Offerpad is an iBuyer that purchases homes for cash and streamlines the whole selling process. But how do they actually work? Learn more about Offerpad, their home selling process, and what its business model means for sellers.
iBuyers are an alternative to the traditional real estate transaction most people are familiar with. Offerpad is one option providing buyers and sellers with a speedy alternative to the conventional real estate process.
From presenting sellers with cash offers in as little as 24 hours to giving buyers easy access to Offerpad homes, Offerpad is far from your traditional brokerage. But is the price of its convenience worth it for you?
Offerpad streamlines the sales process of buying and selling a home, but a fast close at the expense of a chunk of your equity may not make the best sense for everyone.
If you want to sell your home, but aren’t sure where to start, “Get to chat with a local real estate agent who can discuss your options for selling or buying a home fast.
What is Offerpad?
Founded in Arizona in 2015, Offerpad has since grown tremendously, recently closing a Series C funding round, bringing the total investment in the company to $975 million. According to Offerpad, they are a “leading tech-enabled direct home buyer and seller.”
Put simply, Offerpad’s platform gives sellers a quick cash offer based on their algorithm’s and local experts’ home valuation. Then, after making minor repairs and updates, they put the house on the market to sell.
As a cash buyer, Offerpad is able to quickly close sales. In some markets, sellers can close in as little as 10 days, which is a huge benefit for homeowners for whom speed is a priority.
Offerpad charges a service fee of between 6% and 10% when they purchase your home. This service fee varies depending on the location and the type of home, however, Offerpad states that the average service fee is typically 7%.
Offerpad currently services 12 markets across 7 states, including Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina (part of the Charlotte market), and Texas. However, Offerpad plans to be operating in more than 30 cities by the end of 2010.
What is an iBuyer?
An iBuyer is a company that offers to buy your home for cash by using algorithms and local data points to determine its market value. iBuyers’ fast, straight-forward cash offers and speedy closings create a simpler and more convenient home sale.
iBuyers typically purchase homes to fix-up and sell. Most prefer move-in ready homes and will deduct the cost of repairs from their offer. Some also integrate other real estate services such as title, insurance, and financing to streamline the sales process further.
How does Offerpad work?
- First, request a no-obligation offer for your home. Complete Offerpad’s online form by providing your address, your home’s structure and condition, and details about any special features and upgrades it may have. While uploaded photos are encouraged, they are not necessary to receive an offer.
- Next, Offerdoor uses its algorithm, which looks at data on home sales and market trends to determine how much they will offer. A team of local real estate experts will review and refine the offer before sending it to you. It typically takes 24 hours to receive their offer.
- If you decide to accept their offer, you’ll select your closing date. At this point, you can opt for Offerpad’s Free Local Move (within 50 miles) or Extended Stay (up to three days after closing) option.
- Once a sales price and all terms are agreed upon, Offerpad will present you with a purchase contract to sign online. Once you sign, you are under contract.
- Offerpad will then perform an on-site inspection of your home within 15 days to verify its condition. If any repairs are needed, you can credit the costs to Offerpad or hire a licensed contractor to take care of the repairs before closing.
- Finally, you’ll close on the sale and transfer the title. Offerpad will take a 6%–10% service fee at closing and once all other closing costs are settled, you will receive the net proceeds from the sale.
Does Offerpad pay a fair price for homes?
On average Offerpad, like other iBuyers, offer sellers a below-market price for their home. According to a 2019 study by MarketWatch, on average, the net sales proceeds from an iBuyer deal are 11% less than if the homeowner sold their property on the open market.
However, given the speed of the sales process, the lower price is worth it to many sellers.
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Where is Offerpad available?
Offerpad is currently available in 12 metropolitan markets in the U.S. including:
- Phoenix, AZ
- Tucson, AZ
- Orlando, FL
- Tampa, FL
- Atlanta, GA
- Las Vegas, NV
- Charlotte, NC (and neighboring parts in South Carolina)
- Raleigh, NC
- Austin, TX
- Dallas, TX
- Houston, TX
- San Antonio, TX
Pros and Cons of Offerpad
When it comes to selling a home, there is no such thing as “one size fits all” solution for homeowners. Whether your priority is to make a certain amount or close by a specific date, there are advantages and disadvantages to all potential sale methods. Here are the main pros and cons of selling your house to Offerpad.
- Flexible Closing Date: Because Offerpad isn’t moving into the house, they can be flexible about closing completing the process in between 10 to 90 days.
- Faster Sales Process: The Offerpad sales process eliminates the need to prepare your home for showings and open houses. You’ll receive an offer within 4 hours.
- Free Local Moves: Offerpad offers free local moves to sellers, as long as it is within 50 miles of your current home.
- Limited Availability: Offerpad is currently only available in 12 markets in the U.S.
- Costs and Fees: Offerpad charges a service fee of between 6% and 10%, with the average service fee being 7%. Comparatively, the typical realtor commission to sell is 6%.
- Offerpad Inspections: In most cases, an Offerpad employee conducts an inspection of your home. Depending on what they find, you will be expected to credit Offerpad for the total value of the repairs or complete the repairs before closing.
- Limitations on Homes They’ll Buy: Offerpad currently only purchases single-family homes that were built after 1960. They also only purchase homes with a value of less than $500,000 to $600,000 (depending on the market) and with a lot size no larger than one acre.
How is Offerpad different from other iBuyers?
Offerpad differentiates itself from other iBuyers by offering a free local moving service to sellers, as long as their new home is within 50 miles of the homes they’re selling.
They also offer a three-day extended stay option after closing, for sellers who require a little more time moving out. If you opt for this option, Offerpad will hold $3000 from your net proceeds at closing, as a deposit to cover any potential damage that may occur. They also conduct a final inspection of the home before releasing the money back to you when you move out.
Is Offerpad right for you?
Offerpad may be right for you if your top priority in selling is speed. If you need to sell on short notice, due to a job relocation for example, Offerpad can meet your needs.
However, don’t assume Offerpad is your quickest option. Experienced real estate agents can aggressively market your home or use their network to get you offers — sometimes in a few hours. They can also give you insights into your home’s value so you know how fair Offerpad’s cash offer is.
Connect with Clever and we’ll introduce you to top-rated agents in your area. You can schedule a no-obligation consultation with them to weigh all your options.
FAQs About Offerpad and iBuyers
How does Opendoor work?
Opendoor has a very similar process to Offerpad. Sellers request an offer for their home online by providing basic details about their property's location and condition.
Opendoor uses various data points, such as comparable sales in the area, to decide how much they want to pay for your home. It will take around 24 hours to receive an offer.
If you’re happy with the offer, Opendoor will arrange for an inspection to check the home’s condition — if repairs are required, Opendoor will deduct the costs from their offer.
Once all terms have been agreed upon, you can choose when you want to close and move out.
How does Zillow Offers work?
Zillow Offers works in much the same way as other iBuyers. Sellers start by requesting an offer and Zillow researches the home and decides how much they would like to pay. They also assign you a “Zillow Offers Advisor” to walk you through the sales process.
Once a sales price has been agreed upon, Zillow will inspect the home to verify its condition, and if necessary will handle any repairs. They will then deduct the cost of repairs and their service fee at closing.
Does Zillow Offers pay market price?
Zillow Offers, like most iBuyers, is in the business of making money. To ensure that they have a healthy profit margin, they need to pay less than the current market value of the homes they purchase.
If you’re planning on selling your home, but aren’t sure whether selling it to an iBuyer is a good option for you, reach out to one of our Clever Partner Agents, who will be able to tell you how much your home is worth in the current real estate market.