Zillow – Instant offers a good deal for some sellers, but you might leave money on the table :: WRAL.com
Maybe you’ve seen it in your neighborhood: Homes sold, then sometimes listed just days later, for ten of thousands of dollars more. In many cases, it’s not just the result of the current hot real estate market. Often, the companies behind such quick turnarounds are known as “iBuyers,” short for instant buyers. These include names you might be familiar with like Opendoor, Mark Spain, Redfin and Zillow Offers.
The pandemic boosted the appeal for sellers to work with an iBuyer because offers are virtual, the companies will handle repairs, and sellers don’t have to deal with strangers in their homes for showings.
Katie Johnson sold her five-bedroom, three-bath North Raleigh home to Opendoor in June.
She says it was quick and easy!
She provided “literally just the square footage of the house. I uploaded pictures, I uploaded the improvements I’d made myself,” said Johnson
After a virtual walkthrough and an in-person check of the exterior, the deal was done. Opendoor bought it for $390,500!
A month later, Opendoor put it on market at a price of $415,000.
Johnson showed 5 On Your Side the repairs and improvements the company made. “They did change the backsplash. They changed out the microwave,” she said. Johnson also noticed new paint and carpet.
Still, Johnson says, she has no regrets about the price she got, and the quick closing helped her. “Due to my cancer diagnosis, it just got to the point where the house was too much for me to manage,” she said.
5 On Your Side researched area listings owned by iBuyers.
- In Cary, Zillow Offers paid $484,000 for a home on Presidents Walk Lane in June. It’s now listed for $48,900 more, $532,900.
- The company bought a home on Pauls Penny Lane in Raleigh for $319,000 in July. 12 days later, it was listed for $349,900, an increase of $30,900.
- In Durham, Opendoor bought a home on Highgate Drive for $440,500. Twelve days later it was listed for $60,000, at $510,000.
- Zillow got a home on Durham’s Cottonwood Drive in June and listed it a month later for $72,900 more, at $517,900.
“I think that can go to show you that your house can be worth a lot more on the open market,” says Raleigh real estate agent Rachel Lowe.
She acknowledges though, convenience is a big part of iBuyer appeal.
“I do think it serves its purpose,” adds Lowe. “But if you’re willing to go forward with kind of putting in minimal effort, even just to get it show-ready, it can be really worth your time.”
iBuyers charge a fee. Opendoor says fees are usually between 5 and 8 percent, but can be as high as 14 percent depending on the home and location. If repairs are needed, the company deducts those costs from the initial offer.
For Johnson, those fees added up to almost $29,000: $9,088 for repairs, and a 5% service charge of $19,525.
While that’s comparable to a realtor’s commission, agents point to what was potentially lost given the current market. Buyers are snagging properties so quickly, repairs aren’t always needed. Plus, a realtor might recommend a higher listing price.
Still, Johnson says for her, it was worth it.
She credits the quick sale with enabling her to quickly place an offer on a condo.
“You tell them, this is what I want out the transaction, and if they can meet those needs, then it’s the right choice for you,” she said.