Getting a Good Off-Market Price for Your House
Looking to sell your house off market? Getting a good off-market price is harder than it sounds. Follow these tips.
There are plenty of reasons that homeowners opt to sell their home off market instead of the traditional market: it’s easier, faster, and less stressful. But one challenge homeowners frequently face when selling off market is getting a good price.
Off-market buyers are notoriously hard to trust. Many are predators who will give you lowball offers. But there are off-market buyers who make reasonable offers. Why then is it so hard to weed through buyers to get a good off-market price for your house? Here are four common reasons and how to get around them.
You live in a highly “flipped” market
One reason you may have trouble getting a good off-market price is if you live in a highly “flipped” market. This means that there are a large number of home flippers in your area. Home flippers are property investors who buy houses, fix them, and then attempt to sell them for profit.
When a market is saturated with flippers, it’s more difficult to find an experienced homebuyer who knows what a home is truly worth. This is because markets oversaturated with flippers tend to have a presence of “mom and pop” flippers who are often unqualified.
Inexperienced flippers don’t have access to the same resources as professionals. Thus they typically spend more on renovations when taking on a flip. With smaller profit margins, they are able to offer less for your house than a more sophisticated organization.
What to do
To get a higher off-market price for your home, look for an experienced buyer. Experienced homebuyers won’t waste unnecessary dollars on renovations, leaving more money available for the seller. Ask any prospective homebuyer to provide you with a list of homes they’ve bought off market.
Read more: What You Need to Know About Cash Homebuyers
Variations in the “formula”
Many off-market homebuyers use a formula that determines what their cash offer will be. Some of these formulas favor you as the home seller. Others keep the buyer’s interests front and center.
For example, Opendoor, a popular off-market homebuyer, can take up to 14% of your estimated home value in service fees. A cash offer from Opendoor factors in the expected sales price of your home minus this fairly large fee.
Opendoor focuses on buying homes that are in good condition to ensure they make a profit without having to invest heavily in a rehab. The down side of services like this, is it can actually contribute to housing shortages.
Beyond the cash offer formula, the date used by off-market homebuyers varies as well. Sundae uses the Multiple Listing Service (MLS) to determine market conditions.
The MLS is the database used by licensed realtors in the traditional market, so it is an extremely accurate indicator of the average sales prices of homes for any given area. However, not all off market home buyers have access to the MLS and may rely on other, less-accurate sources.
What to do
Make sure you understand completely how your prospective buyer determines the offer price. Ask them to show you a worksheet or a list of comparable sales. The more transparency you have into pricing, the more likely you’ll be to judge what constitutes a fair price.
A home’s value is sometimes seen as subjective
Another reason it’s difficult for sellers to get a good off-market price is that some buyers price homes subjectively. A home’s actual value is not determined by preference. But many flippers make purchase offers based on opinion.
To get a fair off-market price, it’s important to work with experts who understand what holds value in a home. As well as what doesn’t.
According to Kiplinger, things like paint, carpeting, ceiling texture, and landscaping seriously diminish the value of your home in the eyes of some retail buyers. But a professional homebuyer will see past these surface level features to determine the true value of your home.
What to do
Learn the value of real estate in your neighborhood. And have a solid estimate of your own house’s value. Check out nearby sales prices from the past six months. Use a tool like Home Advisor to understand the costs of various renovations in your area.
Scammers abound off market
Part of the problem with getting a fair, high cash offer when selling your home is the prevalence of scammers in the industry. Scammers will often use a “bait and switch” scam to fool sellers into accepting a lower offer than they could receive from an honest buyer.
The bait and switch scam is when an initial cash offer is presented, only to be replaced later by a much lower number. The lowball offer comes in once all of the hidden fees, charges, and commissions are added.
This tactic is often successful because it preys on sellers in a vulnerable position. They need to sell fast and by the time they realize the offer is lower than expected, it’s too late. They sadly take the offer and accept much less than their house is worth.
What to do
Do your homework. Learn to spot the signs of a predator or scammer. If you want to get a high off-market price, you have to work with a reputable homebuyer. You’ll want to find someone who is clear and upfront about their service charges from the start. Look for online reviews and ask any prospective buyer for some customer references.
See also: How to Avoid ‘We Buy Houses’ Scams
An easier way to sell your house off-market
Selling off market is increasingly popular among homeowners for good reason. With the rise of iBuyers and innovative real estate technology companies, sellers have more options than ever.
But whenever opportunity is present, there is also the possibility of exploitation. If you’re considering selling off market, finding the right buyer that will give you a fair offer is paramount.
At Sundae, our mission is to help homeowners get the best outcome when selling. This means we put customer needs first, and we are always transparent about our process. If you’d like to know whether Sundae can help you, get in touch and speak to a Customer Advisor today.