Have you seen all the recent publicity around the real estate company, Offerpad? If you haven’t, then you’re about to. It’s another version of the new “iBuyer” real estate tech company, that’s reinventing the home selling process for sellers. In May of 2018, Forbes wrote an article saying “In the last 16 months, OfferPad raised more than $410 million in equity and debt.” That’s sure to catch the news and raise some eyebrows. But what’s all this money doing? How’s it being put to use? Is a monster company the right fit for you? Maybe it is. Maybe it isn’t. Read on and find out for yourself.
Who are the people behind Offerpad?
Brian Bair and Jerry Coleman, two established entrepreneurs in the single-family rental real estate industry, came together to create Offerpad, in mid 2015. The two partnered in 2009 and over the next 6 years compiled their knowledge of the real estate selling process, and set out to design a simpler way.
My name is Parker Stiles, and I’m the founder of Barrington Acquisitions, which also launched in 2015. We don’t have the massive funding that these iBuyer companies do, but i’ve been working hand-in-hand with homeowners, at their kitchen table, in the Atlanta market and have closed on over 65 homes since the start. I’m writing this article to layout the pros and cons of selling to these iBuyer companies like Offerpad, so you can decide what the right decision is for you and your family.
How does Offerpad make money?
The margins that Offerpad buys on are very small, meaning what they pay for the property, plus what they spend to renovate & hold the property, is very close to what they can sell it for after paying for commissions and closing costs. Sometimes even more, meaning they take a loss. Because of this, Offerpad wiggles in a variable fee for its services. This fee starts at 6 percent and rises to 10 percent for more risky properties. In addition, they will subtract a conservative amount for repairs, that their contractors think it will cost to get the home to “market ready condition.”
Since the volume of homes purchased by Offerpad is so high, there are certain types of homes, and areas, that Offerpad will not buy in. To find these types of properties or areas, you will need to submit your information personally. On another note, since my company Barrington Acquisitions is much smaller, it allows me to purchase property in more areas within the Atlanta market, and with a higher distress level if necessary. We have purchased over 65 homes in the last couple years, and are excited to keep that number growing. We pride ourselves in the “personal touch” that is hard to come by these days, and love showing off what the sellers that work with us have to say afterwards (CLICK HERE). Here’s a quick preview:
How does Offerpad work?
What Offerpad says “is supposed” to happen.
- Submit your address and property information.
- Hear from an Offerpad representative & go into detail about your home.
- Receive an offer, sign that offer, and choose closing date 5-90 days out.
- Offerpad will inspect your home after your have signed an agreement.
- Close and get paid.
What’s the Catch Selling to Offerpad?
- Offerpad will not buy in all areas. In areas they do buy in, there are pockets, price ranges, and levels of disrepair they they will not purchase.
- This is all done virtually, or over the phone. If you’re looking for someone to personally guide you through the sales process, you might feel lost. In the past we have helped sellers move, found them probate attorneys, let them stay in the house for a short term after closing, and many other methods of assistance to help this process go as smooth as possible.
- IMPORTANT: This offer is made sight unseen and is solely based on online information combined with what you verbally told them about the house’s condition. A very popular tactic of this company is reducing their offer after inspecting the home for repairs & updates needed to bring the home to “market ready condition.”
- Only after you have signed a contract saying you will sell Offerpad your home, will they come out to inspect your property. It is very common for you to skip over certain areas of disrepair when explaining the condition to Offerpad, because it’s your house, and you’re used to the condition it’s in. So when this inspections is completed, it’s common for the price to be dropped a significant amount. This is where Offerpad increases their profit margin. At this point you have 3 options. Accept the lower offer, do the repairs yourself, or cancel the contract. FYI, we make all of our offers on site, immediately after inspecting, so we know what we can realistically pay for our properties. There is no need in wasting our seller’s time, unless we we are buying and selling thousands of properties like Offerpad does. We are a small, local shop.
- If a price is agreed upon, closing will be set and eventually take place. Keep in mind, there will be more fees due at the closing table such as Offerpads fee, attorney’s fees, closing costs, possible agent commissions, etc. At Barrington, we cover all those costs for you and we don’t charge anything to buy your home. So the price you see on paper, is what you end up putting in your pocket.
Should you sell your house to Offerpad?
This is 100% your decision, based on the research you have completed, and how personal you want your selling experience to be. However, whichever you decide, it’s important to know that you’re working with an experienced professional! This job is too important to be playing with rookies. Before making a final decision, a quick checklist might look something like:
#1 – Analyze all options for Pros & Cons
- Traditional Listing with agent
- Independent Local Cash Buyer
- Corporate Buyer “iBuyer”
#2 – Make sure you’re only considering true professionals (look for lots of website reviews!)
#3 – Know the fees & your bottom line (how much do you HAVE to take home?)
#4 – Who can 100% close by your needed date? No exceptions..
Regardless of your decision to list your property, sell to a corporate iBuyer like Offerpad, Opendoor, etc., or work with a small local home buyer like my wife and I, I hope you will at least give Barrington Acquisitions the opportunity to make you an offer. It’s free, and we really place our focus on the situation that you’re in, making the selling process feel as personal, and stress free as possible, & creating a win-win for both sides.
Ready to Sell Your Home in the Atlanta Area? Click Here to see how much it’s Worth!
P.S. If you are interested in selling your home, make sure to check out the current promotions running on our Monthly Incentives Page.