What’s the Deal with Tech Companies Buying Homes?
Everyone is looking to sell their home quickly at the highest price possible with the smallest amount of effort. I know this because I have sold personal homes, investment properties and I have been a Realtor for over 15 years.
Ask Zillow and a half dozen other tech companies and they will eagerly make you a sound offer (their opinion, not mine) on your home and they promise to close quickly. But see this is nothing
new. Have you heard of We Buy Ugly Houses? House Flippers? They have been around for years. They make a cash offer, buy your home cheap, slap on some paint, make some repairs, and sell your home for a much larger sum of money. The only way money can be made by anyone buying your home to “flip” is for you to lose money in the first transaction. There is an old adage in the real estate world, ”You make your money when you purchase the property.”
But… the best part, no broker fees! That makes up for the lower offer, right? Wrong. It is true that since you are selling your home to a corporation that doesn’t want you to have any representation; you don’t have anyone to pay for protecting you. However, they do want you to pay them a “holding fee” which can be 15% of the offer. The holding fee basically covers their expenses while they have your home off the market to touch up and then the time it takes to sell the home. They will also expect you to reduce the original offer by an amount they decide they need to make your home market ready. Say, they decide the home needs a new roof, flooring, etc. You are also expected to cover these expenses as well. They call it repairs. I call it your equity.
An excellent example would be the home I sold in The Woodlands at the beginning of the year. Initially the seller was going to sell directly to a smaller flip company. She was ill and decided to sell the home to pay her medical expenses. The initial offer seemed fair, after all they told her that $165,000 was probably the best she could hope for in the present condition. Of course they needed to do inspections. Oh dear, now they needed another $15,000 off the price to cover the repairs. Now the offer is $150,000. At this point, her daughter told her boss about the situation and thankfully her boss, my client, referred me. Long story short, I met with the seller, suggested a list price of $190,000. Suggested paint, carpet and some minor repairs and provided the names of the contractors to complete the work. We received multiple offers and closed within three weeks of accepting an offer. Seller walked away with $25,000 more in the bank than the initial offer. I don’t know about you, but I’m more than willing to put in the extra two weeks to net $25,000.
Of course each situation is unique, so if you are interested in going with a quick flip sale, I have numerous options that will allow you to get the top dollar for the current condition, and you will have me represent you instead of you going it alone against a large tech company.
Next month, let’s talk about how the sales could impact your community’s resale value.
Questions or Comments, email us at Mary@MaryBowenHomes.com or call 281-732-5937