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Putting a Face on Real Estate since 1995™
• Benchmark Mortgage VA Loans • Trendmaker Homes luncheon with PT50 REALTORS • Blackburn Communities Grand Opening at The Crossings • & much, much more!
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AUGUST 2018 • VOLUME 23 • ISSUE 4
Are online wholesale home seller services worth the hype? By Riki Markowitz
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ome heavily advertised and funded tech companies that offer instant offers for homes may be coming soon to Austin. Sometimes called iBuyers, such as Opendoor, Knock and OfferPad, these for-profit companies have a similar business plan. Reviews show customers have experienced everything from a positive transaction to misadventure at every turn. Sellers go online, provide information
about their home and are given what appears to be a fair market offer. If the owner agrees to the company’s terms, the wholesale company then turns around and sells the house at a profit. The offer presented to sellers is based on photos, comps and tax records. Once a seller agrees to a wholesaler’s list price, an inspector goes to the home and compiles a list of repairs (like how it works with a traditional buyer). The seller has the option of doing all or some of the repairs. The company will provide a monetary advance that they will recoup at closing or sellers can elect to have the wholesaler do the repairs and the cost is deducted from the sale price. One agent living in a large Georgia metro area, according to Inman News, wanted to see what it was like to work with some of the more popular wholesalers in his area. After providing information about his home on their websites he received an initial offer, which he found disappointing. He said their final offer was nearly 6.6 percent less than a recent appraisal, which in his case represented a potential $125k loss. While some sellers are willing to trade some profit for closing quickly, many people simply don’t realize how much money they’re walking away from. For the most part, it’s due to a combination of their need to sell fast, im-
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patience with the process, lack of knowledge about real estate and discomfort negotiating. Other homeowners don’t want to deal with making repairs or simply can’t afford it. Another pitfall may be limited customer service. Shawn Rooker, a REALTOR with Realty Austin, has had clients who fired their agent from next-gen tech brokerages, mostly due to avoidable problems. “The best agents provide value through their customer service. Period,” he says. Another example: A homeowner who lives in a town outside of Dallas. He needed to sell his house and wanted to do it quickly. He saw
another home listed by a wholesaler that perfectly matched his needs. Everything about his initial experience was perfect. He had a REALTOR and was able to see the house on his timeline, but then he needed some basic information and called the company listing the home. Because he said he had an agent, the company wouldn’t talk to him. It turns out his REALTOR was on vacation and he was worried that someone might come along and snatch the house before his agent returned. He pleaded with the company and explained
Front Page: Continued on page 28
Features of the Month Column: ABoR—Are you ready for the Great American Road Trip?. . . . . . . . . . . . . .. pg. 3 Column: WCREALTORS—Buyers beware: you may be under surveillance!. . . . . . . . . . .pg. 7 Column: HBA—Builders concerned about affordability and cost of construction. . . . . . pg. 15 Expert Commentary: We need to do a better job educating renters. . . . . . . . . . . . . pg. 20 Column: Women's Council—Close the door on Opendoor!. . . . . . . . . . . . . . . . . . . pg. 22 Associates in Progress: Whisper Valley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 25 Column: RRC—Online home sales models leave money on the table. . . . . . . . . . . . . pg. 30 Upcoming Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 33