iBuyers are swooping in to buy properties and may not have your best interest, what you should do instead...
You’ve probably seen Opendoor advertisements everywhere! Facebook, Google, even in the mail! They are spending A LOT of money advertising, and it is drawing a lot of attention! You Might Be wondering, is this a scam? How does it even work?
Who is Opendoor?
Opendoor is what we call an iBuyer, or an internet Buyer.
The bottom line?? They are a highly funded real estate investment company, they buy and sell homes for a PROFIT. Opendoor has been around for a few years now, but they just recently came into the Sacramento market in 2018. They have bought and sold over a hundred homes in the Sacramento metro, some for a major discount and profit, several have been a loss. Once they acquire a property they will make a few repairs, usually carpet and paint, put it back on the market for 10% or more than they bought it for and attempt to sell it under their own brokerage. You may have seen their ‘self tour’ homes and blue signs around your neighborhood.
What types of homes will Opendoor buy?
According to their website they only buy single family houses and townhouses, but in some markets they will buy condos and duplexes. I haven’t seen any condo’s or duplexes sold in our market yet by Opendoor but that can certainly change. They apparently DO NOT buy homes over $500,000.
If you have a rental your need to sell...They will NOT buy homes occupied by tenants! It must be owner occupied or vacant. If the home has major damage or is located in a flood plain they will also not purchase the home.
They WILL however buy a home that is listed with a real estate agent. Your agent should be versed in getting offers and negotiating with Opendoor.
How does their offer process work?
In a nutshell, you will fill out a form and answer a few questions about the condition of your home then opendoor will respond within a couple days with an offer for your home close to market value, but typically under the real value by 1-2%. What you will need to be aware of is additional fees they charge, around 8% or sometimes more. Moving forward, if you agree on the price and sign the contract, you will enter an inspection period in which they will have inspectors come out to the home to point out repairs needed and request that repairs be done to the home OR they may add additional fees in order to complete the repairs needed. All of this accounted for, between the lower offer price and additional fees.... you might be selling your home for 10-15% below market. On a positive note however, if you do decide to move forward they can typically close in less than a week or when you decide works for you.
Here is a breakdown of the Pro’s and Con’s of selling to Opendoor:
- No Selling Prep
- Quick Sale - Close on your timeline
- Slightly Under Market Offer
- Fees upwards of 8% or more
- Additional fees for major and minor repairs needed.
- Profit leaves the local market into a large corporation’s pocket.
What should you do before getting an offer from Opendoor or any other cash buyer?
The simple answer is talk to an experienced real estate agent to get a clear understanding of:
1. The value of your home
2. What your home selling goals are
3. What you would expect to net from a traditional on market sale
4. How the agent can help you get offers from other Cash Buyers and investors.
5. How each option compares and which option will accomplish your goals as a Seller.
In Conclusion, Opendoor is not a scam, they are however in the business of making money and not representing your best interests. Your local real estate experts are held to the highest standard, look to them for expert advice and to arm yourself with all your options.
If you have additional or more specific questions feel free to reach out to us by phone or email, we are always here to help! Our number is 916-500-4410.