Recently there has been a stir about the latest "Shiny New Toy" in the real estate industry - The "I Buyer" program.  This is where companies such as OpenDoor  and Offer Pad offer to buy your home cash, with a closing as soon as two weeks. They also advertise "hassle free" transactions.

 Sounds pretty good eh? Let me share with you some of my own personal experiences then you can form your own opinion.

The Dallas/Fort Worth area was one of the earlier markets to be launched. Since we are a member of the DFW market, we were able to get a first hand look at the program. We typically have 40-50 Flat Fee listings in that market at any given time.  On average I would receive 1 Open Door offer a month.  The offers typically came in 10 - 20% under what the seller was requesting. In addition there were fees they charge to make the offer.  A recent offer for $357,077 ($399,000 list) had additional “service” fee of $26,781, which included commission and operational costs. The offers were cash and subject to inspection.  Of the dozen or so offers none were ever accepted by the seller.  The sellers eventually sold their homes traditionally and for more money.  

Just last month I represented a buyer for a home listed by Open Door. Overall I would say the process was decent.  They held an all day open house, which made showing easy.  The offer process was a little cumbersome. We submitted the offer and had to also input the details onto their site.  Seemed like a duplication of effort. Once submitted we were notified we would have a response within 24 hours, which we did receive on time.  The counter was not quite what we were hoping but the buyer decided to accept anyways. Once we had an executed contract we ordered the inspections.  The contract had a 10-day option period but the Open Door Addendum stated we had to have the inspection completed within 3 days. We were not sure if this meant we were only able request the repairs within in the 10 day option or if we only had 3 days.  This was a little confusing.  We made a rush on the inspection just to be safe.  The inspection revealed quite bit of deferred maintenance.  There were safety, and mechanical issues.  Also some cosmetic, which we were willing to forgo. Based on our best estimates over $20K.  We requested the repairs to be made (preferred) or a credit in lieu of repairs. The agent responded saying they would like to get the deal done and if we could come up with the 5 main issues we would like resolved. The response seemed very “scripted” to me.  Like I was dealing with a corporate guideline rather than another agent who I could have a frank conversation with. In any event we were not able to come to an agreement and we terminated the contract.  It took a few days to get the release of earnest money signed, Evidentially it had to go thru various levels, Nonetheless, the delay made my client uneasy. 

In hindsight I began to think about whether buying an “I Buyer” type home was a good idea.  In my opinion the original seller was potentially distressed and for that reason maybe took their offer for less just to get it sold. I mean if you had a home that was well maintained and upgraded why would you not hold out for a higher offer on the open market.  If this scenario were true then it would lend you to think the original seller left the home with a certain amount of deferred maintenance. This may not be in all cases but it certainly seemed to be the case in the home my clients almost bought. I’m sure we will run across another “Ibuy” type home in the future, but this time we will do quite a bit more diligence before plopping down money on an inspection and option fee.

It will be interesting to see where this model goes or what it evolves to.  I can see a market for this type of model, albeit limited. Ultimately think it will lose some of its luster as consumers do their research.