Offerpad Fees: We Found the True Cost for Sellers

Michelle Delgado

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Michelle Delgado

February 22nd, 2021
Updated February 22nd, 2021

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Fees | Closing costs | Repairs | Negotiating | Hidden fees | Additional services | Vs. real estate agent

💰Cost analysis: If you sell your home to Offerpad, you can expect to pay a service fee between 6-10%, plus 1-3% closing costs.

When you sell to Offerpad, you’ll also need to factor in repair credits, which can vary depending on the condition of your home. In some cases, you may also encounter a 1% cancellation fee.

Offerpad is an iBuyer that uses proprietary technology, plus a team of in-house employees and third-party vendors, to buy and sell single family homes, townhouses, and condos in select cities.

» MORE: What is an iBuyer?

Offerpad makes money by buying, fixing up, and reselling houses, so these fees cover the company’s expenses.

Below, we’ve broken down everything you need to know about Offerpad’s fees and how they may impact your decision-making.

What fees does Offerpad charge?

According to Offerpad’s website, sellers typically pay a 7% service fee, based on the cash offer the company provides.

This service fee can vary — ranging as low as 6% or as high as 10% — and is determined by Offerpad’s underwriting team, which analyzes your property and the market where you live.

Are closing costs included in Offerpad’s fee?

No — Offerpad’s service fee does not include closing costs. You should plan to set aside 1-3% of the sale price to cover these expenses.

Closing costs vary by location, but are typically shared by the buyer and seller. In general, sellers pay transfer taxes, title insurance, and various administrative fees.

Offerpad relies on both its in-house team and third-party vendors at closing. The exact vendor you work with will depend on your location: [1]

  • In Arizona, Florida, Nevada, and Texas, Offerpad uses First American Title
  • In Alabama, Offerpad uses Statewide Title Services
  • In Georgia, Offerpad uses the law offices of McMichael & Gray
  • In North Carolina and South Carolina, Offerpad uses the law offices of Hankin & Pack

» LEARN: Who pays closing costs?

What does Offerpad charge for repairs?

When you sell your home to Offerpad, repairs are the biggest variable — they’re hard to predict and can reduce the amount you net from the sale by tens of thousands of dollars.

In any sale, it’s normal for the buyer to negotiate over repair credits. Based on the inspection, the buyer identifies repairs they want or need, then essentially requests a discount equivalent to the estimated cost of fixing them.

The same is true with Offerpad. When you accept Offerpad’s initial cash offer, the company will send a third-party home inspector to your home to evaluate its condition.

Then, Offerpad uses the inspection report to identify necessary repairs and estimate the cost of completing them.

These repairs fall into two general categories:

Structural repairs
Major fixes such as the roof, foundation, and other big ticket items
Cosmetic repairs
Minor fixes such as flooring, paint, and other less costly items

After receiving the inspection report, sellers can choose between two options:

  • Accepting a repair credit, which deducts the cost of repairs from Offerpad’s cash offer
  • Hiring a contractor to complete repairs to Offerpad’s specifications

If you disagree with Offerpad’s assessment, you can either negotiate with the company — or turn down their offer entirely.

One caveat worth noting: If you live in a seller’s market — one where the demand for homes is on track to outpace available listings — you may be well-positioned to sell your home without having to make repairs or concessions.

In this case, it may be more advantageous to list your home on the open market instead of accepting a cash offer that requires repairs.

Does Offerpad negotiate with sellers?

Yes — according to Offerpad, they are willing to negotiate with sellers.

There are two main areas where sellers can negotiate:

  • Offer price
  • Repairs

The one thing that you can’t negotiate is Offerpad’s service fee, which is determined by its underwriting team.

In general, you’ll have a better shot at successfully negotiating if you’re armed with information. Recent appraisals, inspection reports, and maintenance reports can help you make a stronger case for a higher offer or lower repair credit.

Offerpad’s initial offer price is based on information submitted by the seller.

The more information you share — especially in photos — the more accurate Offerpad’s estimate will probably be. If you feel Offerpad’s assessment has overlooked something, be sure to let them know.

When it comes to repairs, gather as much information about your home as possible ahead of time. For example, if Offerpad suggests installing a new roof — but you have documentation showing that your roof isn’t due for an update for several years — you may be able to successfully push back.

Does Offerpad charge hidden fees?

While most of Offerpad’s fees are transparently listed on its website, it’s not obvious that the company sometimes charges a 1% cancellation fee.

When Offerpad provides the initial cash offer, the seller must enter into a contract — essentially, a purchase agreement — before the deal can proceed to the inspection stage.

This is when it gets tricky. When Offerpad provides the inspection report, it will also provide an updated cash offer that reflects the repair credits.

At this point, you’ll have four days to consider Offerpad’s offer. During this window, you can:

  • Accept the offer and agree to the repair credit
  • Negotiate over the repair credit
  • Reject the offer and walk away

But if you decide to back out after this four-day window, you’ll be subject to a 1% cancellation fee, based on Offerpad’s initial cash offer.

It’s a tight turnaround, especially if you want to get a second opinion from a contractor or inspector.

How much does it cost to use Offerpad’s extra services?

Extended Stay

Offerpad allows sellers to stay in their home up to three days after closing. If you choose to take advantage of this arrangement, the company will hold $3,000 of your proceeds from the sale, which will be returned after you vacate the property.

Local Move

If you’re moving within a 50 mile radius, you can take advantage of Offerpad’s Local Move program[2] at no additional cost.

To provide this service, Offerpad partners with Bellhop, a third-party moving company. The Local Move program includes all the heavy lifting — but note that you’ll have to box and pack all of your belongings yourself.

Offerpad fees vs. real estate agent fees

By the numbers, the cost to sell a home (including closing costs) is roughly:

  • Offerpad: 7-13% of the sale price
  • Real estate agent: 9-15% of the sale price

However, it’s crucial to note that this figure does not include repair credits.

To sell to Offerpad, you might have to agree to repair credits that reduce your net profit by thousands of dollars.

By contrast, a real estate agent might be able to help you find a buyer who is willing to pay closer to your full asking price or agree to fewer repairs. Your agent will also negotiate on your behalf — unlike negotiations with Offerpad, which you’d have to navigate on your own.

While fees are a helpful metric, it’s crucial to consider every factor that could impact your bottom line before choosing the option that’s best for you.

Cost comparison: Offerpad’s cash offer vs. a traditional realtor

Let’s say you’re planning to sell your home and move within a 50 mile radius. How much would it cost to accept Offerpad’s cash offer, compared to hiring a traditional real estate agent?

For simplicity’s sake, we’ll run the numbers on a three bedroom home valued at $200,000. We’ll assume that each option requires $3,000 worth of repair credits.

In this scenario, Offerpad’s costs might look something like this:
  • 7% service fee, or $14,000
  • 2% closing costs, or $4,000
  • $3,000 repair credit

Before your mortgage payoff, you’d walk away with $179,000.

A traditional real estate agent might charge:
  • 6% commission, or $12,000
  • 2% closing costs, or $4,000
  • $3,000 repair credit
  • $1,000 preparations and staging
Before your mortgage payoff, you’d walk away with $180,000. However, because you’d be selling on the open market, there would be a chance that you could sell for more than the asking price.

Wondering how much your home is worth?

Clever's top-rated real estate agents can provide a comparative market analysis (CMA) to help you determine what your home is worth. A free, no-obligation CMA is a great way to compare your Offerpad offer to what your house might fetch on the open market.

Connect with an agent and get a free CMA today!

Key differences

Cost
Offerpad
Real estate agent
Commission
No commission on cash offers*
5-6%
Service fee
6-10% (typically around 7%)
No service fee
Closing costs
1-3%
1-3%
Timing
Fast and flexible closing dates, which can help you avoid carrying two mortgages
Less control over the closing date, which could result in carrying two mortgages
Moving costs
$0 within 50 miles, excluding the cost of packing materials
Approximately $560-$1,100,[3] depending on size of house
Repairs and concessions
Variable
Variable
Preparation (Staging, cleaning, etc.)
$0
Median cost of $400[4]
*If you’re selling to Offerpad through an agent, you’ll have to abide by the commission structure in your listing agreement.

If you’re considering selling to Offerpad, another major trade off is that there’s always a possibility of obtaining a higher offer price on the open market.

This is one of the most important distinctions between selling to an iBuyer and listing with a real estate agent.

iBuyers promise to streamline the selling process, using cash offers to provide:

  • Greater certainty
  • An expedited closing process

In exchange for Offerpad’s fees and repair credit system, sellers can walk away from a real estate deal with minimal hassle.

By contrast, real estate agents emphasize:

  • Personalized service
  • Collaboration and support through negotiations

Though this process can take more time and involve less certainty, listing agents’ commission structure incentivizes them to get the best possible deal for sellers.

To decide what’s right for you, you’ll have to weigh the perks of Offerpad’s cash offer against the potential to net more from the sale of your home.

ARTICLE SOURCES
[2]

Offerpad. "Free local move." 

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