When Mike Hill wanted to sell his Mesa home in November to be closer to his daughter in California, he needed a quick, no-hassle deal.
He pointed his Internet browser to new online home-buying organizations, such as Opendoor and Offerpad. Being an experienced mortgage lender, Hill also asked top Mesa Realtor Kenny Klaus for advice.
Klaus was in the early stage of figuring out how he, as an agent, could offer value to impatient home sellers and eager online home buyers.
Klaus and his Keller Williams Integrity First Realty team worked up a thorough market analysis for Hill, just as they would for a traditional retail sale. He took pictures and looked closely at comparable nearby sales. He identified features and improvements that Hill may have taken for granted.
Klaus shopped Hill’s home to Opendoor, Offerpad, Zillow Offers and others. In many of these situations, Klaus can also reach deep into his contact list and perhaps get a hit from a private real estate investor, a hedge fund or a real-estate investment trust.
In the end, Hill accepted an Opendoor offer. He has no regrets. Thanks to the immediate offer and a quick closing, he spent the holidays with his daughter.
“I was happy with the whole process,” Hill said. “Kenny set it all up. I didn’t have to do anything. It was pretty painless.”
Klaus garnered a small referral fee from Opendoor for the Hill sale and took a reduced commission at closing, about one-third of the fee from a traditional sale.
Klaus said the new wave of Internet home buying gives homeowners a tool they didn’t have before. However, a new power tool can also cause a painful injury if you’re not careful.
“What you don’t know could cost you money,” Klaus said.
While Klaus takes a tentative first spin around the dance floor with the Internet home-buying hotties, other influential East Valley agents are hugging the walls, waiting to see what happens.
Tia Coates, an agent with Revelation Real Estate in Chandler, said instant Internet home buying fills a need, and it’s not going away. Shee believes that a traditional real-estate sale, though it might take a couple of months, will net the home seller a maximum amount. It’s a tradeoff for speed and convenience.
Veteran Ahwatukee Realtor Craig Peck said sellers who go the Internet buying route generally get about 15 percent less than they could through the conventional process with a real-estate professional.
“It sounds so awesome when you see the commercials,” Peck said, “but we can make you a whole lot more money.”
I-buyers are investor-backed companies that rely on complex computer algorithms to identify slightly undervalued East Valley homes and turn them quickly for a small profit. It’s a volume game. They’re not flippers. The most they’ll do – or have you, the homeowner, do – is clean up the landscaping or paint.
I-buyers are filling a real need for homeowners who want to sell, move and get on with their new lives. They offer a quick reward without the hassle of showings. Sellers can close in two weeks or ask for a “late checkout,” depending on their needs. That translates to a lot less stress and a lot less frantic vacuuming for sellers with messy children and pets.
South Phoenix and Mesa, Chandler, Gilbert and Queen Creek are a target-rich area for I-buyers. They like moderately priced homes – $350,000 is about the sweet spot, although they’ll buy lower priced homes and go up to about $400,000.
The East Valley real estate market’s steady inflation rate made launching Opendoor in 2014 in the Valley a no-brainer, said Rob Reiling, the firm’s Phoenix general manager. Opendoor is in 17 markets now.
Reiling said tech-savvy millennials in Chandler, Tempe and other East Valley communities are comfortable with the idea of Internet home selling and buying. The service is ideal for job relocations and contingent sellers.
The goal, Reiling said, is helping sellers move quickly with a sense that they got a fair deal. Many home sellers often find their next dream home when an Opendoor house is on the market, and they do a round-trip transaction, he said.
Homeowners get bogged down during the Internet home-buying process during the inspection period, when they have to make the hard decisions about doing repairs or accepting credits. Money starts slipping away.
The net figures on a traditional sale versus instant sale can be fairly eye-opening when it’s all said and done.
Peck with Re/Max Foothills said he enjoys dealing with the I-buyers when he’s a buyer’s agent and they are the sellers. The homes are vacant and easily shown. The firms are experienced negotiators and take emotion out of the equation.
“They’re a machine, and I know what the programming is,” Peck said.
Peck said he wonders if the I-buyers will disappear as quickly as they sprang up when the East Valley market takes the inevitable downturn. That will be the true test. In any case, firms with names like Re/Max, Century 21, Keller Williams and Revelation will still be around and thriving, he said.