I am always marveled by great marketing and promotion therefore I must give a tip of the hat to Zillow® for their new “Instant Offer” program. First, it’s getting them tons of attention and press, particularly within the REALTOR® community, which is probably where it is the most beneficial to them since real estate agents are, after all, Zillows’® paying customers. Courtesy of Inman News, REALTOR.com and others, this new program has received the equivalent of thousands and thousands of dollars of free advertising, which is the type of thing I love and dream of getting this type of free publicity for my firm.
Instant Offer concept is not new…
So, why do I say it’s nothing new? I have nothing against Zillow® (although many in the REALTOR® community are not fans as they see them as a threat) however, I really don’t see anything “new” or revolutionary about their instant offer program. Basically, according to their website, what their program does is allows you to submit information on your home to them which then goes to a group of national investors who then submit you a cash offer for your home. Then, an inspection is done of your home (I’m guessing the offer is subject to this inspection being favorable) and if so, then you proceed to closing. Homes have been sold in this manner for decades, including right here in St Louis, so it’s nothing new. When I entered the real estate business here in St Louis in 1979, there were many “speculators” in St Louis, including the broker I worked for, that would make sellers a cash, as-is, offer on their home and would offer to close as fast as 24 hours. So, basically, the same thing as the “new” Zillow® instant offer program with a few exceptions including that our offers were typically unconditional (other than that the seller had good title), truly as-is and we were local, people the sellers could meet, talk with and establish a relationship with as they contemplated whether or not this approach to selling their home was a good decision. Over the years, I was involved in the purchase of over 2,000 homes in this manner right here in St Louis. Today, thanks to internet webinars, reality TV shows and just a wealth of information being readily available, there are many, many people, that, in addition to the established “professional investors”, out there trying to buy real estate in this manner.
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If this type of approach to selling your home does appeal to you, or appears to be a good fit for your situation, then you have many options available to you. The first thing to remember though, the investors buying homes in this manner (whether big national ones like Zillow® says they are working with) or local ones like I’m talking about, are looking to make a return on their investment and, therefore, are not going to pay you 100% of the retail value of your home. Having said that, there are many times that due to a property’s condition, the seller’s financial situation, timing, or for convenience, that this is in fact a great way for a homeowner to sell their home.
How to make sure you get the most for your home if you sell to an investor…
As I mentioned before, I have quite a bit of experience in this area as an investor and now, from the “other side” of the table, so to speak, as a real estate broker. The short answer to this question would be, do what the big banks, and the government does. Big banks and HUD, Fannie-Mae and other government agencies, as a result of foreclosures, end up with thousands of properties to sell a year (1,703 were sold in St Louis alone in the past 12 months), most of which are sold “as is” and to investors. Certainly, they have the ability to sell these properties direct to large institutional investors, or even to small local ones, on their own, but they typically list the homes for sale with a real estate agent in the local market. In fact, a search this morning of our local MLS reveals that there are currently 784 active listings by that are bank or government owned. Why would these organizations choose to pay a commission and list with a real estate agent when they could do it on their own? While I can’t speak for them, I think the answer is fairly obvious...they see benefit (and return on their investment of commission) in doing it this way.
If you want an instant offer on your home, then I would suggest going the same route. Seek out a real estate agent with knowledge and experience in this area and let them properly price and market your home. Make sure your home will be listed in the REALTOR MLS so that you get maximum exposure (MLS listings go out to 1,000’s of websites) to assure you get the top price for you home. If you don’t go this route, and just contact an investor direct, or accept an offer without fully being exposed to all the potential buyers, you don’t know if you have received the highest price possible for your home, and under the most favorable terms, even if you received full price. To prove my point, 653 of the 1,703 homes sold (38%) in the past year in St Louis, that were bank or government owned, sold for more than 100% of their asking price. In fact, as our STL Market Chart table shows, the median price these 653 homes sold for was nearly 107% of the list price. This illustrates why this is the way to go and the commission spent by the seller is a smart investment that brings a good return.
