Comparing the Big Three to local agents

Offerpad, Knock and Opendoor may have their places in real estate sales

1449 Hillview Drive
Home For Sale in Harbor Acres - Are the new services the best choice in selling your home?

Considering selling your home by owner, either through a website or just by hanging a sign near the street? There are many obstacles to consider before you travel down this route, especially if you are serious about the sale of your home or residence. It seems lately there are new websites offering alternatives, claiming to save you thousands of dollars and with a quick sale.

Are these claims real? Let’s examine how websites such as Offerpad, Knock and Opendoor operate. They may be the Big Three of this new technology. We’ll see how others are getting into the game. RP Funding is bundling there services with a Listed.com agent and offer to pay your closing costs. I’m not knocking their services. But as in other transactions, shop around for the best terms and interest rates. You could find yourself saving a little at closing but end up paying thousands more in interest.

As for the Big Three, let’s start with the fair market value of your home. Although Zillow is not in this market of selling your home, they do have a process of evaluating your home value called their Zestimate. Zillow has received a lot of criticism and even lawsuits for their Zestimate pricing structure. The company based in Seattle may not have a clue what a home on Gulf of Mexico Drive on Longboat Key is worth. They base their estimates on an intelligent algorithm, pulling from comps, tax records and possibly price per square foot.

What they don’t do is walk into your home, look at upgrades made to the home and give value to the little things that current buyers are looking for on Longboat Key. In contrast, the Big Three provide their valuations similar to Zillow, and offer their bid on your home at a value much less than the current market. Offerpad and Opendoor will offer to purchase your home based on their estimate. Knock will place your home on the market for six to eight weeks and offer to purchase it at the end of that listing period. By undervaluing the price of the home all three are assured of a profit.

Maybe you think that your savings in the sale will present itself with the fact that you do not have to pay a commission. The Big Three each charge a commission but may call it something else. Opendoor calls it a service charge of 6.5 percent. Their buyer-centric platform is openly admitted by these companies.

1235 North Lake Shore Drive
Home-buying programs may not be the best choice for the luxury waterfront second-home market.

Consider the cost of repairs. In the process a qualified independent inspector will provide a list of expected repairs. A professional agent working on the seller’s behalf is certainly acquainted with this process and will negotiate which repairs the seller is willing to make or will recommend a credit, if necessary. It is part of the negotiations. The Big Three are very rigid on these costs. If you are in a situation that you can not make the repairs, a mandatory credit is issued at closing.

Other fees with these online companies have terms such as customer experience fees, closing costs, market risk fees and holding fees. Knock does have unique programs to trade-in or trade-up your home, but interest can be as high as 8 percent while living in the home waiting for the sale.

Another concern about the Big Three is that they don’t take all homes offered to them for purchase. Each has restrictions on what they will take based on price, age of the home, clear title provided, occupied or the community has age restrictions. They may not make an offer on a home that has significant damage, they want a quick turnaround.

Also, they do not sell in many areas of the country. Offerpad listed six cities on its website, two of which were in Florida. Through the Tampa link I found four homes for sale in Sarasota and no homes for sale on the barrier islands. Opendoor had 10 cities listed with Minneapolis and Houston coming soon. The Tampa link did not have any homes for sale in Manatee or Sarasota counties. Buyers on Knock go through a free pre-approval process before gaining access to its inventory. These are hit-and-miss strategies for buyers, especially since they may know they have free access to hundreds of homes in these areas through the Multiple Listing Service.

These services may have a future in some markets and for some home sellers. Sellers that need to move on quickly may want to use these services. Inexperienced sellers, owners that want little to do with the process or homeowners in default and facing foreclosure may be good candidates. This doesn’t sound like the seller of a waterfront luxury property in a second-home market. Those sellers want the experience of a professional real estate agent in the market they have their home.

You can use some of those same arguments to justify using a professional versus hanging a sign alongside the road as FSBO. Those sellers lose out on the exposure of the MLS, the negotiating experience to get the best price and the knowledge of the closing process so the sale is seamless. It reduces the stress in selling a home. We have seen it many times, one year with a sign out front before they visit our office.

225 Sands Point Rd. #6105
New listing - 225 Sands Point Rd. #6105

Last week I listed an Inn on the Beach community resort residence on Longboat Key at 225 Sands Point Rd, #6105. It is a unique furnished home behind the gates of the Longboat Key Club. This is an income-producing property, listed in the rental program there. The owner has 30 days of access per year and all the Longboat Key Club privileges while in residence. We discussed the property and announced in REALTALK™ #176 that the proceeds from the sale benefit the Southeastern Guide Dogs program in Palmetto. Please contact me at (941) 387-1840 for an exclusive showing or if you have a property to sell or buy.

Address List Price Media Slideshow
225 Sands Point Rd, #6105 $329,000 Video Photo Slideshow

 

Call us at (941) 387-1840 for an exclusive showing