3 ON YOUR SIDE (3TV) - Selling a home can be daunting and exciting at the same time. Some consumers say they've found a new way to sell their home that's alleviating some of the headache. It's a method that's gaining popularity, but it may come at a cost.

[WATCH: New trend in selling home could cost you]

Dora Cagnetto wanted to sell her townhome recently, and although it needed some minor repairs, Cagnetto says she just didn't want to take the time to do the work and wanted to sell it fast.

"I'm retired. I don't want to spend my retirement fixing up a place to sell," Cagnetto said.

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That's when Cagnetto came across something fairly new in the real estate industry called Zillow Offers.

It's was launched in Phoenix just over a year ago by Zillow. Here's how it works.

You go online and with a click of the mouse, you ask Zillow to make you an offer on your home.

The offer usually comes in about 24 hours.

"They gave me an offer. They did an inspection. They gave me a final offer, and it went through just like that," said Cagnetto.

George Laughton is a realtor and helps Zillow buy homes like Cagnetto's. He says the process is easy and convenient.

"We like to say, it's so simple, like, we click a button and magic happens," said Laughton.

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However, all that magic comes with a price tag.

"On average the fees average about 7% where when you list traditionally average about 6% so it's fairly close, you're giving up a little bit of money for certainly, convenience, flexibility," said Laughton.

Randy Cooney is a Valley real estate broker and he says the selling program is similar to Opendoor, which launched five years ago and has gained in popularity. And there's another one called Offerpad. In the real estate industry, these companies are all referred to as "iBuyers."

"The iBuyer is an investment buyer who is going to usually offer the consumer or the seller more of a wholesale price versus a retail price cause they have to take the property and they too have to make some profit from it," said Cooney.

In other words, if you use an iBuyer, Cooney says there's a strong chance you'll leave money on the table. That's because iBuyers pay less for the home than they'll sell it for, it's wholesale versus retail.

"For some consumers, that's OK. They have to move quickly, speed is important but for many others if they just wait a little bit and find that right buyer for their property they could retain a lot more dollars in the transaction," said Conney.

[READ MORE: Phoenix area real estate: Are we headed for another bust?]

In Cagnetto's case, she sold her house to Zillow Offers and the iBuying company put it back on the market for about $10,000 more than what it paid. But Cagnetto says the convenience was well worth it for her.

"It went smoothly and quickly and I didn't have to do any of the repairs. I didn't have to worry about negotiations, I didn't have to worry about contingencies," said Cagnetto.

If you choose to use an iBuyer to sell your home, seek multiple offers from different companies and make sure you look at the different fees that may be involved.

 


Copyright 2019 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.

 

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(7) comments

Shredder

This type of transaction has its place. Some folks don't want to spend the time or money to get their homes "sale ready" only to have a Realtor reap the rewards for selling their home. Maybe they don't need the extra 10K or maybe they inherited the home and just want to get rid of it. I think that its just another option for sellers. Just be aware, you're going to walk away with less money.

MH

In my particular case I walked with more $ with Opendoor.

dbaxfan

But you won't necessarily walk away with less money. I think where people get confused is the actual selling price, you have to look at what you walk away with after the transaction is all done. For ease, take a home that has a market value of $100,000. These companies make you an offer that's 6% less than that so they can sell it and make a profit, that's $94,000. Sell it for $100,000 with a realtor and you walk with $94,000. Don't look at the selling price that's lower, look at what you have when all is said and done. And yes, listing it with a realtor for 3 months could possibly net you more money but it's not guaranteed so for 3 months of hassle you might not walk away with anything more than you would selling to one of these companies.

MH

Having just signed with Opendoor, I can offer some good information. I received quotes from the 3 companies listed in this story and had a realtor tour and price my home. The realtor wanted to list at 235-245k with a recommended listing of 240K (this is a hot price point). Opendoor offered 246k. Fees were identical at 6% and $1700 worth of needed repairs. Yes, it is possible that through a realtor there could have been offers for more than asking, but for the ease of selling with no showings I went with Opendoor. No, everyone won't have the same experience, but it's worth looking into. Opendoor also allowed me to stay until my new build was finished and even extended my stay after closing for additional days. Traditional real estate will always have a place in the market, but these companies are here to stay.

dbaxfan

So, just to clarify, realtors who are losing sales to these companies are warning us that this is a bad deal? So say she sold to Zillow for $186,000 but if she'd hired a realtor and paid $2000 to do some fixes, then spent 5 weeks keeping her home extra clean and leaving on short notice for showings, then sold for $200,000 and then paid 6% or $12,000 to the realtor so she ended up with $186,000 (counting the $2K she paid to fix things). How is that a bad deal? The more I hear about these companies and the deals they make the more I think the only people suffering are the realtors who would be getting commissions.
Your story makes a big point of saying the company turned around and listed the home for $10K more!!! So it's BAD if the company is trying to make a profit but if you paid that $10K to a realtor instead it would be a GOOD thing?

TCAZ

Yep ... you got it right!! AND ... trying to get your house fixed up around here is a pain ... 75% of the people claiming to do anything will take your money and never come back.

Wazoolie

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