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Old 12-16-2019, 11:17 AM
 
2,928 posts, read 3,050,666 times
Reputation: 1882

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Just saw this flip. Sold about a month ago for ~$234k, just went into pending at a list price of $249.9k. $16k into OfferPad's pocket, not calculating that they're involved in at least 3/4s of the transaction as far as commisions go. Not even 30 days on the market.

If the seller just listed it with a normal agent he would've at least pocketed that $16k. Instead he thought it was wiser to get an insta-sale...Not sure why.

https://www.realtor.com/realestatean...-41416?view=qv
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Old 12-16-2019, 11:22 AM
 
2,928 posts, read 3,050,666 times
Reputation: 1882
And if sellers don't want to pay commission, it would be better to do FSBO. This is just putting another middle man into a transaction and increasing housing costs for the next person down the line.
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Old 12-19-2019, 05:02 PM
 
Location: Southern Highlands
2,261 posts, read 1,504,034 times
Reputation: 2065
Quote:
Originally Posted by ddrhazy View Post
Just saw this flip. Sold about a month ago for ~$234k, just went into pending at a list price of $249.9k. $16k into OfferPad's pocket, not calculating that they're involved in at least 3/4s of the transaction as far as commisions go. Not even 30 days on the market.

If the seller just listed it with a normal agent he would've at least pocketed that $16k. Instead he thought it was wiser to get an insta-sale...Not sure why.

https://www.realtor.com/realestatean...-41416?view=qv

Surely you understand the list price is not necessarily the sales price. Don't you?
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Old 12-19-2019, 05:10 PM
 
995 posts, read 460,359 times
Reputation: 1218
Quote:
Originally Posted by ddrhazy View Post
Just saw this flip. Sold about a month ago for ~$234k, just went into pending at a list price of $249.9k. $16k into OfferPad's pocket, not calculating that they're involved in at least 3/4s of the transaction as far as commisions go. Not even 30 days on the market.

If the seller just listed it with a normal agent he would've at least pocketed that $16k. Instead he thought it was wiser to get an insta-sale...Not sure why.

https://www.realtor.com/realestatean...-41416?view=qv
Let's say it sold for $250k as your post would indicate. Assuming 6% commission (which is typical for low price point homes like this) so that's $14k or so!? Instead they sold for $234k no commission and no delay. Maybe I am really stupid but that seems like a great deal for the seller at $234k. In fact, I don't think this "flipper" is going to stay in business long with such low margin.
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Old 12-19-2019, 05:13 PM
 
995 posts, read 460,359 times
Reputation: 1218
Quote:
Originally Posted by ddrhazy View Post
And if sellers don't want to pay commission, it would be better to do FSBO. This is just putting another middle man into a transaction and increasing housing costs for the next person down the line.
FSBO like many do-it-yourselfer things works great for people that like being a DIYer. I personally prefer letting a pro handling it so I can do what I do best (which is not selling real estate). Also, in my experience a good Realtor is worth the commission as they understand pricing, marketing, and holding a deal together through escrow (where often the buyer and/or seller need some hand holding). You sound like a know-it-all type so you probably won't accept another opinion on a topic but rest assured there are two sides to a coin.
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Old 12-19-2019, 05:41 PM
 
Location: Las Vegas
14,218 posts, read 27,660,411 times
Reputation: 27540
More to it than that. The seller didn't lose the RE commission plus no staging and strangers tromping through your house all the time. Having to leave during showings and keep the house show ready 24x7. Didn't have to rent a storage unit to get all your stuff out of the house for showing. All this stuff is a lot of effort, expense, and work. Looks to me like the seller lost about 3K more than just the commission and that would have been worth it to not have to do all that other stuff.
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Old 12-19-2019, 05:50 PM
 
Location: Southern Highlands
2,261 posts, read 1,504,034 times
Reputation: 2065
Quote:
Originally Posted by yellowsnow View Post
More to it than that. The seller didn't lose the RE commission plus no staging and strangers tromping through your house all the time. Having to leave during showings and keep the house show ready 24x7. Didn't have to rent a storage unit to get all your stuff out of the house for showing. All this stuff is a lot of effort, expense, and work. Looks to me like the seller lost about 3K more than just the commission and that would have been worth it to not have to do all that other stuff.

Really, impossible to evaluate fully until the house closes and the sales price is made public.
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Old 12-19-2019, 06:50 PM
 
Location: Lone Mountain Las Vegas NV
17,744 posts, read 7,811,975 times
Reputation: 8593
Quote:
Originally Posted by longviewJoe View Post
Let's say it sold for $250k as your post would indicate. Assuming 6% commission (which is typical for low price point homes like this) so that's $14k or so!? Instead they sold for $234k no commission and no delay. Maybe I am really stupid but that seems like a great deal for the seller at $234k. In fact, I don't think this "flipper" is going to stay in business long with such low margin.
Not sure you understand how these instant sales work. They collect a fee that may well exceed 6%. So the seller got $234K less 6% or $220K. And there are likely another set of fees adding to a few percent. Commissions on low end today are in the 4 to 5.5% range. At the high end a $250K sale would yield $236K. And again there will be a few percent of other fees.

Many of these i sale operation claims they will sell the property for the price they pay for it and some actually do. Their profit is the fee not the markup. Note they also appear to avoid pricier policies where they risk longer sale cycles with heavier carrying costs.
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Old 12-19-2019, 07:35 PM
 
995 posts, read 460,359 times
Reputation: 1218
Quote:
Originally Posted by lvmensch View Post
Not sure you understand how these instant sales work. They collect a fee that may well exceed 6%. So the seller got $234K less 6% or $220K. And there are likely another set of fees adding to a few percent. Commissions on low end today are in the 4 to 5.5% range. At the high end a $250K sale would yield $236K. And again there will be a few percent of other fees.

Many of these i sale operation claims they will sell the property for the price they pay for it and some actually do. Their profit is the fee not the markup. Note they also appear to avoid pricier policies where they risk longer sale cycles with heavier carrying costs.
Ok. Then my bad. Still $234k cash v. $250k (maybe) cash minus the same sales commission. My conclusion is the same that I'd do the $234k in a lot of cases. It's not very clear cut to me.

Having said all that I own a lot of property and tried one of those "instant" offers on Zillow in another city. They determined they couldn't make an offer (which makes no sense as it's a tract unit so easy to comp) but would gladly connect me with a Realtor who could help me sell.... So, at least in that other city I think zillow was just connecting Realtors to potential sellers. Just a guess on my part.
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Old 12-19-2019, 09:22 PM
 
222 posts, read 109,458 times
Reputation: 475
The real long term plan for these online companies will be acting as a clearinghouse for real estate transactions. No realtors needed from the buyer and the seller, and they can be profitable on both sides of the transaction.

There is less and less need for realtors in general in the future, especially at 6% of a transaction cost.

If the transactional costs of real estate transfers were reduced, we’d see more mobility and higher inventory and it would be an economic boom to the country.
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