News: “Zillow is getting out of the iBuying business and will shut down its Zillow Offers division.”
To find out how much other iBuyers would pay for your home, please submit your address here.
Selling a home has become one of the most dreaded tasks Americans face today. From repairs to showings, to buyers backing out, selling your home the traditional way can be a nightmare.
This article will provide you with a quick, yet comprehensive comparison to two of the biggest iBuyers in real estate: Offerpad vs Zillow. You’ll also learn how they can help you sell your home quickly and hassle-free.
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What is real estate iBuying?
An iBuyer, short for “instant buyer,” is an online instant real estate buyer. This iBuyer is able to buy your house for cash, sight unseen.
The top iBuying companies have national programs to allow you to sell your home for cash in what seems like a click of a button. By using data-based algorithms to determine the current market value of your home, iBuyers can offer you a hassle-free way to sell your home.
What is Offerpad?
Offerpad is an online direct home buyer that makes cash offers to sellers to buy their home. Due to necessary repairs and renovations, Offerpad will buy a home at a price that is often below market value.
With the low offer price, however, the seller will enjoy a convenient all-cash closing. With a conditional offer usually within 24 hours.
What is Zillow Offers?
Zillow Offers is an agent referral network and real estate investment platform. They focus on homogenous homes within their operating locations.
Zillow Offers is mostly focused on selling consumer data to Premier Broker and Premier Agent participating agents. Though they do make some money on the difference between buying and selling homes, only about 1% of all requests end up with a successful Zillow Offers offer.
How does iBuying work?
To start the process and see what an iBuyer would offer for your home, simply enter your address on our website. After some additional questions like how many bedrooms and bathrooms there are or when the appliances were updated, the iBuyer will contact you with an offer for your house.
They will offer to help you with any questions about the offer and ask you how soon your planning on moving. If you like the offer, then you can then schedule a time for a representative from the iBuyer to come to your home and assess it.
After the assessment, some maintenance issues may come up. You then have the choice to either do the repairs yourself or have the iBuyers do them for an additional fee.
Then you’ll get the final offer. You may have as many as five days to a few weeks to accept the offer.
How they work
Offerpad uses the data from recently listed and sold homes in your area to determine what they believe your home is worth. They then present you with a cash offer for your home, usually within 24 hours.
After you choose to accept their offer, you get to pick your closing date. Then, Offerpad will arrange to send an inspector to your home and prepare the paperwork for your closing.
Zillow has a 4-step process. There is the initial online application to start it all.
Secondly, they perform a “Zestimate,” or a Zillow estimate of the value of your home. They use your information as well as comparable sales data in your area to come up with your cash offer.
Next, they schedule a free in-person evaluation of your home to finalize the cash offer they will make you. If you accept this offer, you can go ahead with the closing of the sale.
Maximum amount to home seller
Offerpad offers fair and competitive pricing. Their original cash offer is usually very close to what you’ll start to see at closing.
They charge a fee for their services, somewhere between 6% and 10% of the sales price. Whereas a traditional real estate agent will be 5%-6%.
Neither percentage is including the normal transaction costs involved with selling the home.
Now Zillow Offers fees range between 1.5% and 7.9%, though this does include closing fees and all. So for a $431k house Zillow Offers would charge say 7.0% which comes up to $30,170 in commissions.
For that same house, Offerpad would more than likely charge 7.5% making a $32,325 in commission. Then Offerpad adds an additional $5k – $11k for the repair costs of the house bringing the total up to $37,325 – $48,325.
How fast to get a cash offer?
Both of these iBuyers try and make their offers fairly quickly. Especially in comparison to the old days of entertaining multiple realtors to get their subjective opinion of the value of your home.
Zillow Offers will usually make you a cash offer within 48 business hours, while Offerpad will typically get you your offer in 24 hours.
How is the closing process handled
Because Zillow Offerspays cash for your home, there is no traditional real estate agent involved so you can expect to close the sale in between 7-90 days. However much time it takes for the title and escrow companies to clear any liens and get the paperwork ready.
With Offerpad you can close very quickly. You could accept their Offerpad EXPRESS cash offer and close in as little as 24 hours. You pick a convenient date and sign the papers at the title or attorney’s office.
In some cases, they can even send a mobile notary to you. Just be prepared to pay those closing costs and other fees.
What kind of homes qualify?
Generally, iBuyers require a lot of data to generate accurate pricing. Because of this most iBuyers look to buy houses in a “buy box.”
This usually looks like medium-priced suburban homes from $150,000 to $500,000. Cities with irregular or expensive housing are harder to price via an algorithm, so iBuyers may not be available in those areas.
Zillow Offers targets single-family homes, townhomes, and condos in the $200,000 – $400,000 range.
Offerpads focuses on single-family homes as well as condos and townhomes that were built after 1960, have less than 1 acre of land, and are valued under $600,000
Additional fees
Offerpad sellers are responsible for closing costs and fees. This remains the same as in a traditional sale. The seller pays title insurance, escrow fees, HOA transfer fees, document transfers, taxes, and other customary fees.
Typically these fees range from 1% to 3% of the purchase price.
Zillow Offers does not pay closing costs. What they do instead is factor those costs into your offer so you pay nothing out of pocket.
Available markets
Offerpad’s head office is located in Chandler, AZ. They are working on expanding but they are currently not offered in as many cities as Zillow Offers.
Offerpad listings locations that are not also serviced by Zillow Offers are,
- Birmingham AL
- Jacksonville FL
- Fort Worth TX
- Charlotte and surrounding areas of NC
Zillow Offers has a much more expansive network. They were able to expand into areas that Offerpad has not yet including,
- Cincinnati OH
- Colorado Springs CO
- Denver CO
- Fort Collins CO
- Los Angeles CA
- Miami FL
- Minneapolis – St.Paul MN
- Nashville TN
- Portland OR
- Riverside CA
- Sacramento CA
- San Diego CA
In addition to their solo operating cities, there are quite a few areas of the country that home sellers may choose Offerpad vs Zillow as their iBuyer such as
- Phoenix AZ
- Tucson AZ
- Orlando FL
- Tampa FL
- Atlanta GA
- Las Vegas NV
- Raleigh NC
- Austin TX
- Houston TX
- San Antonio TX
- Dallas TX
The bottom line
Traditional realtors have admitted to being afraid. It seems as if in the next five to ten years, they could eliminate the need for the old real estate agents.
When comparing Offerpad vs Zillow offers it seems to depend upon your personal desire. They both offer cash offers, in a reasonable time period and make the home selling process much more streamlined and convenient.
Finally, Offerpad’s main focus is iBuying houses. While Zillow, with their 2.2 billion web visits in just the 4th quarter of 2020, wants to be a one-stop mecca for all things home buying/selling related.
Selling your home is one of the most important decisions you will make in your life. Make sure you have all the information you need by reading our blog of useful resources for home sellers, buyers, and investors.
Zillow Offers has stopped buying homes for the rest of 2021. To find out what an iBuyer would pay for your home, visit our Home Valuation tool.
