Most Sellers are unaware of the true financial and opportunity costs of utilizing an IBUYER. The financial cost of OPENDOOR & OFFER PAD, both prominent players in the ibuying arena, charge the Seller a service fee equal to 5% of the sales price. This does NOT include closing fees or any repair fees they may require prior to closing. Additionally, there is an opportunity cost which can lead to a substantial loss in profit to the Seller. An ibuyer is in business to purchase your home at a price that ensures they can resell it for a substantial profit. An ibuyer strategically makes offers on properties in which they give the Seller a very limited amount of time in which to accept said offer which is often below current market value as they prey on the emotions of the Seller with the idea of a one stop no hassle process. Often an ibuyer will incorporate language into the contract in which they can terminate the contract without recourse. Imagine the stress a Seller must endure if they enter into contract and just before closing the ibuyer terminates because the home longer meets their criteria! That criteria could be anything including, but not limited to, changing market conditions.
It is important to note that a Real Estate Brokerage offering a Full Service OR Flat Fee MLS Listing Service Options has a fiduciary duty to represent the best interest of their Seller whereas an ibuyer does not. Additional options the Seller may consider in lieu of the ibuyer concept include traditional Real Estate Brokerage or a Flat Fee MLS Listing Service Brokerage. When a Seller lists their home with a Real Estate Agent, Real Estate Broker, Realtor in the MLS – the Seller benefits from Listing Exposure to potentially thousands Buyers, who may or may not be working with a Buyer Agent, via the MLS & IDX feeds to numerous other websites. A Full Service Listing Brokerage often charges a substantial percentage of the sales price as a commission whereas a Flat Fee MLS Listing Service Brokerage, such as Ohio Broker Direct, charges a minimal flat fee which can eliminate thousands of dollars in commissions and service fees with the Seller having the added benefit of maintaining control of all aspects of the sale.
Numerous companies have tried the IBUYING concept and many blame their failures on the utilization of algorthyms. Redfin, once a predominent player in the ibuying industry, took a substantial loss when it shut down its ibuying / home flipping business. Zillow also exited the ibuying market having lost 880 Million Dollars embracing the concept. Zestimate is an example of how utilizing an algorthim to determine value in an ever-changing market without having any direct knowledge of the property itself can lend itself to failure. OPENDOOR has lost SIGNIFICANT VALUE, trading at $34.59 at its peak on February 12 of 2021, and the time of this blog at it is trading at $1.49 per share. OFFERPAD reached its peak of $13.63 on September 13 of 2021 and is currently trading at about 60 cents a share.
Listing your home for sale in the MLS maximizes exposure and enables you, the Seller, the opportunity to negotiate a highest and best offer with terms that meet your specific criteria.
Joan Elflein, Broker / Ohio Broker Direct
Ohio Broker Direct & its Brokers or Associates assumes no responsibility or liability for any errors or omissions in this blog, we advise all participants in buying or selling real estate to enlist the services of a Real Estate Attorney