The Real Cost of a "Home Buy-Out Offer" is Your Home Equity

Happy New Year!!!

The one bottom-line truth about any business is money, and more specifically your money. With regards to real estate services, how much you get to keep (home equity) versus the cost of services you pay to sell your home is the question we will explore.

Recently, the Texas Association of Realtors created this informational flyer to alert consumers about instant offers from companies like Opendoor, Offerpad, Zillow®, and similar companies.

Real Estate Buy-outs

Real Estate "Buy-outs" are nothing new. Over the years many have come and gone. Some Realty businesses will even offer to buy your home, if they can't sell in so many days, as a hook to get your business, knowing that nearly no seller would ever agree to a buy out once they have the "real" buy-out price.

Today in DFW you can make an inquiry about getting your home "purchased" based upon an inspection, a market report and then an offer. Selling your home becomes super-easy if you can get a number that reflects anything close to actual market value, but don't be shocked when you see the below-market offer.

There are no free lunches because businesses that buy out homeowners have to account for the highest amount of business expenses imaginable in the process of flipping your home. And who pays for this? Well, it's you! In fact, most easy buy-outs make paying 6% look like the bargain of the year, but you can still do better.

ARG™ OFFERS YOU WAY MORE THAN A LOW EQUITY BUY-OUT OFFER

Let's use a recent example involving ARG™ compared with a "Buy-out" offer. This family was selling their pre-owned home and upgrading to a new home. After comparing a buy-out offer, this family Sold and Closed their former home using ARG's "True-Free" Move-up solution. Why? Well, my client's net out of pocket commission cost to sell their home using ARG's was $0/0% (saved all 6%) as long as they closed escrow on their new home, which they did.

The "Easy Buy-out" broker needed what amounted to $45,000 up to $54,000 (10% - 12%) of their home's selling price! That is pure equity a seller hands over for the convenience of a fast sale. For this family, who needed every penny to put down on their new home, the convenient "easy-out" was simply not a feasible financial option. For them, like so many move-up sellers in DFW, ARG™ was the winning solution that offered the highest home equity retention.

Depending Upon Your Need Here Are Seller Choices to Consider

BUSINESS COSTS ASSOCIATED WITH A FAST BUY-OUT OFFER

Here is what a "Buy-Out" home flipping brokerage is looking at when making you an offer on your home. These are the expenses they will account for and deduct from your home's real market value.

• Repairs, before buy out to be performed by seller or price, is further reduced
• Carry Interest to cover several months where the buy-out broker owns your home
• hazard insurance: Typically unoccupied homes cost more to ensure
• utilities (electric, gas, water, sewer, garbage collection)
• repairs and upkeep that may occur
• landscaping and yard maintenance
• house cleaners
• property taxes
• re-marketing/MLS costs to Sell
• Business administration costs
• marketing and advertising
• Money owed investors

Benefit: Fastest close, but with a significant reduction in home equity.

BUSINESS COSTS ASSOCIATED WITH TRADITIONAL FULL COST BROKERAGES

Many times sellers want to increase their price over market value to cover the steep listing commission. However, actual market value, or what a buyer is willing to pay ignores real estate commissions and focuses only on the home you are selling and what it offers.

• 6% MLS Listing Fees
• Necessary repairs
• Cosmetic updates and repairs
• Maintaining a home in show-ready condition.

Benefit: Full Services. 6% loss of Home Equity, Still a Better Return by far, than a Buy-out.

BUSINESS COSTS ASSOCIATED WITH ARG'S FREE MOVE-UP

ARG's™ New Home Move-up can get your listing commission to $0, where you save all 6%. That can help you manage a small repair budget a whole lot easier and prepare your home for sale. With ARG you earn the maximum equity possible due to our amazing services and DFW's best Free-Move-up. The fact is, next to paying off your mortgage balance, the brokerage commission is your next largest expense, and with ARG, that expense is greatly reduced or fully eliminated.

• Depending upon the new home builder, Commission costs starting at 0% (FREE) to 3%.
• If buying an existing home through ARG, a total listing cost of just 3% to sell your home.
• Full Client MLS Realtor Services provided, Internet and Social Media marketing, complimentary staging, and more included
• Costs involved with getting your home cosmetically ready to sell. Usually, all fix up costs can be expected to be recuperated via a higher selling price. In some instances, sellers can recover 200% to 300% of their fix-up budgets.
• The seller must maintain a show-ready condition.

Benefit: Lowest Cost. FULL Realtor Services plus Highest Retention of Home Equity. 

Even when JUST SELLING, ARG™ makes better sense than even DFW FLAT-FEE Realtors®.

Interested in Earning Top Dollar When You Sell? Here's Time-Proven Advice

If you truly want to retain as much of your hard-earned home equity appreciation as possible then you must be willing to embrace best industry practices when preparing your home for sale. Here are basic time-proven tips you should consider:

1. Do fix up your home. Your home's condition and looks are mission-critical towards creating a better first impression with buyers and earning a higher sales price.
2. Do allow for a sensible pre-MLS listing fix-up budget to cosmetically address what I call obvious "Buyer Sight Objections."
3. Do consider a budget for wood flooring (buyers love wood floors and it can be done cheaply), upgrading counters, backsplash, faucets, hardware and appliances (Craigslist is a good source for lightly used modern appliances). The cost for these updates is recovered in a higher sales price when compared to the price your home would earn if these updates don't happen. In many instances, ARG clients have earned nearly triple their fix-up budges and have sold their homes at or above neighborhood comps. The fact is buyers will pay more for the right home. Cosmetic upgrades turn heads, make positive impressions, sell faster and for more money. Click Here to View an Example of what Fix-up can do for sellers.
4. Do talk with qualified experienced cosmetic contractors who can move mountains in a short amount of time, with a cost that makes good business sense.
5. Do "pre-stage" your home by decluttering, and removing excessive furnishings. If you have small rooms, make sure large furniture items are removed in favor of smaller items. Dial it in and make it look right! We can help!
6. Do change to "Single Piece Assembly" LED Can Light inserts to help brighten up your home's interior look. I can help you with exact LED lights selections, best color temperature to buy at the lowest cost.
   
7. Do a deep clean, including cleaning up the yard, edging, putting out fresh mulch and some flowers for color. Make the house appealing!

Happy New Year!! Got Questions for Mike or want to discuss selling your home? Fill out the form below and Happy House Hunting from the ARG Family to yours.