Selling your Home to "Hedge Fund Buyers" vs. Listing with a Broker
In recent months, our industry, at least in Arizona, seems to be getting bombarded with "Hedge Fund" buyers, IE companies like Open Door, & Offer Pad just to name a couple. We Buy Ugly Houses have been around for years, their model is simple, your house is less than move in ready, needs work, you just wanna jump ship, call them, they'll make you a "fair" offer, all cash and close as quickly as you'd like The Other two newer ones, mentioned above, seem to have a sliding scale on what they initially offer you and what they end up paying you.
Now, I have worked with both (the companies with an "O" in their first word and from a buyer broker standpoint, easy to deal with, straight forward, little to no drama and I have typically gotten everything I asked for on my clients behalf. So I can give them praise from a buyer broker standpoint.
Understanding how their process works when they purchase your home is a whole other story. I have a client who is actually selling her home to one of these "hedge fund buyers" so I am getting fed details. The first details is the price they offer, cannot sustain them as a company, as their is no profit margin. IE, lets pretend her house's full market value is $250,000. Ideally they want to purchase and reprice at a range that will get them off the market and sold within 90 days or less. I have watched them drop their prices every 30 days to ensure this happens. The offer they gave my client was $230,000. Which leaves little to no room for profit, but the "catch" came upon completion of their inspections. The house, only a few years old, nothing major needing done, just minor cosmetic issues, but once they completed the inspection, the numbers started flying.
The other misunderstood item regarding these "hedge fund buyers" the commissions, They'll advertise until they're blue in the face, no more commission, you don't have to pay Realtors, you don't have to put your home on the market and have strangers through your home day and night