You are ready to move on to your new job, or your being sent to another state for an opportunity you can’t give up, or you may even be moving to be closer to family. There is a long line of online companies who want to buy your house, but there are pitfalls that come with that Easy Button.
Let’s face it – selling a house is not all sunshine and rainbows. Online companies feed on the comfortableness you have in anonymity.
Most of the time, you earn equity in your home, this means the difference in the presumed market value versus what you owe, which is what you would get if you sold the property with a broker. Now, comes in Guaranteed Offers and Online purchasers, and they buy your home at up to a 25% discount more or less, depending on the location. With any of these offers, you will not get the top dollar – you never will do.
We have heard from For Sale By Owners, who would take a hit of 6% to not list it with a Realtor, but with that comes the challenges of keeping up with criminals looking for a place to live, the never-ending long list of Rent to Own prospects, bankruptcy filers, and folks who genuinely want the home, but don’t have the money to pay for it, plus the new real estate brokers trying to court you on listing the home with them – all coming directly to your phone at Midnight.
Not only that, but 49% did not actively market their home at all, or did so minimally. Or tried to wrangle in a buyer with a yard sign posted outside in which out of 100 people, 7 would see, and perhaps 1 of them are in the market. With homes selling in as less than 3 weeks, and your FSBO is on the market more than a year, using a companies guaranteed offer may sound like a great deal especially since in today’s climate, FSBO’s lose $40,000 in returns for attempting to save $5,000 in commission.
But is it a deal?
The short answer is no. You are hitting a panic button versus an easy button. Sure there is showings, and listing, and the pain of the phone call from your broker – but they are a gate and a prospector. They are the ones that ensure that those who qualify for the home can buy the home. Those are always inconveniences – but well worth the commission to get the largest gain.
Why is a guaranteed offer not a great idea?
First you have to think that they are going at the current Competitive Market Analysis. (Click here for a free one.) Then they are going to make an offer 25% less than that price, or more depending on the location. In turn, with the costs of transporting it to them, they are going to charge you an additional 6% fee. (So they have already made 31% of you – but keep adding)
Then comes your nightmare. In order to facilitate the sale, they are going to charge you for paint, carpet, yard work, roofing, plumbing, appliances – and in some cases charge you a fee for each service needed of a particular group of people at $20-50 each dispatch. So if there are six people that go out and they charge $700 on average – you are on the hook for $4,200 + $210 service fees on top of that. Are you starting to stress a bit?
So now, they have charged you for all of that – they are now going to price the home at all of that which you paid out of pocket at closing, so if you are looking at a $215,000 home, they may charge upwards to $249,000 for a home and take that delta difference and place it in their pocket.
Think about that. That Easy Button earned someone else over $84,000. That is a big amount of money you give to someone because of an inconvenience factor.
While so many companies want to remove the hassle, a potential hundred-thousand-dollar loss in equity should be a larger overall weight on your mind. But as with many things in today’s new service economy, you are paying for convenience, and not having the stress of trying to sell your own home. Just at what pain point does it become painful?
If you can wait and can handle inconvenience, in many of the markets it is best to contact a Realtor where you can get help, and you won’t waste your money.