A new trend is disrupting the housing industry: certain startup companies are taking risky, bold actions that may potentially change the way houses are bought and sold. With the new idea of letting startups buy your home at a time when people often end up renting instead of owning, is it worth taking the risk?
Sell Your Home When Able
The idea of having a startup buy and sell homes is not exactly new. Opendoor has brought up the idea as early as 2003 when Keith Rabois initially pitched the idea, but it didn’t come into fruition until around 2013 or 2014. Atlanta-based Knock.com (officially Knockaway, Inc.) also sells homes via quick offers or “knocks,” and was founded in 2015. OfferPad was founded the same year in Phoenix, and the $260 million in funds backing the startup is an impressive feat on its own already.
However, the Seattle-based Zillow Group, officially founded in 2006, has been leading the pack and is creating even more buzz lately when they announced they too would start buying and selling homes beginning April 2018. RedfinNow by the real estate brokerage firm Redfin also now wants to sell your home “hassle-free.”
Essentially, this trend of buying and selling “when you’re ready” is an idea that appeals to many: it’s less risk, for a good price, and the homeowner can sell with certainty. The traditional way to sell a house would take a lot of physical and verbal effort – and sometimes would even be financially risky.
The new method means companies like RedfinNow, Zillow, Knock, and all the previously mentioned startups can give you a fair offer almost instantaneously – up to just 48 hours after they have seen and inspected your home. It significantly cuts the amount of time and the energy involved. It means less stress, less tiresome efforts, and more peace of mind for the homeowner. This is highly attractive for people living today’s busy lifestyles, as well as for people who need to sell their home soonest (maybe due to relocation, selling an investment, or just simply moving on from their current property).
Risk-Free, but Should You Do It?
Interestingly, in a tight competition between only a handful of names, it has become less of a battle and more of a healthy situation where everybody essentially wins. Opendoor, for example, rather than see it as an aggressive fight to get to the top of the game instead welcomed Zillow into the relatively new strategy of buy-and-sell when ready.
“Welcome, Zillow. Seriously,” said Opendoor chief executive officer (CEO) Eric Wu in an official statement. “We are genuinely excited, having invented this new category in 2014, and it’s invigorating to see a host of others in the industry recognize the importance of removing hassle and time from the transaction.”
With such exciting things happening for this trend, the question homeowners have in mind is: should I let them help me sell my home?
Well, there is no cookie cutter answer. For example, in the case of RedfinNow, when one of their agents provide such an option versus the regular option of listing via consulting, majority of potential sellers would probably take the regular route as most other sellers might not be in a hurry in the first place to sell their home and get their money. This rush often involves cutting down the price.
However, the “buy and sell when ready” option can be perfect when the seller is in fact in a hurry. A near-instant relocation due to a cross-country job change, or even foreclosure, or desperately needing the cash, would require a homeowner to get their house sold as soon as possible. Of course, it is provided they are willing to sell their home at a lower price than its true value, rather than waiting too long to sell for something that’s time-sensitive.
Old school sellers with their “we buy homes” slogans may just be given a run for their money. The industry they dominate has not been disrupted until now – and companies like Opendoor and RedfinNow are displaying fine sophistication with their bold methods and groundbreaking ideas, which is the reason investors are backing these startups in the first place.
What does it mean for the housing industry? This new technology or service might not be the end goal – these bold startups may work on other types of services and technologies in the future that may shake things up even more. The way Redfin’s been handling things, even though Zillow is currently taking a bold leap, RedfinNow is their way of dictating the pace and how things should be done – maybe even licensing the tech so other brokerages could pay them in order for such brokers to offer the same service. Maybe these startups have realized they can contribute more to the purchase/sell side process when they actually own the properties that homeowners want to sell, as opposed to the startups being just the middlemen.