Direct-sell firms add new concept to Orlando home market
Orlando has become a test market for three national companies seeking to change the way houses are bought and sold by dealing directly with buyers.
The deep-pocket groups are banking on sellers who prefer a fast sale to getting top dollar. San Francisco-based Opendoor and Arizona-based OfferPad have joined Zillow’s Instant Offers program in trying to win over Orlando homeowners to the concept. And this week, Knock announced it secured a Florida brokerage license with plans to introduce its own twist of the concept in Orlando this year.
Orlando area resident Jerome Blake said he recently researched the companies offering quick sales and got prices from several for the Maitland town home he was selling. He characterized some of the offers as “insulting” but later found Opendoor and accepted its offer. Inspectors
contracted by that group found some needed repairs and discounted the price, but “I thought it was very fair,” said Blake, who closed on his house three weeks after requesting the offer.
“I wanted to avoid the whole process of dealing with the real estate agents, putting the house on the market, making the repairs, having the showing, dealing with the offers and counteroffers,” he added. “You kind of get tired of going back and forth with the haggling.”
The programs all vary somewhat but generally take online requests from owners seeking amounts the companies are willing to pay for the house, with prices based on nearby and similar sales. Following inspections and any pricing adjustments, owners can then choose their closing date to avoid double moves and short-term rentals.
The fast-expanding companies tack on commission fees to sellers and base sales offers on comparable previous sales. While each is launching in other markets, Orlando stands out for drawing the biggest names in what could become a game-changing approach for the real estate industry. Companies said Central Florida’s growth in population, jobs and home prices attracted them. Knock co-founder Sean Black said Orlando houses also lack the big-ticket home insurance premiums found in Florida’s coastal areas.
The potential disruption to the residential real estate industry rankles some longtime veterans.
Barbara Hampden, an agent with Re/MAX 200 in Winter Park, said she appreciates the new ideas but is skeptical about anything that gives sellers less representation on one of the biggest financial decisions of their lives.
“I think that they’re the Uber drivers of the future. But will it really take off?” she said. “There’s a lot of dumb venture-capital money in California that will invest in startups. Reputation means a lot in this industry. They don’t have a reputation or track record.”
Opendoor was founded in 2014 and has raised $320 million in equity from investment groups including Khosla Ventures and GGV Capital. In addition to its Orlando launch three months ago, it operates in Phoenix, Dallas-Fort Worth, Las Vegas, Atlanta and Raleigh-Durham.
OfferPad is the brainchild of Jerry Coleman, who co-founded Blackstone’s Invitation Homes. Other than Orlando, it operates in Phoenix, Las Vegas, Salt Lake City, Tampa and Los Angeles.
Last year, Zillow piloted Instant Offers in Orlando and Las Vegas. The service connects sellers with investors who may purchase the property and agents who can list it on the market. A spokeswoman said it has “performed well” and the company recently announced it will expand into Phoenix this year with an eye on other markets.
In addition to those groups, Knock is expected to enter the Orlando market this year backed by about $33 million in venture capital from both the East and West coasts, its founder said. Knock purchases buyers’ next house for them and sells it back to them with a sales price that tacks on a 3 percent real estate commission. The advantage for buyers is that they can secure their dream house in competitive markets even if they still have to sell their own home. Knock is slated to open in Charlotte, Raleigh, Los Angeles, San Diego, Phoenix, Chicago, Miami, Orlando, Tampa and Denver in the next two years.
Orlando-area home seller Blake said he ventured into the new homesales model without knowing anyone else who had gone that route.
He said entrusting relatively new companies with your home sale is a risk and advised sellers to do their research.