Instant Offers...The High Cost of Convenience

If it seems too good to be true, it probably is! This has never been more true than Instant Offers in real estate sales.

An instant offer is a generic term for when a company makes an offer to purchase a seller’s home and to allow the Seller to skip the traditional method of listing the home with a Realtor. Sure, an instant offers allows for a quick sale, flexible closing date, and no required repairs; but what is the cost you are giving up?

An instant offer involves meeting with a Realtor acting as the Company representative, viewing the home, an offer presentation, signing of contracts, closing, etc. This process has many of the steps involved in a traditional sale. In most cases, the Instant Offer is presented by the Realtor working with the purchasing company and the Seller does not truly have anyone solely looking out for their best interest.

What brought this issue to the writer’s attention is that several local Sellers sold their homes using Instant Offers. The homes were back on the market within weeks at a price approximately 10% more than the initial selling price. It is not likely the company would try to sell the home for 10% over market value. It is much more likely, the Seller receive an offer 10% below market value. No substantial improvements were done on the homes. Giving up 10% of your homes equity is substantial. Every real estate transaction is unique, but this was concerning.

For example, if you purchased a home for $400,000 on a 30 year fixed rate mortgage at 4%, with a 20% down payment, it would take you over 5 years to pay down your mortgage 10%. That’s five years of going to work every day so you can make your mortgage payment at the end of every month. After all that, you simply sign it away to a for-profit company to avoid some minor inconvenience.

Instant Offers allow you skip listing your home, open houses and showings. Open houses are optional and showings open the door for exposing your home to the widest spectrum of the market. It allows for higher offers and multiple offers. Today’s listings frequently obtain offers over asking price, unlike Instant Offers. Instant Offers allow the Seller to select their closing date. A traditional sale generally closes in 30-45 days and the Seller can instruct their Realtor to negotiate a specific closing date.

Real estate commissions are negotiable. Most Instant Offers charge fees, whether they be called commissions or something else, that often have a combined total that exceeds that of commissions on a traditional sale.

So, the bottom line is how much minor inconvenience can you tolerate to avoid giving up a substantial part of your home’s equity?

The best way to protect yourself is to set up a listing appointment first with a full service real estate company like Gulf Shores Realty. Call 941.488.6644. Have them do a Comparative Market Analysis. Gulf Shores Realty will NOT give you an instant offer. Our business model is to put the maximum amount of profit in your pocket and to simplify the selling process. Our professional services will help you obtain the highest possible price for your home. Homes are selling fast and there is no reason to give up any of your equity.