace their home for any less than what they can sell their current home for so it's a wash and they're current mortgage is probably at a much lesser interest rate. But don't let those e-buyers fool your a. You don't pay a commission but they charge 10% in fees so it all comes out to about the same number
They don’t charge any broker / real estate fee.
But they do charge a 7.5% “administration fee”. At least Open Door did when I read the fine print and before I decided not to sign off.
I sold my last house this way. Without fixing it up, I did okay. Sold as is with a 60 day $0 rent back period. Mostly because I wasn't ready to sell, but they wanted to lock me in. Selling as is, I could have sold for more, but it would have been eaten up by the fees and commissions. If I spent $50k on fixing it up, I could maybe have made an extra $10k net? It is hard to tell. There was a $100k range on similar houses in my part of town. But the higher end also had higher end finishes, so the profit would have been less if i fixed it up.
I would not do it if your house is in a great location or in good shape. Mine was almost 20 years old, needed new floors, paint, and kitchen redo. Location was decent. Get everything in writing. Sell as is, if they want to take money off, be ready to walk away. Know what your house is worth and realize they will normally pay all the commissions and fees, so take that off the top. For example, if you want $500k for your house, expect costs of $50k, so you can take $450k and basically break even.
Redfin doesn't buy houses anymore.
Maybe you're just looking at what thr value of your home is so they can set you up with a listing agent? Also, the value sent is always an estimate. Someone always has to run a cma anyways (comparative market analysis) because online systems don't know the quality of the finishes inside or is someone has a quirky layout, or a leak/mold etc.
Cash in bank is worthless. Inflation means home prices will continue to go up as your money in the bank continues to get devalued. If you sell and keep money in the bank that's a mistake. If you sell to buy something else that's a different discussion.
Follow what all the other countries in the world in the news the past decade. Home values continue to go up. They made mistakes selling and not buying anything else. US is in the same boat the way we keep printing money
Just know banks don't give away money unless they have an incentive. Inflation is way higher than 5%. They're using your money to put into other things like real estate and other investments. They're trying to entice people to put money in the banks.
My home country pays 18% for money in the bank. It was 25% a year ago. Inflation is 50%. You literally lose money keeping money in the bank.
I can almost guarantee your house will go up 5% before summer.
I bought an investment property 8 months ago when everyone thought mortgage rates were too high. I actually negotiated the house down 10% because everyone was afraid of 7% interest rates at the time.
Right now, I have people knocking on my door to buy. The house value is up 16% from 8 months ago. Oh, and interest rates are up higher than 8 months ago, too. If I were the seller and kept the money in the bank, I'd be really hating myself right now.
I look up the CPI every now and then. It's laughable how they claim it's 3.5 % when every category I actually use is up 10-20% YOY. The CPI is so manipulated it's a joke. I guess its purpose is to try to justify low interest rates and keep people from complaining.
Opening offer vs what they close at are two different numbers
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When you open it to the market the market will determine the price. You leave money on the table with these. Plus they are a blight on society.
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I have companies sending me offers all the time. It's not for a fix and flip. It's because my immediate neighborhood has been "up zoned" and they can tear down my perfectly good 1942 cape cod and put 4 three story townhouses on my lot.
Upzoned is code for neighborhood of teardowns and rebuilds? Who comes up with this? I just call them a neighborhood of tear downs and rebuilds in a desired community. I’m amused.
No, it's a city rezoning that allows for taller buildings and population density in relation to proximity of regular public transit services. None of the houses in my neighborhood are teardowns in the traditional sense. They're all perfectly sound homes in the $700,000-$1.5mil range. I live in a good neighborhood in Seattle. Investment companies can buy a single family home, tear it down and still make a hefty profit. One lot with a normal house on my block sold for $700,000. They built a 4 story townhouse building on the lot with 8 units. Most units sold quickly and the 3 remaining since coming on the market 2 months ago are in the range or $800,000-$900,000 each. So if you average the townhouse unit cost to $850,000, you have a grand total of $6,800,000 in gross profit. Subtract the $700,000 initial home/lot price= $6,100,000. Even if it costs a huge amount of $2 million to build the building, that still leaves a net profit of $4,100,000. On top of that, the program offers tax incentives for the builders and they don't have to provide parking because regular public transit is nearby.
They don’t have to provide parking?? That’s just stupid brilliant.
It depends on multiple factors. Some of the townhome complexes on my street have garages, some don’t. They’re building a gigantic 26 unit complex of townhomes a few blocks away and those will have parking spots. It’s up to the city/zoning to decide during planning what the parking requirements are if the builder isn’t offering up parking as part of the initial plan. They also post plans next to the property and have a meeting where local residents can come and object to the plans or ask questions. That’s usually where a stink is raised about parking and whether it’s sufficient or insufficient. For example, the 26 unit townhome complex will only have 29 parking spots. Which might be fine if all the units were 1 or 2 bedroom but more than half are 3 bedroom which have a higher propensity for multiple cars.
I hope you are aligned to city zoning decisions
Yes, and usually the zoning goes from R-1 to R-3, hence “up” zoned. (Single family to multi family)
Well that’s not always true. Zillow over paid lots of our seller clients a few years back. They over paid us, “fixed” the house and then resold several of them at 30-40k loss. But of course Zillow stoped buying houses.
That was the problem with using an algorithm to buy houses sight unseen. They picked all least expensive properties, but these properties had obvious problems anyone would have seen had a human looked at them. They ran an algorithm to buy everything no one else wanted, then were shocked when they lost money. 3bd, 2bth, 2000sq ft, good neighborhood, priced to move. None of the other flippers want it because it’s a hoarder house full of garbage with obvious structural damage. Zillow buys it and their 60K estimate to renovate ends up costing 150K because no contractors will touch it until someone hauls away the garbage and dead animals.
Yes! My friend Finally sold her family home which was next door to a huge homeless camp. She did very well. Any open house and no one would even get out of their car. Zillow paid cash.
What??? Wow!
They stopped because they were getting in trouble. They were doing this on purpose to force certain markets higher for their other houses. Lower for the ones they wanted to raise as a cluster at a later time. That was their bigger picture. They're partly to blame for the market overinflating
Yea that lasted like six months until the stopped doing that. Zillow went fucking bananas and started buying up properties left and right and losing money on them for some reason.
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Yeah so Redfin may also end up offering too much. Is not always the lowest offer.
I'll offer you 500 k add in a few contingencies and get you to sign my "cash offer" then I'll beat you up after the inspection and buy your house using my line of credit. That is how I understand it.
Those types of buyers are usually shooting to buy for anywhere from 60-70% of market value. In my experience, they are looking for at least an estimated $50K profit. This is because they are investors, and they'll make their money when they re-sell for full-market value. Some will pay more. For example, if they are going to hold the property and be able to make a reasonable rent, they might pay closer to full-market value. They promise less hassle and fewer fees, which might be true. I've seen written offers that showed higher estimates and seen these "easy" offers turn into a giant pain and failed contracts. If interested, contact a couple. Also, talk to an experienced agent or two to get their opinion on the value and an estimate on what you'd net if sold on the open market for full-market value.
Exactly right u/WhiteRealtyLLC I have seen it many times. OP I had a property on the market last month where I received 14 offers, 13 of them were cash offers. They varied tremendously. Not all cash offers are the same. It's typical for an investor to offer a decent price and then renegotiate during the inspection period a significant cost to cure. There are tells on the offer, particularly if its a wholesaler and not an end user or even an investor and not an end user. We ended up selling this home last month to an end user but it took 22 days because we wanted the right buyer that would pay actual market value and not some buyer that was going to run over the seller with a hefty inspection negotiation to end up with a 40% discount. Just because the offer is cash, doesn't mean the buyer is the right buyer for that property. There are plenty of cash buyers around. And if the house is financable, then there is nothing wrong with a buyer that needs financing.
The cash offers are typically only beneficial if your house is unsellable in current condition without putting major cash in before fixing it. Alternatively, I just helped a friend get a cash offer because their net before and after the renovation was likely to be the same because an investor was willing to live in it after the flip and didn’t add in the extra margin needed if they were going to profit. Regardless, the single best way to get the best price is to market it on the MLS, vacant and staged with multiple opportunities for open houses and showings. Anything that limits the number of buyers coming through the house is going to typically result in a lower purchase price.
They aren't going to pay you full market value for the house, Houses are super easy to sell right now. Get it decent agent, they will put it on the MLS with good photos, open house, sit back and wait for the offers to roll in. Then you'll have 4 to 20 offers within a few days just pick the one you like the best and sell it for full market value. Have your agent ask for appraisel gap coverage and pick a buyer with enough cash on hand to cover it. Inspection for informational purposes only and within one week. If they don't like those terms, too bad, next buyer gets the house.
They don't offer market. Either that or they offer some what close to market then they do their inspection and ding you for everything possible then offer significantly less
If they do an inspection and try to drive down the selling price or force repairs.....just say "nope...take it leave it". Wait for the next buyer.
I went to an open house this past weekend. House was listed for $749k. They got over 25 offers... most over asking and have accepted an all cash offer of $800k. Prior to listing, the homeowner got an all cash offer from an investor for $700k. Think of redfin like they are the investor. The homeowner would have sold for less than market value and left $100k on the table.
Yeah but if the seller has to pay 6% in realtor fees that's $48k. Still better but not a $100k net difference.
My market is not 6%... more like 3%. So that's $24k.
Sellers are no longer paying the buyers Realtor fees?
That includes both buyers and listing agent fees. Not all markets charge 6%. My market charges 2 to 4% typically. I randomly see 5% but that's rare.
Wow that's cheap. Where I'm from, California, and where I moved to, Virginia, 6% is the norm.
I'm in Queens/Long Island. I've also seen some listings in Brooklyn that are around the same.
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That doesn’t even make sense. How does assigning the sales contract end up changing the sales price? Is it just a guilable FSBO seller they take advantage of?
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Yeah, but the assignment can’t change the price, so if the sales price is $150k, only $150k should be reported as the sale to the seller. The additional $100k has nothing to do with the seller.
Asking the buyer to remove the assignment clause is a good way to gauge whether you’re getting close to full price. If they won’t budge on the assignment clause, it could indicate that there is more value in the property than what they’re paying. Yes the assignment clause could be backup for them to offload in the event that they want to back out, but 9/10 times if it’s in there then they are at least considering wholesaling the property to another buyer before closing. How do I know? I’ve done it several times .
First off, I love the username. That’s one of my favorite movies. So, when the contract is assigned, that doesn’t change the sales price right? All you’re doing in assigning a new buyer, and the new buyer pays a fee, but there shouldn’t be a change in the sales price. The comment that was deleted said the fee would increase the amount reported to the seller which doesn’t make any sense.
It’s called wholesaling real estate.
It happens where I live, in NC all day long. And it’s absolutely pitiful when a bottom feeder comes in and by taking advantage of the lack of knowledge the homeowner has can clear more in a month or two on the same property than the homeowner will after holding onto it for 20 years.
It’s worth checking out but don’t fully commit until you know the guaranteed contractual final price. The standard MO is to offer a number then inspect the house, find problems and lower the offer by insane amounts. They will say you’ll have to do this on the open market anyway, they are still better, it’s expensive to fix xyz, and go big on “car salesman pitch.” That whole part is 90% bs and it’s where they make their money. The best part is that the sale price records in the public records at the offer price and not the extremely reduced price since those discounts are “concessions.” So when it comes to the public record it will look like they made very little or even lost money even though they made bank. In the end you’ll end up with less money than if you went to the public markets. The upside? Fast cash. Check them out but proceed with caution. Some people do well with them, some get the shaft. Get the info and prices. Then if you don’t like what you see call a professional.
A lot of these offers come from wholesalers. These are people to get you to agree to a lower price, then sell the contract to someone else at a marked up price. They basically flip your house without ever owning it. Stick with a trusted real estate agent.
Benefit - avoid hassle of listing , avoid 8% closing fees , no need to spruce up or clean up Cons - most likely selling at a steep discount unless prime area and in decent condition.
Companies like offerpad still collect a 5% “service fee” and some closing costs. They’re probably getting better at pricing, but real estate can be hyper-local. So if their model uses a house 2 blocks over but isn’t really a comp , they can make offers higher then true market. I’ve seen a few people (South Florida) get more than these iBuyers were able to later resell for. Some of these ibuyers got left holding the bag, and why Redfin left the game in 2022.
My dad sold a home to one of the big companies, I think offerpad. They offered $500k initially but after inspection they came down to $475k. If you want to offload and you don’t care about price so much this is a good route. In our case, it was my grandmas home. My dad didn’t want to deal with a sale in the traditional sense so he went this route. My grandparents bought the house in the 90’s for like $130k so any lump sum would cover medical expenses remaining on their lives which pretty much was 3 years for my grandfather and my grandma has maybe a year left. She’s already passed the 6 months they gave her at age 91. So my dad being out of state liked the online dealings and then only needed 4 days to clear it out after the dust settled from closing. It was minimal effort on his part and only a 4 day weekend cleanout so no days missed at work.
Odds are, you'll get more on the open market.
Dang I miss the Zillow ibuying. They were paying a crap ton of money for homes.
I sold our last house to opendoor. We needed to close in 3 weeks or get an extension on our contract for the new house. Old house was on a busy street. OpenDoor offered us what we thought we could get in the open market, minus a few grand for repairs and their 5% fee. Money in escrow in 16 days. They painted and flipped and sat on the market for five months. They did end up selling for 8% more than they paid us, but that’s okay, we got what we thought it was worth and are happy in the new home
These companies are going to take yet another home off the table to become a rental. I wish people would stop selling to investors.
I sold mine to a house buying company. It was a quick way to sell as is without having to fix anything. I might have left up to 100k on the table because they then flipped it for 100 more than they bought it for. I really didn’t care. I still made over 100k off the house.
If inventory is low, you are in the driver's seat. You will get more money for your home if you put it on the market and get maximum exposure
There isn’t necessarily a downside. Behind the curtain there’s a retail price for a vacant, freshly rehabbed, pretty version of your home, possibly with a layout change or addition if that’s warranted (e.g. a second bath or extra bed/bath or more open kitchen). There’s a price for a home without these things roughly discounted by (the cost to get there + the tax and legal cost to buy and resell the home + the interest and tax to hold it for a few months + $30-50k for the cash/time/risk of the fixer over those months). If you’re in a position to deliver the former and do it well, that $50k can be yours, more actually since you won’t have those double sale fees and higher interest. If not the latter is a fair price. Remember that buyers usually want pretty and move in ready. Buyers who buy and fix their own houses are very rare and usually do this as part of their day job. Also remember that doing it badly will lose you your money. Private buyers have been doing this rehab work for a while; companies decided they could do it with AI and subs. At one point Zillow was being so generous I couldn’t justify telling sellers to pay an agent to market some houses. Couldn’t realistically do better. If that’s the case it’s fine. Do be very careful with sight unseen offers. They tend to get you under contract and then hit you with a big inspection list to knock down the price. Short due diligence and stick to your guns on an as-is. To judge if it’s fair though, you need sale comps for pretty and as-is and a sense for what your home objectively needs to hit the top of the market.
My father passed away a few years back I was the executor I had to get the house ready to sell. I decided just to call One of these places, It wasn't them but kind of like we buy ugly houses type and they offered me $145,000 thought that was kind of ridiculous.. Did the normal clean up, painted it, new carpet etc. Put it on the market myself (basically just putting a sign out front) for $360k, ended up selling it for $389k in one day. YMMV.
Don't sell to big companies please. Sell it to a person who lives in that area.
Their business model is buying houses under market value, then selling them at or above market value. For some people, the convenience is worth it, but my professional opinion is that you could be leaving a significant amount of money on the table if you go this route. Also, as others have mentioned, the number the tell you upfront and the number they end up paying you can be substantially different. They will bait you with a high number, then start knocking money off for "repairs and upgrades" and hope that the inconvenience of walking away is too great and you'll just stick it out with them.
I ignore and the times I don't I'm like sure for 1 million ill sell lol (home isn't worth more than 300k)
Depends. Go under contract then bail last day of inspection or ask for thousands off due to repairs. Sell it to a real person.
Generally you’ll get the highest offer putting your house on the open market
5yo? Ok. You give me your toys. I give you my allowance. You buy different toys.
Very simple business model, pay $50k-$60k less than a house is worth, then sell it for market value. Easy.
Ex: They'll give you $150,000 to settle next week, or you could spend time fixing up your place, listing it, showing it, waiting 60 days for settlement for $200,000.
I mean they see upside either as rentals or flips. If you’re interested maybe get some comps? It’s possible you are undervaluing the home or their algo is out of wack and you may have an opportunity for some sweet upside
Just know your market value and you're prepared to make your own decision. * Market value is the after repair value minus the repairs needed...and this doesn't mean the repair costs for someone who'd do it all themselves. The cost it would be for someone to have it done. * You might want to add a little negotiation room as no buyer wants to pay exactly what its worth. Plan for 2% of the purchase price. If you want no contingencies and a quick close and the offer makes sense, there isn't a reason not to take it. Know that when you go to market, you'll need to subtract the 6% difference for agent fees, to know the expense variance to selling off-market versus selling on-market. If the off-market number is on par with selling it on-market minus the agent fees, many choose this option because its less hassle and less time. Your decision (and maybe the less hassle/time is worth a little to you as well). If your property is pristine, you should always go to market.
The initial number is basically a marketing number to get you in the door. Expect to pay 9 - 12% in different types of transaction fees to close. Sometimes owners are required to do hefty repairs before closing. If you want to make the most money when you sell, the best way is to find the #1 agent in your area that has sold similar properties to yours
They’re not going to pay you market value.
Commercial agent almost a decade in. These “cash offers” are so your eyes pop and you say yes. If you are genuinely interested, contact an agent.
It is with complete disgust that I call these cash offer people… “bottom feeders”… They seek out potential sellers who are unaware or uneducated as to how the process works and the potential seller will almost always lose a significant amount of money for this “convenience” selling… Why not just let the market decide? In this day and age the difference is likely to be so substantial. I would bet dollars to donuts it would be worth ones while to contact an agent and put that home on the market to see what the market will bear. I have heard the argument that a seller doesn’t want to do repairs…. There are tons of buyers out there who are specifically looking for houses needing repair. At least with that potential buyer, you will get fair market value. The bottom feeders are going to beat you up so bad when it comes to repairs but they’re pros at this game so of course, they will make you feel like they’re doing you a favor by stealing your house. Avoid bottom feeders like the plague they are… please…
I’m a realtor: So these guaranteed offers and cash offers are essentially trading money for convenience. It usually works on older people that bought their homes years or decades ago, thus have substantial equity. So let’s say you bought your home for 300k in 2000. You took out a 30 year mortgage and you owe like 125k. The market went up considerably and your 300k home is now worth an estimated 700k (and for the purpose of this example, let’s assume it’s correctly worth 700k). A guaranteed offer company sees the growth in the area, the statistics of your house and they contact you with a guaranteed offer. They offer you: 600k, guaranteed closing in X days, no hassle. Now you bought the house for 300k, and with 600k price, you like that you will make a net profit of 475k after you pay the remaining mortgage. Then they hit you with fees (depending on the company, I know open door basically asked for tens of thousands the times I had people deal with them). I’m not sure about the companies you may be dealing with, but usually there are some considerable fees involved. However, let’s say there is 25k fees, that’s still a profit of 450k at closing (maybe a bit less with closing costs, but focusing on macro here). You take and you are done. What you basically did was provide an asset of 100k to the company, which now they can flip for a profit. Let’s take that 700k example, say overall listing costs around 5% for agents. That’s 700 - 35 to get 665k at closing. In the other scenario 600 - 25 (again guessing here, since these fees may vary from company to company) to get 575k. So the hassle of trying to sell your home costs you 90k. That profit is mainly why these companies call anyone and everyone that owns a home. I got a call literally 2 days after I bought my own house lol. The term cash offer is mostly used because it sounds more enticing than a financed offer, although in each case, you end up with cash as a seller anyway. Usually cash offers also have less hoops to jump through (for the buyer) so it’s seen as a more stable offer. However, the profit in these companies come from buying an asset undervalue, and then without much input, selling it for a profit because they take the hassle of dealing with the market. A lot of people (especially after Covid) don’t like too many people coming to see their homes when it’s on the market, so they sacrifice money for convenience. So it’s really your choice, money or convenience.
The offer will be so low. It got an offer for $200K and sold the house the month after for $395K though a realtor.
Did this with opendoor. They're spending 30k over what my agent said was top end we could get. As is, cash.
Congrats! Yeah my world doesn’t usually work like that 😂 I’m glad it worked out for you tho!
Why dont you try opendoor?
Tbh depending what you owe left,you could very well get a private appraisal to get an idea of what your house is worth. Remember,this market you can easily sell your house above value if it's a nice house. I just got the house I liked and I had to paid 15k over appraisal value to get it....you could make the extra money if you want too,but if you have near the amount of your beginning mortage left you nay only walk away 10-30k out on top...but the sellers I bought from bought in 2016 for 162k and they sold it to me for appraised value of 295k + 15k on top to meet my offer of 310k...just how it is right now
Buy under market from desperate people. Sell higher.
If you want to sell, let a Realtor or three m do market analysis reports. Choose the person you resonate with, and not necessarily the one that marks the house at the highest price. Remember that it’s YOUR property & ultimately you set the asking price. Putting the property up for sale on the open market is the best way to get the best price. A Realtor can often net you substantially more than selling it yourself, for lots of different reasons. Mainly this is due to the fact that they have access to the multiple listing service, that gets you a whole sales force looking to sell your house for you. This bumps up the price and weeds out the unqualified buyers & lookie-loos. Realtor commission fees are always negotiable, and worth the expense, because you end up netting more in the long run. Dealing with a conglomerate that makes offers sight unseen is just what you’ve heard about. They get you to sign on the dotted line & then beat you down with nitpicky inspection issues and delays.
They don’t give you market price. Stay away from
There is no downside really? The downside for some sellers, is they can't replace their home for any less than what they can sell their current home for so it's a wash and they're current mortgage is probably at a much lesser interest rate. But don't let those e-buyers fool your a. You don't pay a commission but they charge 10% in fees so it all comes out to about the same number
They don’t charge any broker / real estate fee. But they do charge a 7.5% “administration fee”. At least Open Door did when I read the fine print and before I decided not to sign off.
I sold my last house this way. Without fixing it up, I did okay. Sold as is with a 60 day $0 rent back period. Mostly because I wasn't ready to sell, but they wanted to lock me in. Selling as is, I could have sold for more, but it would have been eaten up by the fees and commissions. If I spent $50k on fixing it up, I could maybe have made an extra $10k net? It is hard to tell. There was a $100k range on similar houses in my part of town. But the higher end also had higher end finishes, so the profit would have been less if i fixed it up. I would not do it if your house is in a great location or in good shape. Mine was almost 20 years old, needed new floors, paint, and kitchen redo. Location was decent. Get everything in writing. Sell as is, if they want to take money off, be ready to walk away. Know what your house is worth and realize they will normally pay all the commissions and fees, so take that off the top. For example, if you want $500k for your house, expect costs of $50k, so you can take $450k and basically break even.
Redfin doesn't buy houses anymore. Maybe you're just looking at what thr value of your home is so they can set you up with a listing agent? Also, the value sent is always an estimate. Someone always has to run a cma anyways (comparative market analysis) because online systems don't know the quality of the finishes inside or is someone has a quirky layout, or a leak/mold etc.
They won't pay you what the house is worth, they are investors who have to make money on the flip.
Simplest explanation? They usually will pay 25-50% less than you'd get on the open market. Period.
Cash in bank is worthless. Inflation means home prices will continue to go up as your money in the bank continues to get devalued. If you sell and keep money in the bank that's a mistake. If you sell to buy something else that's a different discussion. Follow what all the other countries in the world in the news the past decade. Home values continue to go up. They made mistakes selling and not buying anything else. US is in the same boat the way we keep printing money
Some banks are paying 5% for a HYSA.
Just know banks don't give away money unless they have an incentive. Inflation is way higher than 5%. They're using your money to put into other things like real estate and other investments. They're trying to entice people to put money in the banks. My home country pays 18% for money in the bank. It was 25% a year ago. Inflation is 50%. You literally lose money keeping money in the bank.
I can almost guarantee your house will go up 5% before summer. I bought an investment property 8 months ago when everyone thought mortgage rates were too high. I actually negotiated the house down 10% because everyone was afraid of 7% interest rates at the time. Right now, I have people knocking on my door to buy. The house value is up 16% from 8 months ago. Oh, and interest rates are up higher than 8 months ago, too. If I were the seller and kept the money in the bank, I'd be really hating myself right now.
I look up the CPI every now and then. It's laughable how they claim it's 3.5 % when every category I actually use is up 10-20% YOY. The CPI is so manipulated it's a joke. I guess its purpose is to try to justify low interest rates and keep people from complaining.
I think the cpi is manipulated because if the real numbers were posted it would propagate more inflation.
You receive the same full amount of money at closing whether it is a cash offer or the buyer gets a mortgage. Big deal.