5 Options to Sell Your Home Online in 2023
According to a 2022 report by the National Association of Realtors, 47% of homebuyers first consulted online listings when beginning their search for a new home. This is an increase from 43% in 2020, and also important to note is the fact that 96% of all buyers used online tools during their search process. While the internet has played a major role in the housing market for many years now, its importance only continues to grow and its role in real estate transactions continues to evolve.
This brings us to the increasing presence of iBuyers: online companies that claim to buy your home as-is for cash in a quick and easy sale with rates that are competitive with local realtors. Like all things that sound too good to be true though, the actual transaction doesn’t always go as expected, and as we’ve stated before when some of these companies started entering the Portland real estate market in 2019, this convenience comes at a price. So in the interest of providing as much information as possible to inform your decision about whether to sell online, here are the pros and cons of five different options, from least to most recommended.
Flyhomes entered the iBuyer market in 2016 with a model that allows buyers to present cash offers to sellers. Flyhomes finances the sale, providing a short-term loan to the buyer until they are able to secure a mortgage. Unlike other iBuyer services, Flyhomes doesn’t promise quick transactions because the offers come from homebuyers instead of the company itself (Flyhomes will purchase your home only as a backup option if it doesn’t sell on the open market).
The listing fees to sell your home with Flyhome including buyer’s agent commission, closing costs and repairs ranges from 5.75 to 10.5%. In contrast, selling with a local real estate agent comes with an average fee of 4.92% (including buyer’s agent commissions).
Last year the company housing underwent two rounds of layoffs in response to a cooling housing market. Time will tell if Flyhomes will join the ranks of iBuyer services that have shuttered over the past couple of years.
Offerpad has not yet entered the Oregon real estate market, but since its inception in 2015 it has spread to nearly 1,000 U.S. cities, a level of growth that points to its continued expansion. However during that time Offerpad has accrued its fair share of negative reviews, ranging from lower cash offers than their competitors to high repair costs and dishonesty regarding cancellation fees. Remember that unlike profits-driven iBuying companies, Realtors are required to put their client’s interests first.
Offerpad charges a service fee of 4-7%. You are also responsible to pay for all the repairs they require, at the price they choose. And like all iBuyers, Offerpad’s business model is built around buying homes below market value, then reselling them on the open market for a profit.
Opendoor became the largest iBuyer on the market by the end of 2021, with four times the amount of homes for sale as Offerpad. The fact that Opendoor charges lower service fees of 3.5-5% and provides only virtual walkthroughs (which can lead to higher final offers as repairs are more likely to be overlooked) may have contributed to its success. But don’t be fooled by low service fee, because it is subject to change and can end up as high as 14%. And consistent with other iBuyers, their initial cash offer is almost guaranteed to be below market value and can decrease after the inspection. This company is also recently struggling in 2023 and its stock has fallen quite a bit recently.
2. Homelight Simple Sale
Homelight employs a slightly different business model, marketing your home to a pool of investors who compete to make a cash offer. Because the investor agrees to buy the home “as-is” and take on necessary repairs, expect offers to be well below market value – even by 30-50% – depending on the condition of the home. Homelight makes this clear on their site and we appreciate their transparency. And unlike the “instant sale” promise of iBuyers that isn’t always guaranteed, the process moves quickly.
If you decide to turn down offers from investors, Homelight offers to connect you with a local real estate agent as a “free” service. (They say it is free, but they’re actually charging the real estate agent 25 – 30% of any earned commission in return for the introduction.) Because Homelight doesn’t primarily make money off of buying homes themselves and “flipping” them for a profit like iBuyers, instead earning money on referrals (either to investors or real estate agents) we’ve placed them near the top of our list.
1. eXp Realty Express Offers
Express Offers is a service provided by eXp Realty that connects you with one of their agents, like myself, who will visit your home and take down basic information with your permission. That information is then entered into the online Express Offers platform, which accesses a wide network of local and national cash investors. The various investors will have a chance to bid on your home, and then your agent will bring you the highest possible bid (all without going on the public market). Each agent can set their own fee for the service. In my case, the fee to accept the cash offer is 1.75% and the cash offer typically closes quickly. Now, as a real estate professional, I still recommend to every client that they put their home on the public market, but if they insist on a private, cash sale, then this is the best option I’ve found, producing the highest prices I’ve seen for off market properties in need of repair.
If you decide against accepting a cash offer, you can go a different route or choose to list your home for a higher price in the open market with the same (or any other) Realtor – with no further obligation. If you’d like to explore the possibility of a cash offer for your home, give us a call at 503-714-1111 to make an appointment and we’ll do the rest.
iBuyers no Longer in Business
Zillow is one of the most well known home shopping platforms and in 2019, the company decided to launch its own iBuyer program, called Zillow Offers. But in November 2021, Zillow had to shut down its home-buying segment due to an algorithm that inaccurately predicted home values, causing the company to lose money. Zillow is selling through their remaining inventory but is no longer in the business of home-flipping.
Redfin, another popular resource for online home shoppers, also ventured into the “instant offer” market in 2017 with its iBuyer platform RedfinNow. As mortgage interest rates continued to climb due to federal hikes and the housing market cooled over the last year, the company decided to cut its losses and shutter its home-buying operation in November. Like Zillow, Redfin is now working through its inventory, fulfilling contracts and selling off its remaining homes.
Get the Most for Your Home on the Open Real Estate Market
While the iBuyer model has gained some popularity, it is important to remember that companies like Opendoor, Offerpad and Flyhomes are always operating in their own best interests – not yours. They promise quick sales but may not always deliver, and their business model is to buy your home for less than its market value so they can turn around and sell it on the public marketplace with a Realtor.
Cash investor networks like Homelight and Express Offers can be more beneficial for sellers because investor competition drives higher offers. An added safeguard is that these companies don’t primarily make money off the seller (as their overall business model), but from referrals to investors or other agents.
Sellers with unusual circumstances or urgent deadlines may be willing to lose tens of thousands of dollars on their home sale in exchange for a hands-off transaction, but why sign away your profits to a big corporation when you can enlist the help of a qualified real estate agent who will work in your best interests to secure an at- or above-market price for your home?
For a home valuation appointment with a top 1% Portland Realtor or to discover what Express Offers can do for you, give us a call at 503-714-1111. We pride ourselves on providing the best possible seller experience and we’d love to serve you!February 3, 2023