Should You Open The Door

Dated: 08/18/2016

Views: 585

Should you Open the Door?

I learned several years ago to "never say never" when its comes to DFW real estate.  As most of you know, we have continued to experience a strong seller's market with buyers sometimes paying 5% to 10% ABOVE appraised value.  With values increasing at a double-digit rate year over year, it is no surprise we would attract real estate investment companies from across the country.  Like anything, some are too good to be true; however, in a few cases, selling direct to an investor can be the best option for a seller. 

For example, I recently had a friend wanting to sell her house.  It is a 1500 sq. ft. three bedroom, two bathroom in an excellent school district.  Because of the school district and the upgraded interior finishes, this house will be a phenomenal rental property.   My friend wanted me to list the house; however, she mentioned an investor from her church had offered to pay cash for the house and take it as-is and pay no realtor fees.  I was surprised with how much the investor was willing to pay.  After running the comps for the house, I quickly determined her best bet was to take the investor's offer.  As crazy as it sounds, I talked her out of listing her house with me.  Although I possibly could have earned my friend an extra $1K - $3K, there was no guarantee and in her case, the investor's offer was pretty close to what the open market would have brought.  My philosophy has always been that I'd rather have a client for life than a client for a transaction.  I want what is in the best interest of my client.  I know in my friend's case, she will remember me when she goes to buy or sell her next house.

I share this example with you to give you an idea about the current market and to illustrate that I do recognize that it is not always in the best interest of a seller to sell a home on the MLS.  With this in mind, let me tell you about a new company entering the DFW market - OPENDOOR.  You probably have seen commercials and maybe even received postcards in the mail from OPENDOOR.  OPENDOOR is a company that makes an "all cash" offer on your house to buy it "as-is" and allows you to pick the closing date of your choice (within a 60 day window).  Wanting to understand all possible options for my clients, I was intrigued when I received a postcard from OPENDOOR last week with an offer to buy my house and decided to check them out. 

The process was simple.  I logged in to their site, gave them my address and started populating details about the interior of my home.  They even had pictures of my house on the site from the last time it was on the MLS.  I'll be honest, I was pretty impressed. And then I got my offer...

 

When I first opened my offer, I was impressed.  They were offering $295.3K.  A similar home with less updates than mine and a choppier floor plan located 15 houses down the street from mine sold for $312K in June.  So $295K, all cash, no fees, quick close, I'm thinking I'm doing pretty good. And then I looked at the charges. 

Image titleNot only do they still charge the standard 6% broker's commission, they also charge an additional 6% market risk!?!?! What the heck is "market risk"? Per their website: "We list your home for sale immediately after closing, but home values may change as your neighbors sell for less or interest rates go up." Are they really charging me 12% to buy my house below market value!?!?! As I continued to scroll down the page, my thoughts were confirmed.  By their calculation, using their sales price and estimated costs to sell (and for the record, I don't agree with their estimated concessions and staging fees, but that is a another issue), it would cost me almost $12K MORE to sell my house to them than to sell my house on the MLS.  Image title

I don't know about you, but mine is one door that will not open. 

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Christy Horne

Christy is a multi-million dollar producing agent with the heart of a teacher. She grew up in the HEB area and is a graduate of Trinity High School. She attended the University of Texas at Austin whe....

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