Phoenix is guinea pig of “e-commerce for real estate”
iBuyers like Opendoor, Offerpad, and Zillow are big players aiming to bring big business efficiencies and software to the housing business, and Phoenix is an ideal proving ground. As one of the country’s fastest-growing metro areas and with relatively inexpensive newly built and similar styles, companies like Offerpad use algorithmic appraisals help guide big landlords and house-flippers. Here’s how it works: iBuyers will make you an offer on your house at a guaranteed purchase price. You don’t have to show the home or fix it up, and you can decide when you close.
This type of bulk buying could prove exorbitantly expensive in cities like New York or Boston. And pricing algorithms won’t work well for houses in some parts of the country that vary so dramatically in age and design. Big investors now own more than 22,000 rental houses in metro Phoenix.
The down side? A prospective buyer who needs a mortgage can have a hard time competing against a big investor making an all-cash offer on a house. In addition, iBuyers are after real-estate transaction fees and anything they can make on reselling the property. Margins are low, so volumes must be high. Using iBuyers comes with the benefit of speed, but you’re leaving a lot of money on the table and may end up paying twice as many fees as you would with an agent. Just be sure to do your homework before selling your home.