Offerpad is the latest in online investors that are now offering to make a bid and put in an offer on your home. Over the past few months I have noticed Offerpad's claims on the radio of providing a fair selling experience? "We make it easy," or something to that effect. Even on their site it says, "Providing a better experience at a fair price."
So is the phrase "a better experience" a fair statement? Looking at a Google search for "offerpad reviews," Google results show a Google rating in the Atlanta area for Offerpad.com of a 1.0. Reviews and even response of from Google reviewers and the owners locally at Offerpad hint of missed expectations and frustration by the first Seller as they noted, "When we received the addendum, OfferPad was requesting an $18,500 repair credit.." after inspection and the paperwork had been signed (*NOTE* There is no relation to the reviewer and myself..) and a rating from the BBB of 3.7.
See I understand what can go wrong. I have sold homes to investment companies like Offerpad before where it went right. I have seen situations in real estate where it, just like the Google reviewers found, can go really wrong. It's like selling a car. Everyone feels their car's condition is "excellent." Right? Then when we take it to a dealer on a trade or people look at our used car for sale they point out all the issues with condition and maintenance and the dollar value of that vehicle gets knocked down much lower than the high trade-in value on Kelly Blue Book. On home sales, and I would stress to the consumer that neither Offerpad nor any investor is a benevolent organization looking to get you top dollar on the sale of your home, when that investor comes in to inspect, anything they find will be a huge knock off a pricing already agreed to based on how well you are able to describe your house to Offerpad online. There is no seller's disclosure as in the traditional selling process for example to provide them with details to come up with a pricing that is negotiated as close to current conditions of the home as truly possible prior to their inspection. Don't be fooled.
Since as of Tuesday, January 23, 2018, there were only four (4) Google reviews for Offerpad in the Atlanta market, I expanded that search to look at other Google search keywords such as, "offerpad reviews Tampa," which I found 25 reviews and a 2.2 rating. To be fair, Offerpad reviews in Phoenix were higher at 4.0, but look at lower reviews when things go drastically wrong. For those reviewers that were more positive in the experience, did they have the comparison of multiple offers to see what market value was on their homes? I mean, "happiness is relative...." if we don't know how much money we left on the table!
This leads me to the other phrase in their claim. Offering a "fair price." What does Offerpad offer on a property for a "fast sale," and what are their fees? For purposes of finding out more about their experience I went to Offerpad and made as a listing agent two requests for offers. The first was a listing at 1445 Sever Woods CT, Lawrenceville, GA you can find located here on Zillow.
What I received was the emailed pictured above. You click the link to review your offer and it takes you to the following;
Let's break this down together if we can. On a home with a list price of $245,000, I had it under contract due to low inventory and high demand, in 3 hours. Yes, it hit the market on a Thursday about 5pm and I got a call with an offer before nightfall! So Offerpad didn't beat the Realtor in getting a contract. In fact, to stay on that point for a minute, I think this is one of Offerpad's fallacies where they mislead the public. On their page that discusses pricing and comparing Offerpad to the traditional sales experience, pictured below,
they note that Offerpad (via Realtor and MLS) provides savings to you the Seller by selling your home instantly to them versus "Avg Days to Find a Buyer" of 90 days. Where they got that number I could not tell you. The Georgia Association of Realtors just issued their 2017 annual report where in it is discussed both days on market on the average in Georgia and percentage of sales price to list price.
What we saw in Georgia as an average days on market last year was 57 days from listing date to closing. Not 90 days to market and 50 days to get to closing as Offerpad displays on their site. Also, while Offerpad on their graphic comparison says average days to close as "0" days compared to a traditional sale of "50," if you look at the chart below entitled, "Estimated Monthly Ownership Costs" and click the question mark to the left it denotes that Offerpad "usually closes within 30 days.." In my example on my listing at 1445 Sever Woods CT once again, it took "hours." Another listing, I will refer to momentarily located at 3582 Thornbrooke PL, Duluth, GA was listed on Thursday late and under contract on the first weekend. Both will close within 30-35 days on market. All this to say that Offerpad has no competitive advantage here on a quick sale.
Let's go back to pricing and their "Offer." On my listing at 1445 Sever Woods CT, Lawrenceville, GA Offerpad offered $228,000. If I could refer you to the above photo from the Georgia Association of Realtors, the average Georgia home last year sold at 96.1% of list price. Offerpad's offer is 93% of list price. Too, that's before their inspections determine whether or not a "repair credit" is to be made to Offerpad's side of the ledger reducing their offer, which also further reduces how much goes into the Seller's pockets. Their fees as noted are $15,960 or 7% of sales price. For my client, I have a commission structure of 5%. So assuming for a minute, and while this house is under contract and pending I can't convey the sales price, that we got the Georgia average from last year of 96.1%, our sales price would be $235,445 (compared to $228,000 from Offerpad). Fees on a 5% commission are $11,772 versus $15,960. Now Offerpad will "move you for free," but I could do a lot of moving for over $4,000!
Regarding that free move, make sure you read the fine print. Per their website, OfferPad Free Local Move (homes up to 2,800 square feet). If your home is larger, it will cost you. They note, "Additional square footage and other services may be purchased and selected by the customer. Services not included are: valuation, packing/unpacking labor, packing materials, and third-party services (including appliance service)." Pickup of contents must originate from the address purchased by OfferPad and delivered to one local destination/address within a 50-mile radius of customer’s origin zip code. "Click here for more information on our Free Local Move."
Sounds like for many, there could be some hitches in this "free move offer" from Offerpad. If you are moving out of the area, it will cost you a lot!
On the other listing I referenced at 3582 Thornbrooke PL, which sold in the first weekend and should also close in 30 days from the listing date, this home listed for $312,500 got an offer from Offerpad of $285,000 with fees of $19,950 or 7% of sales price. Regarding the traditional sales experience, on day two on the market we had 8 showings that first Saturday afternoon and it resulted in multiple offers. On the flip side, if we 'just got' what the Georgia Association of Realtors revealed as the average sales price to list of 96.1% from 2017, you would expect a sales price at closing of $300,312. Not $285,000. Even the Zillow "Zestimate" shows an estimated value of $313,626. I found Offerpad between $20,000-$35,000 lower in terms of their offer (including fees) than a tradional sale through MLS.
Once again, for Offerpad to say they offer a "faster way to sell your house" is short sighted when you look at our local market where with inventory as low as it is, homes on the market for sale don't last long before you listings changed to pending or under contract. Going into Spring and Summer many don't make it out of the first weekend in MLS without having multiple offers.
*NOTE* To attempt to obtain the highest and best offer from Offerpad on these two listings, I not only provided the property address for each, but I also put in information on each listing including GAMLS listing number for each home to reference as well. Also, I uploaded professional photos to assist Offerpad in being able to provide the best pricing or offer to me as an agent on each listing.
So what do I hope to convey to consumers who might be considering putting their home on the market for sale? Neither Offerpad, nor Knock, nor Zillow's "instant offer" provide pricing models that are designed to get you top dollar on your most expensive asset. Your Home! None of these are, as I said earlier, benevolent organizations tasked with helping you as a consumer maximize the value our home. They are selling a service of "quick sale" with no showings to make your life easy. At the end of the day what are you paying for their version of "easy?" What are you paying for their convenience, and from Offerpad's Google reviews and their website I don't know exactly how convenient the process is truly to take less than market value, pay more in fees, have to still pack my own boxes, and in the end leave my money on the table for the privilege of doing it.
For some, Offerpad might be a great option. Some obviously felt that way in the Phoenix market that reviewed the service on Google, yet I would always compare the advertising to what's really going on in 'your' market. As I stated, we are not seeing their claim of 90-140 days in a traditional sale in MLS to sell a home in the Metro ATL because of such low inventory. Finally, I hope my review from my personal experience with Offerpad helps you see the need to get multiple opinions on what your home might sell for in your local market. In doing that, you can make the best decision for you! On the personal front, I wouldn't hire the first contractor who provided a bid to paint my house, and I sure wouldn't take the first offer from any Buyer to buy my house without figuring out not just if that was the best and highest sales price, but whether all terms were conducive to yielding a successful and a smooth closing.
From statistics in Georgia MLS, my listings sold over the past year at 99.7% SP/LP% and took an average of 20 days on the market to sell. All thanks to my Home Selling Strategy. Once these two listings referenced above close, I will update this post to to reflect just how much better my clients did in a traditional selling approach as opposed to Offerpad.
2-26-2018; UPDATE to this original review of Offerpad.com. The two listings I referenced above closed on 2/21/2018 and 2/26/2018. Now that both are public record I can share the results of each sale.
Sold in 36 days from the listing date.
Offerpad.com offer $285,000
Sold in 36 days from the listing date.
Offerpad.com offer $228,000
New Google Reviews since my original post;