Traditional Selling Route Versus Corporate Investor: Whats Best For You?

The real estate industry is constantly evolving in order to incorporate better technology, better systems, and anything that can make buying or selling more convenient for the consumer. In the last 3-5 years, you may have started to see more real estate signs and advertisements from Open Door, Offer Pad, or Zillow (the newest company thats gotten into buying and selling). These companies buy homes on a mass scale, and instead of having an agent working directly with you, you work with multiple people within the company. It has turned selling into a more corporate process.

The purpose of this article is to outline differences between processes of a large corporate investor like an Open Door, Offer pad, etc. versus a traditional seller. Like with anything in life, one size does not fit all, so selling to a corporate investor may be the most appropriate solution for certain people.

The general model of corporate investors is as follows: 

  1. After the homeowner (seller) receives an offer by the corporate investor, may decide to take the deal.
  2. In choosing this option, the homeowner has flexibility with the closing date, move out date, and does not have to show their home to other buyers.
  3. Once the buyer (corporate investor) and the seller have come to an agreement on price and terms, the corporate investor conducts inspections, at which time they will tally up a large list of items that need to be repaired, tally-up the cost, and the corporate investor will take a credit for the $ amount. What this means is that the homeowner must sell their home for the offer price MINUS the amount of money that is tallied up for repairs.
  4. Fees for this transaction, charged to the seller, are generally: 7.5%.
  5. Corporate investor will then turn around to re-sell home as quickly as possible.

What Most Consumers DONT know about this model:

  1. Corporate investors will require (typically a hefty) credit (a.k.a reduction in price), after they complete their inspections.
  2. While the corporate investor might state they will need to take a specific dollar amount to repair the roof (for example), they may never actually end up doing the repair before putting the home up for sale again. *This is stated in online reviews by consumers and companies.*

The model when you choose a traditional representative to sell your home:

  1. You, the homeowner meet with an agent to discuss your goals, price, and how to get your home “showing ready,” that is specific to your dwelling and situation.
  2. You and the agent decide on a price that is competitive but still helps the seller meet their goals.
  3. The listing agent markets the home appropriately.
  4. Once receiving offer(s), terms are all to be determined by the buyer and the seller: Price, selling date, etc.
  5. Once under contract, a buyer has an opportunity to conduct an inspection, and request repairs. The seller is able to respond with what repairs they complete, or if it is more convenient for them to credit the buyers for the repairs.

There is no doubt that these two options are very different models that tend to produce different outcomes. For homeowners looking to avoid preparing to get their home showing ready, having to leave for showings, and may have to close on their home at a less convenient time, selling to a corporate investor may be the way to go. However, there is a high price to pay, for the seller, for this convenience factor.

Many homeowners have worked hard to make upgrades their home and have gained equity, which means they don’t want to lose out on that hard-earned cash. With that being said, most homeowners are willing to put the effort in to go the traditional route, in order to reach their goals, even if it means things will potentially be inconvenient for a short period of time. At the end of the day, it’s a juggle of spinning plates that a good real estate agent can help manage in order to not only sell the home but also help the sellers move forward. 

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