Everything is easier online — even selling your house.
More Americans are turning to online real-estate companies like San Francisco-based startup Opendoor and Zillow to quickly sell their homes; no open houses, considering multiple bids, or waiting on a buyer to work out financing, the Los Angeles Times' Andrew Khouri reports.
Zillow Offers is already available in four US markets — Phoenix, Las Vegas, Atlanta, and Denver — and will soon be launching in Riverside, California, Zillow announced on Tuesday.
The service radically simplifies the selling process for homeowners: They enter their address online, answer questions about the home, send in photos, and wait for Zillow to consult a local real estate agent and come up with a home value estimate. It takes only about two business days, Khouri wrote.
Then Zillow sets up an in-person walkthrough before handing over a confirmed offer. If the homeowner accepts the offer, they choose a closing date between seven and 90 days from signing. Real estate agents are still a part of the process, but they're handled and paid by Zillow, not the homeowner.
"We have closed on a house in as little as five days because we wanted to help the seller who was in a time crunch," Zillow spokeswoman Jordyn Lee told the LA Times. In Riverside, the company's newest market, Zillow says it's focusing on homes in the $200,000 to $600,000 price range, which it aims to resell within three months.
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But there's a catch for homeowners. A typical real estate agent may charge a commission fee of 5% to 6% of the purchase price, whereas Zillow commands 6% to 9%, Khouri wrote. Fortunately, that fee includes the cost of any repairs or necessary adjustments made to the home after closing.
Likewise, Opendoor, which launched its direct-to-buyer service in 2014 and now operates in over a dozen markets, charges a fee between 6.7% to 13% of the purchase price, according to Reuters. The closing period for sales on Opendoor can range from 10 to 60 days, according to the website. Reuters reported in June 2018 that the company was valued at more than $2 billion and buys homes with an average price of $250,000.
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Brad Berning, a senior research analyst with Craig-Hallum Capital Group told the LA Times that i-buyers are here to stay. Berning estimates that by 2021, virtual buyers could account for 10% of the existing home-sale market.
Chase Marsh, cofounder of Prevu, a New York-based real-estate startup, said in a contributor article in Forbes in June that the convenience of selling online to a company rather than dealing with people is a huge draw, but the high fees aren't worth it — at least not yet.
"While iBuyers provide the convenience of selling quickly, matching expert investors against consumers isn't always the best thing for the consumer," Marsh wrote. "Choice is good, but a home is generally your largest asset, so you may want to consult an expert before 'iSelling.'"
