Sellers who receive offers to buy their homes from a third party who will fix the place up a bit and resell it are always left with a nagging question: Could I have gotten more?
Now there's a new tool to help sellers answer those questions. It's called the "Offer Optimizer," and it will help you make a side-by-side comparison of offers made online or in person. That's the only way sellers can make a sound monetary decision on how to proceed.
The "I" in the term I-Buyer stands for several things. The internet, for one, because most of these outfits work almost exclusively on the web. Instant, for another, because they promise to make you an offer within just a few days and, if you accept, to close quickly, paying you in cash.
This kind of service is nothing new. Many realty firms and agents offer what are known as "buy-in" programs that will be happy to take your property off your hands. Then there the so-called bottom-feeders like HomeVesters of "We Buy Ugly Houses" fame and House Buyers of America.
None of these buyers will pay sellers top dollar. After all, they have to make something for their troubles. Worse, the discount sometimes can be steep, as much as 50 percent less than what you might sell for on the open market if the house is in good shape and in a solid market.
Lately, though, there has been a movement to institutionalize buy-in programs so the rules are the same nationally for everyone. And everyone, it seems, is getting in on the act. So far, the leading I-Buyers are Offerpad and Opendoor, but Zillow is ramping up quickly, as is Redfin Now and several others.
Offerpad and Opendoor, the two largest players so far, work very much the same way. Take five minutes to complete Offerpad's online form -- include pictures, if you like -- and you'll receive an offer within 24 hours or so. It uses automated valuation algorithms and artificial intelligence to determine its offers, which it says are "competitive."
Similarly, tell Opendoor about your home's details and receive an offer within a few clicks. Add unique details for a more precise offer. If you accept, the company will send out an inspector to confirm what you said. And if everything checks out, you can close within a few days.
Both companies say what they pay -- in cash -- is fair, depending on the home's condition and the state of the local market. And both charge service fees "similar to what a traditional real estate agent would charge." The fee averages 6 percent with both companies. But it can be lower or higher -- lower if the house is pristine and in a hot market, and higher if it requires lots of work.
I-Buyers, sometimes known as "disruptors" because of how they hope to reshape the market, command only a small portion of the business now. One source says homes sold via instant offers accounted for a minuscule 0.2 percent of all existing home sales last year.
But they are expected to grow exponentially. In Phoenix, where several I-Buyers compete for business, they bought in 5 percent of all resale houses -- one in 20 -- in 2018. Meanwhile, Zillow has made its buy-in program a high priority. And Opendoor expects to be up and running in 50 major markets by next year.
Realize, though, that all offers are not the same. Which again begs the question: How do you know you're being offered as much as you can get?
Enter Offer Optimizer, which will make three comparisons: one from a national I-Buyer, one from a local I-Buyer and one related to what you can expect to obtain by using a local agent to sell the traditional way. If more than one I-Buyer is active in your market, the tool will obtain offers from all that are available.
The online tool will provide a detailed breakdown of each offer's fees and costs as well as the typical time frame for a sale to be completed.
At this time, the Optimizer is operational in 21 major markets where I-buying is taking hold. It's a free service from zavvie, a matching service that connects buyers and sellers to agents who specialize in their local markets and never travel far afield to score a listing or a sale.
"Time is money. The question for most sellers is: How much money?" says zavvie's Lane Hornung. The program (zavvie.com/offer-optimizer) "puts instant offers on overdrive, ensuring sellers squeeze every last dollar out of their home sale."