Beware of Corporate Cash Buyers (iBuyers)

So, you’re considering selling to one of the large corporate cash buyers like Opendoor, Perch, Zillow Offers, Redfin, Offerpad, Knock and others.

There are some things you should think about first. There may be circumstances that prompt you to consider selling your home for cash, quick close, etc.

  • Perhaps you’ve inherited property that you don’t want
  • You may need to move for a job relocation
  • The kids have moved away and you want to downsize
  • You just want to make a change and don’t want the hassle of doing repairs before selling
  • Maybe you house isn’t “retail ready”
  • Perhaps you’re facing foreclosure

In many of these cases, you don’t want to fix up your house to sell retail.  One of your options is to sell your house for cash in “as is” condition. Selling a house for a full cash offer has been around for a long time, but you should know something about your buyer.

You’ve seen them on TV, the internet, realty signs, direct mail advertisements. Their names are all over the place these days, and it seems like they appeared overnight!  Many of these corporate cash buyers will give you an up front offer, contingent upon inspecting the property. They’ll even let you pick the closing date. They like to pull you in with perks like: no banks, no showing appointments, no open houses, no repairs, and all cash. Sounds too good to be true, right?

You guessed it, there’s a catch. Of course most homes need repairs, and the owner doesn’t want to do them. That’s why you may be considering this route. Just be sure to read the fine print. They often come up with this list of overpriced repairs within a couple of days before closing.  It seems like they want the seller to feel stuck in this contract, like they have no other choice.  Well, you always have a choice.

So, who are these iBuyers and how do they price homes?  They work like this: These companies make cash offers for your current home at an algorithmically determined “fair market price,” allowing you to take the money, buy your next home, and move out at whatever date works best for you.  The transaction closes in a matter of days. That doesn’t “sound” bad.  Here’s the kicker, read some of the linked articles below.  (And there’s many more if you just do a little searching.)

BBB Complaints Opendoor                     Perch rated F on BBB ratings

This quote is from a large iBuyer:

“Our fee averages between 6-7% across our markets, but it can be lower or higher based on how long we estimate it will take to sell your home.”

Fees?  What? I have to pay to sell them my house? Really?

What we won’t do: After we have given you an offer, we won’t reduce our offer for missing light bulbs, broken windows, missing garage door remote, inoperable microwave, toilet that won’t flush, damaged wall, dirty carpet, cracked tile, etc.  Yep, that’s the types of things the corporate cash buyers will “discount” right before closing, even though they have inspected the home many days prior.

What we will do: We will give you our CASH offer up front! We will consider your neighborhood so that we’re comparing apples to apples as much as we can, not some algorithm. We walk through your home, make note of repairs & upgrades needed, work out the numbers and give you a fair offer, based on the home’s actual current condition. We will not adjust our offer unless there’s something major you haven’t disclosed to us and isn’t obvious upon our walk through. We will not approach you with contract price adjustments just a few days from closing.  Seem fair? That’s being transparent!