I have recently had a number of conversations with my clients about selling their properties. A couple of the conversations have included questions about why they wouldn’t just use one of the on-line companies who will buy their property instantly, with no hassle and no Realtor. While avoiding the chores of getting the house ready to list and de-cluttering can be attractive, let’s look at some numbers.
A colleague of mine in Long Beach, California recently decided to see what would happen if she requested Open Door (one of the many on-line property buyers including iBuyers, Clever, Homebay and Offerpad – to name a few) to make an offer on her home. She self discloses that the current market for her home would be between $850,000 and $900,000. Open Door offered her $712,000 and quoted her an 8% service charge separate from closing costs. In her market this means she would have netted proceeds of $648,597.
If she had used a Realtor with a 6% commission and sold it for $875,000, after closing costs the net would have been $822,500. That is a $174,000 difference!
Clearly everyone’s situation is different and this simple set of numbers does not tell the entire story. Working with a Realtor does mean that there will be some time on the market so it isn’t instantaneous. It also means that there will be someone there to guide you through the process and has your interests in mind. These home buying companies are in it for profit – nothing wrong with that – however when the profit they get comes at a 20% – 25% reduction in the money in your pocket, you may want to think twice.
Thanks to Barbara Betts of The Betts Realty Group in Long Beach, California for this example.