Are you looking to sell your home quickly and efficiently? Then a Guaranteed Offer Program, also known as “Cash for Keys”, or “Quick Sale”, or “Instant Cash Offer” program may be for you.
Guaranteed Offer Programs became increasingly popular among homeowners during the pandemic era of 2020-2022. These programs are offered by local real estate brokerages and their investor partners and national behemoths such as Offerpad and Opendoor. With the help of technology-first corporations such as Opendoor and Offerpad, the process has become even more streamlined and efficient. Say goodbye to the gimmicky “We Buy Ugly Houses” signs and discover the benefits of a guaranteed offer program for your home sale.
What is a Guaranteed Offer Program and How Does it Work?
Guaranteed Offer Programs, also known as “Cash for Keys” or “Quick Sale” or “Instant Cash Offer” Programs, are becoming increasingly popular among homeowners looking to sell their property quickly and efficiently. The pandemic era of 2020-2023 really saw an explosion of these offers. These programs are offered by a number of real estate companies and investors who make a cash offer to purchase a property, usually at a discounted price.
Gone are the days of the gimmicky, “We Buy Ugly Houses” or the signs on the street corner that read “We Buy Ugly Homes.”
Today, they are mostly dominated by technology-first corporations such as Opendoor and Offerpad. These companies are known as instant buyers or iBuyers for short.
The advantage of this type of sale is that it is guaranteed to close quickly, often within a matter of days or weeks. This is particularly appealing for homeowners who are in distress such as facing foreclosure, job loss or simply looking for a convenient way to sell their property as soon as possible.
The investor buyer will now buy the home at a price that will allow them to make a profit in the end. This is typically 10%-25% of the fair market value of that home. In addition to that, some of these iBuyers will charge a convenience fee of 5% to 7% of the final price that they will offer, after they have carried out their due diligence on the property.
If you’re looking to sell your property quickly, a guaranteed offer program may be the right choice for you.
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PROS and CONS: Why Guaranteed Offers Could Be the Solution for Your Home Sale
A guaranteed offer is definitely an option for homeowners who are looking to sell their homes quickly. When selling a home, an owner’s priority and mindset may be such that getting the home for the highest price is not the main objective. Instead, that owner may be more interested in selling their home quickly and efficiently and may be willing to sacrifice upwards of 30% of the value of the home to get it off their hands Here are a few reasons why a guaranteed offer may be right for you:
- Speed: One of the major appeals of Guaranteed offers is their promise to close quickly, often within days or weeks. This is especially appealing for homeowners who need to sell their homes quickly out of necessity, such as those facing foreclosure or relocating for work.
- Convenience: Guaranteed offers and instant offer programs can be an easy and convenient way to sell a property. The investor will handle most of the work involved in the sale process.
- Certainty: With a guaranteed offer, the sale is pretty much guaranteed to go through, which can provide a sense of security and peace of mind for the homeowner.
- No repairs necessary: iBuyers will typically make “AS IS” offers. That means that their offer is typically not contingent upon the seller making repairs to the home. However, in some instances, the iBuyer may give the owner an option to make repairs to get a hire offer.
- Avoiding the traditional Real Estate Agent route: With a guaranteed offer, homeowners can skip the step of showing their homes. This made this program particularly popular when people did not like the idea of people coming in and out of their homes during the pandemic.
- Fair price: The investor buyer will buy the home at a price that will allow them to make a profit in the end. This is what makes it fair: they take the home off your hands and then they are able to sell it in the end to make a profit. This is typically 10%-25% of the fair market value of that home. Note, this is just their offer price. They will also deduct an extra 5% to 7% as a “Convenience fee.”
- Control over the closing date: Most guaranteed offers come with the ability for the owners to choose their closing date within a certain period. This gives owners the flexibility to plan to seamlessly transition to their new home.
- Discounted price: The sale price will often be discounted in order to account for the investor or company’s profit margin and the cost of repairs.
- Convenience fee: Some of these iBuyers will charge a convenience fee of 5% to 7% of the final price that they will offer after they have carried out their due diligence on the property.
- Limited market exposure: You may be able to get a higher price if you go the traditional route of listing with an agent and have a wider pool of buyers looking at your property. Your property may be so attractive that it may attract many offers and cause a bidding war on your property driving up the price of the home.
- Limited negotiations: The price that these instant buyers offer is usually not negotiable, as they have already factored in the cost of repairs and their profit margin.
- Make homes more expensive: IBuyers can potentially cause home prices to increase as they will reduce the number of homes that are available on the market. Additionally, they are increasing the demand for homes.
- Limited support during the process: With iBuyers, you may not have the same level of support or guidance throughout the process as you would with a traditional real estate agent.
- Lack of personalization: The process of selling your home with a guaranteed offer program is often more standardized and less personalized than working with a traditional real estate agent.
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The Process of Getting a Guaranteed Offer: What to Expect
Selling your home to an Instant Buyer or iBuyer is not much different from the traditional route, the main difference is that they see potential in your property for them to either flip or hold for renting. Here are the steps that most iBuyers will take when trying to purchase your home:
- Contact the company or investor: The seller will contact the company and request an offer. The investor will now ask for property details such as the condition of the home, square footage, age of the roof, etc. Also, many of them ask for a video walkthrough of the home or pictures of the home and any relevant details that will allow them to determine the after-repair value of your home. At this stage, a conditional offer may be extended.
- Home visit: Some companies may send a real estate professional, such as an inspector or real estate agent to examine the home. At this point, they may or may not provide a guaranteed offer right away, instead, they may offer to list the home the traditional route.
- Property inspection: if the seller decides to accept an instant offer, an instant cash offer may be presented. This offer may then be conditional on a home inspection. Some companies conduct a thorough inspection of the home. That may see a home being visited by specific experts such as HVAC technicians, roofers, foundation experts, and a general home inspector. If you are in Georgia, a termite inspection will most likely be carried out. These professionals will determine if any repairs are necessary.
- Offer: After the inspection, the investor will make a final offer to purchase your property. This offer will typically be at a discounted price and will take into account the cost of repairs and their profit margin.
- Acceptance: If you accept their offer. They will ask you to choose a closing date within a certain timeframe. The contract will then be sent to their preferred closing attorney and they will do a thorough check on the property to make sure that there are not any liens and so forth against the title.
- Closing: On the day you close, you will go in to see their closing attorney. The attorney will have you read and sign all the paperwork. After that, they will provide you with a check or wire the funds to your account.
Top Guaranteed Offer Programs in Atlanta
- Opendoor: Opendoor offers is the current king of instant offers nationwide. They offer a very popular guaranteed offer program. The successes of Opendoor have opened the door and invited other players to the market. Opendoor entered the market in 2014.
- Offerpad: Offerpad is another company that offers a guaranteed home sale program. Their offer is similar to Opendoor’s offer. However, they offer a free local move as an added incentive to use their service. Offerpad entered the marketplace in 2015.
- Real Estate Brokerages: Many brokerages offer a “Guaranteed Offer” program. However, the ones that we have seen are not really buying your home. They are basically passing the home on as a lead to an actual investor, such as Offerpad and Opendoor, or a smaller investor. In exchange, that investor will reward that brokerage by paying a percentage of the sales price. In some instances, the investor may allow that partner brokerage to list that home for sale after it is purchased.
Finally, Guaranteed Offer Programs may be a good option for homeowners who want to sell their homes quickly and hassle-free. These programs are provided by real estate companies and investors who make cash offers to buy a home at a reduced price. One of the most appealing aspects of these programs is their ability to close the sale quickly, often within days or weeks, which can be ideal for homeowners who need to sell their homes quickly for a variety of reasons, such as foreclosure or relocating for work. It is important to note, however, that the sale price is frequently discounted, which can be a disadvantage for homeowners looking to maximize the value of their property. Guaranteed Offer Programs can be beneficial in general.