Will Web-Buyers Really Cause a Disruption in Real Estate?

You may have heard a rumor about a "disruption in real estate". This phrase seems to be making a few headlines, so we decided to address it. 

As a real estate agent, and an attorney, I have certainly heard about the theory of new technology (apps and websites) being a threat to the real estate market. A few financial analysts and some news media publications are suggesting that the real estate market is ripe for a "disruption" that will shake up the market. Let me explain this prediction, from my point of view.

There are a few websites that have gained momentum in the real estate market by offering buyers a quick close on their property, and a quick sale. They do this by buying it privately, then re-selling it for full price, after the owner has moved out. It saves the owner from having to fix up the property or show the property to potential buyers. 

Here is the downside of this: you lose a large portion of your hard-earned equity by selling your home this way. If you chose this method of selling, the buyer in this scenario will make a large profit from your home. Here’s how it works: A company like Open Door (example) offers to buy your home for a very low price. If you are the homeowner, the advantage is that you get a cash offer for your home, and you get to move out right away. The disadvantage to the homeowner is that you walk away from a larger portion of your profits! 

If you intend to buy another home, you will likely need the money from your current home to buy a newer or larger home. If you give a large portion of your home's equity to a company like OpenDoor, how will you afford your next home? Looking at your retirement plans, and long-term investment portfolio, is selling your home for 65-75% of its value a good choice for you? If losing this amount of money doesn’t bother you, then it may be a good option, if you need to get the cash quickly and move out right away.

As a real estate agent, we try to get you the most value for your home. Our commission for selling your home pays for the work that we put into the sale and marketing of your home, and discuss your home with other agents, negotiating on your behalf, writing the contracts, etc. New real estate sales companies like Open Door, OfferPad, Zillow Instant Offers, Knock and others will pay you only a portion of what your home is worth, so their goals are not to get you the most money, but to get you out of the home so that they can flip it, and re-sell it to someone else.

As a homeowner myself, I do not agree with the predictions of the real estate market being "disrupted". I am sure that most homeowners will see that selling their home quickly won't be worth a loss in over 30,000-50,000+ of their hard-earned home equity! 

These new ways of selling a home will benefit some home sellers and buyers, but overall, most people will still want the personal service, sales advice, experience and representation that generate full-market offers only. This is what you would get from a real estate agent. When you use a real estate agent to help you buy or sell a home, you are getting years of real estate market experience and a negotiator that works for you and your goals. When you sell your home with a real estate agent, you are getting a marketing campaign designed for your home and a professional sales agent to help you sell it to the right buyer. Choosing the right real estate agent to represent your home buying and selling goals is still the best way to go if you want to make the most money from your home.

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