|A Home May Be The Largest Purchase You Make|
The growth in the internet and consumers seeking easy and fast answers has resulted in the growth of several online concerns such as 'iBuyers,' Open Door, and Zillow. My most recent research into the changing face of American home-ownership has left me feeling nothing has really changed much from the For Sale By Owner (FSBO) days which has been around forever. If a seller is inclined to lower their price enough they can get a fast sell but it often is not in their best interest. I have an aversion to house "flippers" that I often see as bottom feeders putting lipstick on a pig then vanishing into the night. A quick coat of paint often covers a multitude of sins but quickly fades.
|Expect To Pay Much More For "Move In Ready"|
As I understand it, Opendoor is a start-up out of San Francisco that will buy your home themselves, take ownership of the house, fix it and flip it. Whether you are really dealing with that company or a copycat version they send you an offer online to buy your house sight unseen based on their algorithm. The offer is only subject to an inspection of the physical condition of the house. They don’t do an appraisal but trust their algorithm to determine the value of the house. I assume Opendoor will lower their offer price if the condition of the home turns out to be below average. Since Opendoor has to make money the do charge the seller a fee. Opendoor has 3 different fees, some flat, some variable. In metro Phoenix, in total the fees are 8% to 10.5% of the price of the home.
Hiring a real estate agent to sell your house means that you are likely to pay 6% so Opendoor is more expensive by 2% to 4.5% of the home’s value but it does have several advantages. The bottom-line is that Opendoor is fast, it is certain, and super convenient. Also you do not have to worry about whether the an appraisal or the sale being contingent on the buyer being able to obtain financing. All these advantages gain a great deal of merit in certain situations such as when you inherit a house and the proceeds will be split between the heirs. Other circumstances that might justify the cost is that your time is very valuable, you have other priorities, or simply cannot cope with the stress of taking the more traditional route.
A couple tips or notes;
- Buying a house that has been made "move in ready" often means you will be paying a hefty premium.
- Appraisals matter, never pay over appraised value.
- Don't fall in love with someones furniture, it is best to view a house when it is empty.
- Location is important, there is a reason they say, location, location, location!
- Try to position yourself so as not to be in a hurry.
- Negotiation skills are important, know what is important.
- Remember that because someone is a realtor does not make them an expert or your best friend
- Buying in a city that you are just moving into is extremely treacherous, learn the area before buying!
- It is always far easier to buy than to sell.
- Remember buying a house is a long-term investment, it seldom pays to constantly move.
- Ask yourself, how much house do you really need? Over-sizing can be very expensive.