Long story short; think twice about showing your Buyers any OpenDoor* listings.
There is a dark side to the “instant home-selling” craze all Buyers should be very aware of. Bad Karma may sound silly, but everyone of us has stood in a home with a creepy vibe. We’ve had haunted houses since the dawn of time. But, more than ghosts, these “instantly-bought flip homes” represent someone else’s failure. And to understand this, we need to look at who actually sells to an Instabuyer and why?
Let’s start with facts: According to Marketwatch; i-Buyer sales netted home sellers 11% less than the open market. Collateral Analytics has the home seller loss at 13-15%. Homes selling for less than market value often depress entire neighborhoods. So, using an i-Buyer means not only losing neighborhood friends, but roughly 10% of a home’s value. Ok, so math isn’t the reason anyone uses an i-Buyer. So again, why?
To overcome the objection of making less money, i-Buyers will stress the peace-of-mind sellers enjoy not having to deal with silly “inspection” requirements. (No one needs to know about the standing water in the crawl space) This should be a huge red flag to everyone. While the i-Buyers pitch how hassle-free they make moving, their real selling agenda is in providing, “a way out”. Dig deeper in the instabuyer sales pitch and you will find threads of “getting out from under” and “walking away”. Clearly their messaging is aimed at two groups of homeowners; those in trouble and those who don’t give a sh*t. Neither is good news for your Buyers.
Everyone knows; “never buy a rental car”. The same logic applies to instant-flip homes. Homeowners who don’t care will let little maintenance problems fester into larger ones. They only do the minimum, if that. And, like the rental car, it’s impossible to really know how badly it was abused. You just know that it was.
Logic says most of the i-Buyer sales come from people in trouble. No matter the issue, those who use i-Buyers are in a real hurry and not concerned about money. Red flag. As an agent, why would you want to show your clients that property? Of all the properties for sale, why pick the one where the homeowner was so desperate they basically paid a company to take it off their hands? But, as we all know, it doesn’t end there.
Perfume on a pig. We all know it. We all can smell it. But, i-Buyers are the masters of it. They earn a living by making cheap look just a little better. But make no mistake, their mission is to spend as little as possible, using only the cheapest available products. Applying the thinnest waft of perfume possible is what i-Buyers are bringing to the table. How is this a trait you want to introduce to your clients?
“I know a company that specializes in taking homes from those who are in trouble, want to see what they have?” Care to dance with the devil?
When inventory is low, agents might be forced to show i-Buyer flip homes. Go in with your eyes open wide. For the most part, you can disregard any Seller Disclosure. It’s the agent’s job to look past the perfume. So, take the extra steps when working with your inspector. It’s also the agent’s job to forewarn any potential buyers to the hazards of buying an insta-flip. Yes, there might be deals…..but……
Obviously you want your clients happy. Showing them someone else’s bummer probably isn’t YOUR best foot forward. But, if you must, do your homework and be prepared.
*While our personal experience with OpenDoor was awful, it should be noted this warning also extends to the hordes of similar-like flip-artists often referred to as “i-Buyers”.
1 thought on “Trail of Tears”
Would you consider i-buyer market to be email@example.com, mark spain, and res.net? With the low inventory, these companies are popping up in most of my searches. Res.net and national.sells even make it necessary that the agent pay an extra $150 for electronic fees–on top of offering less than 3% commission. Also, these companies stipulate that you must put in a blind offer and only if your offer is accepted will you be allowed to go inside. I have two buyers that have given up. Is there a way to legislate the market? Honest people looking to own in Atlanta are giving up. Flippers have taken over.