Companies like OfferPad and OpenDoor are appealing to iBuyers and growing at a break neck pace in Arizona! If you've been living under a rock the past year and haven't heard of these two, you will soon! Both Opendoor and OfferPad make sellers online offers on homes virtually sight unseen, make minor repairs, and re-sell the homes for a profit. These aren't fix and flippers, they simple make minor improvements to enhance the showing experience and get top dollar for the homes they purchase. Remember our mantra, price and condition sell homes in today's market.
San Francisco-based OpenDoor is now valued at more than $1 billion. The company began purchasing Valley homes in 2014. In 2017, OpenDoor bought about 1,600 Phoenix-area homes and sold 1,500, for more than 3,100 transactions, according to Michael Orr of the Cromford Report. Gilbert-based OfferPad launched in the Phoenix area in 2015. In 2017, the company reportedly closed a combined 1,800 transactions (purchases/sales) in metro Phoenix.
The two companies offer their clients selling convenience, but at a BIG cost, typically 20% or more of your home's equity! Dubbed "the new way to sell your home", they play on the emotions associated with traditional real estate transactions. Inconveniences such as having to keep the home tidy around the clock so strangers can traipse through and discover all your deep dark secrets. They claim you'll spend thousands in repairs. They'll have sellers believe it takes 140+ days on average to sell a home. Oh, and they use technology to sell your home. Yeah, we use computers and smart phones too...
We ran an experiment on a home we recently sold in Scottsdale, Arizona. Our client, Mary, requested an offer from OfferPad before putting her home on the market. Here's how the numbers shake out.
With home supply low, the right pricing strategy means we're able to find the market value fast. Remember, as a seller, you can set the price for your home, but the market determines the value. Sloat Group clients routinely make 98% of asking price on their homes and sell on average sell within 30 days. Considering that most of our clients pay 1% listing fee or less, our sellers commonly earn 100% of market value on the sale. In January, roughly 70% of the homes we sold ran into appraisal issues, meaning we actually sold the homes for more than an appraiser deemed they were worth. Click HERE to read more about appraisal issues.
Some Valley real estate experts predict the OpenDoor and OfferPad model will disband during the next housing slow down. Is this model designed to get while the getting is good, and then close up shop during the next recession? We shall see. It is an innovative model, but whether or not it's good for homeowners is yet to be determined. Thus far, it's not heading in that direction.
If you're in the market to sell your home this year, speak with us first. We are here to answer any questions you have about the home buying or selling process the East Valley and Phoenix.