You may settle for less in an instant sale
Super low mortgage rates should be able to generate a great deal of confidence about one’s chances for buying or selling a home. But lately, not so much.
The average 30-year mortgage rate edged a bit higher and now rings in at 3.96%, still giving first-time home buyers a bit of a break, according to Bankrate.com, but above the record low of 3.5% in December 2012.
Will mortgage rates fall further? Some economists expect the Federal Reserve to cut short term interest rates again at the next meeting, set for Tuesday and Wednesday. But “mortgage rates are unlikely to decline in re
The idea behind that instant sale is to reduce some of the stress behind selling a home.
sponse to a Fed rate cut,” said Greg McBride, chief financial analyst for Bankrate.com.
“Mortgage rates would decline if there were additional signs of economic weakness or increased trade tensions,” he said.
Uncertainty is the name of the game: Where’s the economy headed? How, quickly, really could my house sell? Or how quickly, really, can I find a house I can afford?
Homebuying sentiment has weakened, according to the Fannie Mae Home Purchase Sentiment Index for September. While many still believe it’s a good time to buy and a good time to sell, the survey suggested more worries about potential job losses. Consumer sentiment is still strong, but the nagging feeling that something could go wrong is picking up.
Many people can’t afford making two mortgage payments at the same time. So frankly, some are afraid to make a move.
Enter some unusual signs, such as one that one real estate agent has been using, declaring: “Buy this home and we’ll buy yours!”
In various spots in the country, a new trend is popping up, too — called iBuying — where players such as Zillow, Offerpad, and Opendoor offer sellers the chance to instantly sell their homes in select markets. Some communities in Florida, Texas, Nevada, North Carolina and Colorado currently are served by some instant buying firms. Not all homes are eligible.
In August, for example, Keller Williams entered a partnership with Offerpad to run Keller Offers, an iBuyer operation.
Keller Williams agents in participating markets would be required to become a Keller Offers Certified iBuyer agent. Once certified, agents are able to submit a cash-offer request via Keller Offers.
The idea behind that instant sale — which is still a tiny fraction of the market — is to reduce some of the stress behind selling a home.
“We couldn’t really move on anything without selling our house at this point,” said Andrew Smith, 35, who works as a sales representative in the construction industry.
Smith and his wife Sarah wanted to
find a bigger home in Michigan.
Two-and-half years ago, they had settled on the three-bedroom, one-bath ranch as something that they could move into quickly in Rochester. It listed online for selling at that time for around $225,000.
Back then, there weren’t a lot of homes up for sale in their price range, Smith said.
Even so, they weren’t sure they wanted to go with the hassle of trying to sell their house when they decided to move this year to a bigger home — four bedrooms, five baths, 3,200 square feet, $430,000 in Rochester Hills.
They always faced the possibility that their old house wouldn’t move quickly enough.
So they jumped on a chance to sell their old house when they could take advantage of a cash offer made by real estate agent Jim Shaffer in Royal Oak, who paid $215,000 for the home in August. A sale on the home is pending.
Shaffer, the lead agent of the group, said he began using the “Buy this home and we’ll buy yours!” slogan in the spring and the group has since bought 10 homes in such deals — nine in Oakland County and one in Detroit.
Shaffer copied the idea from another Realtor who tried it some time ago in the Washington, D.C., area.
What should you expect with a quick sale?
Instant sales aren’t, of course, the
surefire route to getting the very best price that a seller can hope to see.
In some cases, an instant sale could mean you’re likely receiving 10% less — or even lower than that — than you might get otherwise with a more traditional sale.
And you’re giving up the possibility of a bidding war. Shaffer said he explains the tradeoffs up-front.
On the plus side, Shaffer said some homeowners who want to sell their property quickly like the idea that these are cash offers that close in 14 days or less.
“It’s not one size fits all,” Shaffer said. Sometimes, the homes don’t need much work and after the purchase, Shaffer’s group is able to paint the homes, stage them for sale and find a buyer. In other cases, some homes have needed a complete overhaul.
Cash offers, of course, can be appealing to someone who is getting divorced, relocating to another city for a job, inheriting property or looking to sell a house soon in order to complete a deal on a new home purchase.
“We buy at fair market value and we sell at fair market value,” said Viet Shelton, a spokesman for Zillow Offers in Seattle.
Shelton said Zillow makes its money in this case mostly on the service fees, which can average around 7.5%. Fees would vary.
Shelton sees the iBuying concept growing, much like the ways consumers now use their smartphones to find instant solutions to everything from buying groceries to getting a ride home.
“Consumers expect all parts of their lives to be that straightforward,” Shelton said.
What many consumers want, he said, is an easy way to sell their homes and to be able to focus their energy on what they really want to do, such as shopping for their next home.
Ask about hidden fees
Even so, consumers who deal with iBuying or cash sale options need to add up any costs — and consider how much time it might take to sell their home otherwise. Compare fees and read the fine print.
Also, try to figure out what your home might be worth in advance.
Stay away from scam outfits; do some research to make sure the company is reputable. Don’t deal with anyone who asks for money upfront. Any fees should come out of the transaction at closing, which should be handled by a third-party title company.
Some consumers who have dealt with various cash offer sales, though, complain that they’ve later seen their own homes put on the market at 25% or 30% more than what they were paid.
As part of the arrangement with Keller Williams, real estate agents in markets connected with Offerpad present their clients with an estimate of how much their home will go for on the market, based on comparable sales, and then how much Offerpad will pay for the home.
The theory is that the homeowner doesn’t have to deal with repairs or renovations, any delays in closing the deal or any other selling-related headaches. Once an offer through Offerpad is accepted, sellers can select their closing date to align best with their timeline — whether that is two weeks or 90 days, the seller is in control of the timeline.
What’s the price for peace of mind?
Is this a wave of the future? It may be a niche area if things go well — but it’s still a relatively new idea.
Todd Teta, chief product officer for ATTOM Data Solutions, said the idea by the Oakland County real estate agent is unique. But he said it seems similar to iBuying, where all-cash offers are given instantly for your home.
“And you are getting peace of mind that the deal will close,” Teta said.