Now that we’ve established that its a waste of time to try fighting these models in a free market society, what other mindsets must we alter if our industry is going to outplay this latest change?
First of all, we have to get rid of the idea that price is always the no. 1 concern of every seller. We’ve been conditioned to believe that our role is to get them the most money, hands down, every time.
And it’s one we’ve boasted about in likely every listing presentation we’ve been on. The reality is that for 20 percent to 30 percent of sellers, issues of convenience and hassle top the list over price.
As Instant Offers, OfferPad and others creep into your marketplace, they will only be used by sellers who want the “easy” button, but their marketing and overall message is going to perk up the ears of every seller.
Let’s take a look at OfferPad…Who are they?
OfferPad is a modern, easy way to sell a home without the need to go through the traditional selling process. Typically, the cost to the customer comes out to be the same as a traditional sale. However, the fact that it is a cash deal, that can close in as little as five days(!), and you don’t have to allow anyone into your home, makes this a perfect option for many sellers. The flexible and quick closing options are appealing to many sellers.
Are just dumpy properties being bought?
No.
From OfferPad:
- Family residential homes, including condos and townhomes
- Homes in age-restricted communities (max purchase price up to $325,000)
- Homes in gated communities
- Homes that are site-built (not manufactured, pre-fabricated, or mobile)
- Homes located in our service areas
- When the seller has clear ownership of the property (no double escrow)
- Homes built after 1960
- Homes where our valuation is up to $500K
- Homes that sit on at maximum of one acre of land
- Homes that are owner-occupied or vacant, not leased, at the time of closing (no lease backs after closing)
- Homes that don’t have any significant foundation issues
- Homes located in the metro areas of: Phoenix, Tampa, Las Vegas, Orlando, Salt Lake City
Can you compete against a seller who wants to take an Instant Offer (when you don’t offer an Instant Offers option)?
- You would need to prove to the seller that you would net them more money.
- Instant Offers companies are buying 10-12% less than retail. Most sellers easily pay 10-12% in this market to sell. The percentage will increase as the market shifts away from sellers.
Is this a NEW idea?
- No. Investors have been doing this for ages.
- Guaranteed Home Sale program is a version of this.
How many companies are now in this space?
- Zillow is generating LEADs and not doing the actual buying (yet)
- OfferPad
- Others?
- YOU?
What happens to these properties after these Instant Offers companies buy them?
Offer pad sells them. Others are keeping and renting.
- Zillow is selling leads.
- Equity investors are renting/ reselling.
How does it work?
Math. 10-12% off retail.
How will Zillow (and others) market this to consumers?
- Hassle free
- No showings
- No retail prep needed
- No negotiating
- No waiting
- No worrying about buyers ability to close or canceling.
If you thought that OfferPad, Zillow Instant Offers and others creeping into the marketplace were just another “We buy ugly houses” outfit, you’re dead wrong! With move-in ready homes and ‘regular’ sellers as the target, its critical you stop ignoring this must-have spoke on your wheel of business.
