Zillow Offers is Charging 7.5% Commission?? Honesty in Real Estate?

By
Real Estate Agent with Allison James Elite CA. BRE 01501699
https://activerain.com/droplet/5kmZ

Honesty in Real Estate.

Stop unfair, deceptive, and abusive iBuying tactics.

 


Scroll down to read it.

https://petition.thenationalrealestatepost.com/

Study: It Costs Sellers More to Work With iBuyers

Share

August 9, 2019

Home sellers who choose to sell directly to an iBuyer often end up paying higher fees than if they sold the traditional way with a real estate agent, according to a new study by Collateral Analytics, a real estate analytics firm.

iBuyers provide instant cash offers and quick closings, perks that are hard for sellers to ignore. Transactions involving iBuyers have been growing at a clip of more than 25% annually in recent years. But how profitable is it for sellers who choose this expedited route to a sale? The answer hasn't been clear since iBuyers first surfaced in 2014 with the launch of Opendoor.

Collateral Analytics, in a white paper, looks to quantify the costs to sellers of working with iBuyers versus taking the traditional route of working with a real estate professional. Researchers estimate that sellers end up paying between 13% to 15% more when working with iBuyers. The percentage reflects differences in traditional real estate agency fees, as well as an allowance iBuyers often request for repairs and an additional 3% to 5% to cover the iBuyer’s liquidity risks and carrying costs. “Most iBuyers will inspect the home, assess a generous home repair allowance, and negotiate (an additional) credit to handle such repairs,” the Collateral Analytics report notes.

However, some iBuyers take on other costs that most traditional buyers wouldn’t. For example, companies such as OfferPad offer to pay the costs of a seller's move up to 50 miles away. iBuyers may also allow a grace period after closing for the seller to vacate the property.

The chart below from Collateral Analytics shows quarterly median purchase prices on a per-square-foot basis for single-family homes in Phoenix bought by iBuyers and traditional buyers. The lion's share of iBuyer transactions nationwide occur in Phoenix.

 

iBuyer report chart. Visit source link at the end of this article for more information.

© Collateral Analytics

 

The report also notes that the iBuying model could make properties vulnerable to several financial risks, such as the use of automated valuation models that could inflate property values. Also, properties remain empty while in the possession of iBuyers, which could make the homes vulnerable to theft and other criminal activity.

Wall Street has been betting big on iBuyers in recent years. Opendoor has reportedly raised at least $1.3 billion and purchased more than 10,000 homes in 2018—three times that of its closest competitor, OfferPad. More real estate brokerages are launching their own iBuying models, including Keller Williams, Coldwell Banker, and Redfin. “For some sellers needing to move or requiring quick extraction of equity, this is certainly worthwhile,” according to the research paper. “But what percentage of the market will want this service remains to be seen.”

Source: 
iBuyers: A New Choice for Home Sellers But at What Cost?” Collateral Analytics (Aug. 7, 2019)
Posted by

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate Best Practices
Location:
California Ventura County
Tags:
deceptive
honesty in real estatestop unfair
and abusive ibuying tactics click here to sign petitionscroll down to read it
zillow offers is charging 75 commission

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
2,782,419
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Honesty is not always easy to find, so let’s hope this works out for all our sakes. :)

Aug 10, 2019 05:06 PM #1
Rainmaker
585,116
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

Please repost the petition :) The DOJ is investigating a few major brokerage companies, but all the iBuyers get off scott free, with out disclosure, and inferior results Laura Cerrano 

Aug 10, 2019 05:32 PM #2
Rainmaker
67,365
Kris Collis, Associate Broker
Smart Way America Realty - East Stroudsburg, PA
Professional Results you Expect 570-507-7510

Chris, thank you for these very important findings that we need to share with sellers.  The houses remaining unoccupied is certainly a concern though the ibuyer model might have been more useful during the 2008 Recession than in current market.

Aug 10, 2019 08:27 PM #3
Rainmaker
585,116
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

The real problem is the Sellers never know the true cost/fee/commission to sell until escrow closes and are not given the oppertunity to see the value of their home on the open market Kris Collis 

Aug 10, 2019 09:37 PM #4
Ambassador
3,400,550
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

They've hoodwinked a couple of my folks but, thankfully we had a strong enough relationship that they could reach out to me to ask about it before they signed on the dotted line. One of the company's fees in the end was 11% (not Z). 

My BFF also tried it, just to see what they would offer prior to listing her home with me. After we Closed, we looked back at the numbers - they made nearly $50K MORE on their home than they would have with the iBuyer program.

$50K - that's a new CAR for Pete's sake!

Aug 10, 2019 10:25 PM #5
Rainmaker
320,960
Dave Rosenmarkle
Highland Realty - Arlington, VA
32 years of providing fully satisfying service!

It's clear that this is an emerging trend, particularly with a younger generation that is very comfortable with using automation for asserting more personal control of many types of financial and legal transactions. Fortunately, there are still some folks out there who prefer a long-term relationship with a full-service, professional Realtor.

Aug 11, 2019 05:08 AM #6
Rainer
503,744
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Chris,

Excellent post! Of course, these companies call their charges a service fee, not a commission. They are also betting that there are enough dummies out there, who will take 80 cents on the dollar for their houses. I have yet to meet one of these dummy sellers.

Aug 11, 2019 06:49 AM #7
Rainmaker
585,116
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

Thank you for your input Debe Maxwell, CRS  Dave Rosenmarkle  and Dörte Engel! PLEASE do sign and repost the petition :)

https://petition.thenationalrealestatepost.com/

Aug 11, 2019 09:01 AM #8
Ambassador
2,895,768
Anna Banana Kruchten CRB, GRI, WLS
Phoenix Property Shoppe - Phoenix, AZ
603-380-4886

Hi Chris - I do agree with the premise of the 'fees' being charged by the 'investor' buyer and the 'seller' aren't as clear as it appears and yes deceptive in a way. These newer business models make the process appear so easy, quick and stressfree for the sellers and to some it may very well be.  In particular if somebody is left with an estate sale home out of their state and they don't want to mess with getting it sold. What I don't 'get' is why would sellers leave so much money on the table for the 'investor ibuyer companies' to take?  Last year one of our young clients was approached by an ibuyer companies. He would not listen to his mother, a long time smart investor client of ours. He did listen to me, politely, and said - I just want out and I don't care if putting $4k into the home will make me an extra 20 to 30K! He did send me all the paper work and contracts they sent him so I do know exactly how they're playing the game. 

Aug 11, 2019 09:16 AM #9
Rainmaker
585,116
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

It is nice to have the inside information Anna Banana Kruchten CRB, CRS 602-380-4886 so you can see how their process works, which seems to be to prey on people who do not want to be bothered with the details. Fortunately I work with numerous All Cash Investors who have more cash than properties and are always looking for their next purchase.  PLEASE do sign and repost the petition :)       https://petition.thenationalrealestatepost.com/

Aug 11, 2019 04:54 PM #10
Rainmaker
3,039,284
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

I see a trend of people who want things now, they dont want to wait of complete due diligence. Real Estate is not instant. Good things come to those who wait as well as those who do things properly. I tell many sellers it is possible to get sell quickly at the best price obtainable and do it right. When i show them their net after fees for each model, they are shocked and then happy they found a full service agent who was willing to go over every option

Aug 12, 2019 06:15 AM #11
Rainmaker
585,116
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

Thank you Scott Godzyk !! When consumers take the time, or have an agent who does fully disclose the facts, it makes the choice obvious and easy :)

Aug 12, 2019 09:49 AM #12
Ambassador
4,300,966
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Chris B Johnson REALTOR® - surprised to see this happening when the consumers think they 'know it all' and leave money on the table.

Wish we could have more posts like this to educate the consumers -- and do the right thing.

Aug 12, 2019 03:53 PM #13
Rainmaker
585,116
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

Absolutely Praful Thakkar , even though the customer is always right, they don't know what the don't know! 

PLEASE do sign and repost the petition :)       https://petition.thenationalrealestatepost.com/

Aug 12, 2019 03:57 PM #14
Rainmaker
705,246
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

And there is the crux of the matter:  “For some sellers needing to move or requiring quick extraction of equity, this is certainly worthwhile,” according to the research paper. “But what percentage of the market will want this service remains to be seen.”

There has always been a small percentage of home sellers who would rather take less when it is quick and easy. Most home sellers want the best net dollar results and they will not get that by selling to an iBuyer.

If the venture capitalists who are betting heavily and furnishing huge amounts of cash for the iBuyer model don't see acceptable returns...normally described as profits...we will all be looking at iBuyers as a failed attempt to revolutionalize our business. 

Aug 12, 2019 05:42 PM #15
Rainmaker
585,116
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

True John Juarez , especially as we migrate froma Sellers Market to a Balanced or even a Buyers Market. Most Realtors do have a few Investors as clients who would be more than happy to present an offer which would most likely be better than any iBuyer Offer.

Aug 12, 2019 06:12 PM #16
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
585,116

Chris B Johnson REALTOR®

5 Star Rated REALTOR® Quality, Not Quantity
Is it Too Late to Short Sell My Home??
*
*
*
*
Spam prevention

Additional Information