By Carol Hardy • 2018 President
Honestly, until sitting down to write this article, I had not heard of the whole concept of selling homes with tech companies that offer instant offers. I quickly found out there are several firms that offer a “discount,” “take out the middle-man,” “stress-free, worry-free” way to sell real estate. It made me wonder. Do these companies make it easier than working the traditional way, with a REALTOR?
I did some research and these instant offer companies are not in Austin yet, but they are in some of our state’s largest cities, such as Dallas. One broker in that area, Renee Mears of Renee Mears REALTORS, wrote on her blog that these startups can be less than ideal for sellers. One sales pitch is “sell your home to us so you can skip the hassle of listing, showings and months of uncertainty.” The purchase prices don’t seem to be the crazy low-ball numbers we are used to seeing from investors (20-25 percent below market value) but they are still 5 to 10 percent below market value not including outrageous fees, she says.
“In most situations, (wholesalers) do the home seller a disservice,” she writes. “The seller would put much more in their pocket if he or she took the traditional route.”
Sellers can pay 10 to 12 percent in fees, according to some of my research. Also, sellers can end up paying for repairs that are found during inspections, (repairs, if not warranted, are negotiable in traditional sales).
“Sellers are clearly giving up significant equity in exchange for convenience. On a $300,000 house, giving up 5 to 10 percent of market value — plus paying 12 percent commission or fees and making all repairs needed — can add up to a very pretty penny versus hiring a real estate agent and selling the traditional way.”
One online reviewer in Frisco, TX, said he got an instant offer from one of these firms but put his house on the market, but ended up selling his house with a REALTOR for $25k more. Moral of the story, if you don’t want to deal with showing your house, and don’t mind losing money, (instant offer companies) can help you. Otherwise, just use a REALTOR.
Like the phrase I have heard and like to use myself, “Would you go into a court of law and use the other guy’s lawyer?” Your biggest investment is not worth the risk! These people want the most for their company, not the homeowner! Using a professional REALTOR is always the best choice. Yes, it may be a little more work, but it pays off in the end. By educating our clients, the traditional real estate transaction will not be undercut by seemingly “short-cut” companies like these. RL