Opendoor & Offerpad Fees
Opendoor & Offerpad Hidden Fees
Opendoor and Offerpad are legit ibuyers, and among the most popular alternatives to working with traditional agents. They are known for providing a quick selling price, and a fair sale price and advertise that they help with real estate transactions to make the entire process smooth for beginners. If you’re considering working with an iBuyer, it’s important to learn about them.
Who Are Opendoor And Offerpad?
Opendoor and Offerpad are both called iBuyers. Instead of working with real estate agents, customers work with them via their app, website, and direct contact. They buy homes in various areas, and also sell homes.
The buying process for both of these companies is similar. The homeowner requests an offer so that the iBuyer can let them know what they would buy their home for. The price offered is frequently close to market value.
Then, sellers can decide not to work with them if they do not like the sale price. Or, they can continue working with them. The iBuyer will then inspect the home, determine what repairs are needed, and discuss a final purchase price. The homeowner signs the contract and selects a closing date.
Both of these iBuyers also sell homes in the same market that they buy homes in. They offer their own mortgage companies and can help first-time homebuyers complete the entire process.
Before working with an iBuyer, it’s important to understand all of the fees that are associated with working with them.
What are Opendoor And Offerpad’s Hidden Fees?
Both of these companies have certain fees that sellers will be expected to cover. Although sellers do enjoy a quick sale, they will find that they pay more in service fees than if they worked with a traditional real estate agent. We’ll cover everything that customers need to know about both Offerpad and Opendoor Fees. If you want to see our reviews of both companies, you can find them below:
Service Fees
Both of these companies charge service fees, just like real estate agents do. Offerpad is known for charging approximately 6-10% in fees. Opendoor will usually charge approximately 5% in service fees. Both of these are comparable to what a homeowner would also pay a real estate agent to sell their home for them.
Closing Costs
Opendoor charges 1% to cover closing costs. However, it’s important to read the fine print of this agreement. This is assuming that the 1% covers all of the closing costs, which it rarely does. If the costs exceed 1%, the customer will have to pay the additional costs. Often, customers will find that they wind up paying about 50% of the closing costs.
Offerpad doesn’t offer to pay any of the closing costs. The customer will be responsible for title, escrow, prorated property taxes, and any other costs that fall in this category.
Repair Costs
After iBuyers give you an estimated purchase price, they will want to do an inspection. During this inspection, the inspector will detail a complete list of repairs that are needed before they can sell the home.
Homeowners should expect at least some of these repairs because cleaning fees are often included. Even if homeowners clean their entire house, they will more than likely still have to pay the fee.
Opendoor will automatically deduct repair costs from the purchase price. Offerpad will allow homeowners a chance to reject the offer or hire their own contractor to cut down on repair fees. However, these will still be deducted from the purchase price.
Because these are determined on an individual basis, it’s impossible to know what the repairs will cost before the inspection.
Hidden Fees
Neither company has hidden fees. Opendoor is very open about how much everything will cost, but customers might have to ask about fees or read the fine print on the contract.
Some people think that Offerpad has hidden fees because they do not disclose their cancellation fee to customers beforehand. Instead, many customers find out the hard way that they will have to pay a 1% cancellation fee if they back out of the offer, even if they don’t make a dime from selling their house to Offerpad.
However, homeowners won’t have to deal with hidden fees when it comes time to close like they might if they work with a real estate agent. Things like advertising, photography, writing the listing, showing the house, etc. are all included in the fees that are outlined before signing the contract. This can be a huge relief for those that are selling a home for the first time.
Seller Concessions
Seller concessions are things that the realtor negotiates that the buyer has to pay for. This frequently happens to help a home sell. For example, if a home is located in an area that has a high risk for flooding, the homeowner including pre-paid flood insurance with the home can make it more appealing. Neither Opendoor nor Offerpad do this.
However, repair credits and costs are also considered seller concessions in some areas. On the bright side, this is the only seller concession that anyone will have to deal with when they work with Opendoor vs Offerpad.
How Do iBuyer Fees Compare To Real Estate Agent Fees?
When deciding if you’d like to work with a real estate agent or an iBuyer, it’s important to consider the total cost of selling your home. These are the main things that homeowners need to know when making this decision.
Real Estate Agents Offer A Higher Purchase Price
While iBuyers claim that they offer a fair market price based on current market conditions, and they usually do, they don’t take everything about your house into account. For example, single-family homes that have invested in solar panels might not be able to up the value of their home based on solar panels. This can also apply to other additions on the property, such as the installation of a fireplace or a privacy fence.
When homeowners work with a real estate agent, they can use every trick in the book to increase the value of their house. Real estate agents are pros at helping homeowners sell single-family homes for top dollar.
Homeowners That Work With Agents Have To Cover Repairs Themselves
This can be both a good and bad thing. If a homeowner is a DIY enthusiast or the home requires almost no repairs, they can save a substantial amount of money. However, some contractors will charge the same, if not more, that an iBuyer will charge.
Working with an agent also means paying for these costs upfront to get the house ready to sell. When working with an iBuyer, it means a repair credit or taking the money from the total purchase price, which can be more convenient.
Commission Fees
An agent will typically charge 5-6% commission fees. This is similar to the fees that are charged by iBuyers, so homeowners will not save a lot of money on service fees by switching to an agent.
Closing Costs
Typically, a seller will cover closing costs that are associated with the sale of the property. If a seller works with an iBuyer that pays a portion of this, such as Opendoor, they will save money by going with a cash-backed offer from an iBuyer. If they do not, homeowners will spend the same amount of money.
Hidden Fees
Occasionally, you’ll come across an agent that has plenty of hidden fees to jack up the price that you pay them when you sell the house. Some of these are reasonable. Some of these items are typically covered with the price of commission, but other real estate agents might add them as separate services instead of including them in the service charge.
An appraisal is typically included in the commission. However, if a real estate agent has to hire a professional to praise the home, this will be an additional cost.
Open houses that are managed by the real estate agent should be covered by the commission that you pay them, but this isn’t always the case. If a real estate agent does several open homes, they may charge extra for that.
Professional floor plans are another hidden fee to be on the lookout for. These can cost at least $100 for a professional to draw, which you will be billed for.
Photography can add a few more hundreds of dollars to the cost of hiring a real estate agent. If they need professional photos to list your house, they will be taken to perfection by a professional photographer.
Copywriters can be rather expensive as well. Some real estate agencies hire professional writers to write listings for properties. While this can help them sell a home quicker, it can also cost a hundred dollars.
Advertising costs are another expense. These can include everything from paying for the listing to flyers, advertisements in newspapers, etc. Most agencies charge a flat rate for advertising.
While there is quite the list of hidden fees you can be charged by a professional real estate agent, that doesn’t mean that you’re out of luck. Most agencies are transparent about fees when they are asked. You can also read the fine print of any contract that you sign.
Some agencies do not charge a high fee for all of these things. Instead, they charge an application fee per applicant for a home. This application fee helps cover the cost of things like advertising to save homeowners a chunk of money.
Moving Costs
Not only do you have to pay for things like advertising, but you’ll also have the burden of paying for your own moving expenses. Some iBuyers offer free local moving services to help you relocate with the least amount of stress possible.
This is not going to happen when working with real estate agents. Instead, you’ll be covering all of the moving expenses yourself.
Real Estate Agents Offer A Higher Profit
While most homeowners will find that they pay more in fees, hidden fees and even moving costs than if they worked with an iBuyer, they will also find that they can earn more money. A professional agent can often list a house for a higher price, and help homeowners find budget friendly ways to increase the overall value of the home. That leads to enjoying more money in your bank account when it comes time to close.
Agent Vs. Opendoor and Offerpad
There are several pros and cons of Opendoor as well as with an agent. It can be tempting to go with a professional agent, but it’s important to consider the main differences before making the decision based on a higher profit alone.
iBuyers Offer A Predictable Timeline
While companies like Opendoor might not be able to give you everything an agent does, they do tend to shine in certain areas. They let you pick the closing date so you can rest assured that your home isn’t going to be on the market longer than you want. Instead, they offer a timetable that will tell you everything that is going to happen. That is not going to happen with an agent.
Convenience
Some homeowners will have ample time to complete repairs themselves, and they don’t care if there are showings while they live in the home. This could make an agent a great choice for them. However, there are plenty of people that don’t want to deal with repairs, showings, or anything else related to selling their homes. In this case, an iBuyer would be best.
It’s always important to consider everything about a company or agent before working with them. Learn more about iBuyers and the difference between an iBuyer and an agent by browsing through the rest of our blogs.
