Is Offerpad the Best Way to Sell Your Home?
Offerpad promotes itself as being the easiest way to sell your home, but is it the BEST way to sell your home? As a home buying and selling platform, Offerpad buys homes directly from sellers. Offerpad then turns around and puts the house on the market themselves and sell it.
There are other similar services on the market, such as Opendoor. While there are circumstances where using a service like this makes sense when selling your home, using a local realtor is typically going to be in your best interest!
Insight from the Erica Diaz Team
As your local Central Florida real estate team, we always have your best interest at heart. We are knowledgeable and experienced in both the home buying and selling process in Central Florida, specializing in towns such as Winter Garden, Windermere and Clermont.
Lately we’ve had many clients question if using an iBuyers (Offerpad is one of the most frequently mentioned) is as good as working with a local real estate agent. iBuyers make the home buying and selling process sound much simpler than it actually is, resulting in many people wondering why it seems to be a more intricate process with a real estate agent.
In this article we compare and contrast the home buying and selling process with a local real estate agent vs Offerpad. We also encourage you to contact us with ALL of your home buying and selling questions.
What is All the Hype About?
Offerpad provides homeowners the opportunity to quickly sale their home. In some cases sellers can close in as little as 10 days. Everything is done online through their website. Here they’ll answer some basic questions about their home along with uploading some photos and maybe a video. Then someone (probably not in your market, or even your state) reviews the information and makes the homeowner a cash offer. So, the hype boils down to the home buying and/or selling process sounding much more simpler than it is.
Offerpad is an iBuyer
An iBuyer is a technology-driven real estate company. They pride themselves on extending quick cash offers to home sellers. iBuyers began as a service focusing mostly on sellers, however they are now targeting buyers and sellers.
How Does Offerpad Work?
There are 5 main steps when selling your home to Offerpad.
1. Request an Offer
The first step is to request an offer. Once on their website the seller will be directed to send over some information about their house. Types of information obtained is: a homes style, square footage, and year built. There is the option to include photos and or a video as well.
2. Offer Evaluation
During the next step, Offerpad will evaluate the information on the home sent. They use proprietary technology known as AMV that is then examined by a market expert to determine each offer. This process is typically done within 24 hours.
3. Cash Offer
Within as little as 24 hours, Offerpad will make a cash offer to the seller. The seller then has four days to take the offer or reject it. This is a non-negotiable offer. If the seller turns down the offer, their business with Offerpad concludes (the seller will not be charged any fees.) On the other hand, if the seller accepts the offer, the next step is selecting a closing date, as well as an opportunity to select moving services. The cash offer is valid for four days.
4. Home Inspection
After a seller accepts Offerpad’s cash offer, a home inspector is sent to the home. This is covered by the fees paid to Offerpad. If the inspector suggests repairs, the homeowner must choose to do them on their own (providing proof to Offerpad they have been completed.) Or they can have Offerpad do the repairs and the cost will be deducted from the total cash offer.
*Once the repairs are done the homeowner can still back-out of the deal. However, if Offerpad has already done the repairs, there will be a 1% cancelation fee.
5. Closing Day
The last step is the closing. Closing with Offerpad can be done in as little as 10 days. It is fairly simple too. Offerpad will hire a title company to do a title search and set up escrow. They will also go to the home and ensure any agreed upon repairs have been done. Then on the final day of closing the homeowner will go to the title office or an attorney to finish the deal.
Selling a Home with a Local Real Estate Agent VS Offerpad
In all situations there are pros and cons. The same goes for using a local real estate agent or using Offerpad to sell a home. The most important thing is making the right decision for you and your circumstances. While we feel that it’s typically in a buyer or seller’s BEST interest to work with a real estate agent during both the buying and selling process the decision is ultimately up to you!
If you are contemplating buying or selling a home with either a local real estate agent or Offerpad, we’ve compared the two options, taking a look at what each one looks like on different topics.
Offerpad: Life happens, and there are cases where homeowners need a quick sale with a cash offer. In those cases, a service like Offerpad could be a decent option. While Offerpad does have a very quick turn around (typically 24 hours) from the start of the process to when they give their offer, it’s not always the best. Yes, it is upfront and cash, however, it is NON-NEGOTIABLE. Once the offer is made, there is no changing it. The seller then has 4 days to “take it or leave it.”
Real Estate Agent: While hopping online, filling out some quick information and closing on your home may sound enticing, it comes at a price. Offerpad’s service fees can easily be as high as 10% which is much more than a traditional real estate agent’s fees. The bottom line is… Quick and Easy May Come at a Price!
Offerpad: Their service fees run between 6% – 10% with the average being 7%. Three main points are taken into consideration in determining their fees.
- Profit Margin – In order to make money, Offerpad must be able to turn around and sell your home for more than they purchased it from you.
- Cost While on the Market – There is no guarantee on how fast they will be able to turn around and sell a home once they purchase it. Therefore, they are responsible for any costs (such as utilities, or taxes) until it is sold.
- Risk – There’s always a chance the worst can happen, such as the market tanking. They always have “crash” insurance, and that’s calculated into the fees.
Real Estate Agent: There are no fees when you use a real estate agent to help you purchase a home. The seller pays those fees! However, seller fees generally average around 6%, and split between the buyer’s agent and seller’s agent.
You may be saying, “6% is similar to Offerpad’s fees, what’s the difference?” The difference is, with a real estate agent you are more than likely going to receive more money for your home. They also dive much deeper into the details when selling your home, such as how to stage it, quality photos, and more!
Showings & Open Houses
Offerpad: Having a home listed on the market typically includes showings and open houses. When a house is sold directly to Offerpad, they buy the home eliminating the need for a home to continuously be show ready.
Real Estate Agent: While eliminating showings and open houses sound nice, because it means people will not be coming and going. It also reduces the potential profit you could make. In today’s world, listings can provide high quality video walk troughs which will reduce the amount of people wanting to see the home to serious buyers.
Closing Date Options
Offerpad: When sellers sell to Offerpad, they get to pick their closing date. This allows for wiggle room that may not be available with a conventional sale. There’s also the option to change the closing date if needed.
Real Estate Agent: Typically when a home is sold using a real estate agent and there is an accepted offer, it’s 30 days until closing. The move out date and move in date are usually right around or on the closing date. However, each home is a case by case bases. Meaning other arrangements can be agreed upon between the buyer and seller. Having a real estate agent on your side during the process to negotiate terms is definitely in your best interest.
Offerpad: They are currently only available to purchase homes in 17 U.S. markets within only 8 states. Not being readily available to the entire country is a con in itself. Services are limited to residents of the following markets:
- Birmingham, AL
- Phoenix, AZ
- Tucson, AZ
- Denver, CO
- Orlando, FL
- Tampa, FL
- Atlanta, GA
- Indianapolis, IN
- Las Vegas, NV
- Charlotte, NC
- Raleigh, NC
- Nashville, TN
- Austin, TX
- Dallas-Fort Worth, TX
- Houston, TX
- San Antonio, TX
Real Estate Agent: Agents are readily available in all States, Cities, and towns across the U.S. When you work with a real estate agent in a particular market, it’s likely they live, work, and play there. Making them very knowledgeable and experienced about the housing market and beyond in the specific area you live in!
Offerpad: Only certain homes qualify!! Not every home is eligible to be purchased by Offerpad. They have a few restrictions regarding homes that they are able to buy. To be eligible the follow requirements must be met.
- Must be a single-family residence.
- CAN NOT be a manufactured, pre-fabricated, or mobile home.
- Must be built after 1960. Depending on the market, the home CAN NOT be worth more than $5000,000-$600,000.
Real Estate Agent: The type of properties that real estate agents represent are to their own discretion. If you are looking to buy or sale in Winter Garden, Fl or a surrounding area the Erica Diaz Team would love to help, contact us today!
What does Offerpad’s AMV Look at to Determine it’s Numbers?
Offerpad: Offerpad uses an AVM to determine how much to offer a seller. AVM stands for automated valuation model, which is the usage of proprietary technology to figure out how much a specific property is worth. But what exactly does the AVM take into consideration? We’re not entirely sure, only Offerpad knows that.
More than likely Offerpad examines the prices of recent properties near the one it’s evaluating combined with current market trends and local dynamics. There is no way to determined exactly what they are looking at to curate their offer on each home. This can easily have a negative impact on the money offered on your property.
Real Estate Agent: Well… Real estate agents do not use an AMV. They use a CMA, short for competitive market analysis. They take into consideration the age of the home, market value of similar homes, location, upgrades, bedrooms, square footage, and a number of other factors.
The Erica Diaz Team – Is Offerpad the Best Way to Sell Your Home
Before you list your home on Offerpad and wait 24 hours for your magical (but probably too low) offer, contact the Erica Diaz Team to see exactly how much your home is worth. We are dedicated to getting you the most money for your home in the least amount of time. Also, working with a real estate agent will allow you to stay in control of the home selling process without costing an arm and a leg. Of course, all real estate agents have fees, but they are upfront and generally lower than those on Offerpad. You don’t have to go through a third party website for a fast and profitable home sale.