North Texans soon will have another option for buying or selling a home without hiring a traditional real estate agent.
Offerpad, a Phoenix-based company, plans to begin Nov. 1 buying and selling homes in 71 cities across the Dallas-Fort Worth region. It’s an early move in the company’s plans to expand beyond Arizona and into at least seven other markets. According to Forbes, Offerpad has raised more than $410 million in equity and debt during the past two years to spend on home purchases and renovations.
In the Metroplex, the company will compete with other nontraditional real estate companies, including Opendoor, which are already gaining a respectable share of the residential market.
These companies — along with Redfin and Zillow, which offer online home listings and rely heavily on data to connect buyers and sellers — are disrupting the residential real estate industry in major cities across the United States.
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“We provide convenience and certainty,” said Cortney Read, Offerpad spokeswoman. “We are assuming all the risk and responsibility for renovating a house, and getting it market ready. We have 94 percent customer satisfaction. It’s completely changing the way the industry operates, and people are loving the flexibility.”
How it works
Customers who wish to sell a home to Offerpad can start by requesting an offer online, a process the company says takes about five minutes. Offerpad typically responds with an offer in about 24 hours, using a variety of data about comparable homes in the area and input from a company employee who knows the area.
If the customer accepts Offerpad’s offer, an inspector is sent to the home within days. Anything the inspector turns up — i.e. roof or foundation problems — could change Offerpad’s initial offer.
Closing can be done in as little as two weeks, or much longer if the customer needs time to move. The company also provides free local moving through its partner, Bellhops.
Not only do customers not have to worry about showing their home to strangers (other than the inspector’s one-time visit) while they are still in it, but they also need not fear that the buyer will back out at the last minute, Read said.
She added that the perception that non-traditional real estate companies such as Offerpad and Opendoor are preying upon people who are in a rush to get rid of their property — i.e. someone who inherits a property but lives out of state — are off base.
She said Offerpad isn’t interested in buying houses on the cheap and flipping them for a profit, although it’s not unusual for Offerpad to spend $20,000 or more painting, recarpeting and otherwise improving a house before selling it. In many instances, the company will decline to make an offer on a home, if its in-house analysts don’t like the property or its neighborhood.
“People are not selecting us because they’re in dire need, or a time crunch,” Read said. “Actually, a majority of our customers have been through the process (or buying and selling a home) multiple times, and they just don’t want to do it again. They’re busy working, taking care of kids, pets.”
Some non-traditional companies buy homes for a flat fee that often amounts to far less than the 6 percent commission a real estate agent would normally get. For example, Dallas-based Door Inc. is running advertisements on North Texas radio stations offering to buy or sell homes for a flat $5,000 fee.
But Offerpad actually charges higher-than-normal fees of 6 to 10 percent of the purchase price.
But that price eliminates all the uncertainty about whether a seller will get a fair price, how long the property will have to stay on the market, etc., Read said.
About 5 percent of residential sales are now done by this non-traditional method in the Phoenix area, Read said.
Statistics for North Texas weren’t readily available, although by some estimates Opendoor already handles nearly 2 percent of sales in the region.
But real estate agents say their hometown knowledge of the neighborhoods where they work can’t be replaced by technology.
“Buying a home is often the largest financial event of a person’s life and most consumers rely on a Realtor for guidance when it comes to navigating the complexities of these transactions,” said Jane Dollinger, National Association of Realtors spokeswoman.
About 87 percent of home buyers, and 89 percent of sellers, still use an agent, she said.
“Realtors have unparalleled knowledge of local market conditions,” she said, “and can leverage that expertise to help their home buyers and sellers reach their real estate goals.”