REAL ESTATE

Buying or Selling On-Line

      As discussed in Chapter 7 of our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology (available on Amazon), and several previous blogs, the purchase of a home may be one of the biggest decisions, and investments, to make in one’s lifetime. Over the last few years, it has never been more difficult for young buyers, with rising inflation, property prices, and property taxes/insurance, and the situation appears to be only getting worse, with an increasing number of defaults and loans coming due.

      There are many emerging companies popping up all over the country (and world) that attempt to streamline the buying/selling process, or so it seems. It’s almost a certainty that you have heard of local realtors where you reside advertising that they will “buy your home if you can’t sell it,” and/or “you already have an offer if you list with us,” or some variation to those promises. What is not stated in those proclamations is the fact that their offer will not be at fair market value (or else why would they want to buy?) and the closing may still require fees.    

      A new breed of companies has also emerged that take it a step further, promising to complete property transactions solely on-line. Examples of these companies are OpenDoor, IBuy, Offerpad, and EasyKnock. Some offer to buy your home in a “hassle-free” manner, and closings in as little as 7 days, claiming to eliminate the need for a real estate agent.

      To be fair, there are some pros to selling on-line, which need to be taken into consideration, which includes eliminating the hassle of the traffic related to showing your home to multiple potential buyers, determining which bid to accept, the inspection and lending process, as well as the necessity to barter back and forth on conditions to complete the deal.

      Cons, however, can include selling your home for under-market value, and many “hidden” fees that still accompany the transaction. Cons to buying on-line can include the ability to only view videos of the property, the inability to conduct your own due diligence and negotiate the closing terms, and the absence of true representation. “Easier” doesn’t always mean better.

      Some of the companies offer a variety of options as simple as purchasing your home on an “agreed upon” price, equity advances, programs such as buyback-leases, or even co-ownership. Though some of these companies may be legitimate, it is NOT advisable to go through the process alone in our opinion. Some also run on digital platforms, so beware of hackers and information sharing. Unless one is highly experienced in buying and/or selling property, employing a real estate agent, or at least an attorney, to assist in the process should always be a consideration. Real Estate contracts have become very specific and sometimes confusing, and are very easy to misinterpret.

      For sellers, most of the sites require the general information pertaining to the property, which is used to generate a “value” to the property being sold. This is where an inconsistent process can unfold with algorithms, as realtors generally have high knowledge of their geographical area, and may use different parameters to approach a value. Most platforms will also use a plus and minus system to add and subtract value, based on condition of home and systems (called a “condition adjustment”), updates/repairs, recent comparable sales within a certain distance, and many other factors. They then promise to provide an offer within a few days. Keep in mind that the offer is usually only viable for 24-48 hours, which creates pressure on the seller.

      Of course, it doesn’t end there as the “service” comes with additional fees beyond normal closing costs. Most will attach a simple sale charge of about 5%, which is essentially the average commission for an agent, so is there really any savings? Some will also provide Customer Service - to “serve” you! Bottom line is they are charging the customer, YOU, to sell your property to them, at mostly under the true market value. If you are a buyer, your representation turns out to be their employee, who works for them. Either way you don’t have any real representation to look after your own interests. This does not make these companies necessarily immoral or shady, however, you’re blindly leaving your trust, and transaction, solely in the hands of the other party.  

      Does the phrase “Nothing is ever Free” come to mind. Strongly consider some type of representation if you are not an experienced real estate individual.  

      Please visit the website www.augustassociatesllc.com for home values, listings, and professional assistance.

***As always, this information is not intended to be financial advice, or any specific buy or sell recommendation, but rather a guide to assist the reader in some further understanding of current economic conditions.