Seller Beware... read the fine print, don't be fooled by Purple Bricks, Opendoor, etc

October 29, 2018 | By Deanna Johnson
We’ve all seen advertisements for Opendoor and Purple Bricks, a one-stop-shop for all things buying and selling real estate that has been featured in major publications such as Forbes, The New York Times and Wall Street Journal.  After all, it’s an innovative way to sell your home your way, combining competitive offers and fast sales without the hassle of listing and showings. Sounds too good to be true, right?  Well I did a little digging to see just what this  thing was all about, and this is what I found:

The Good
It's all about convenience in a world where we need things to be quick and easy, Opendoor and Purple Bricks are quick and easy. You will find a  user-friendly resource where sellers can input the details of their home, receive offers, close when they’re ready and get paid quickly. For busy families, the idea of not having to get your home “open house ready” is another perk, as this website eliminates the need for open houses and strangers walking through your home.

Opendoor, like many other real estate tools, is right for the right seller. It’s right for the experienced seller who knows the ins and outs of a home sale and knows the questions to ask and the red flags to look out for. It’s also good for sellers who are in a rush, as sellers who feature their home will typically receive an offer within 2-48 hours. The right seller must also live within the parameters of  service areas, which include  Phoenix, Dallas-Fort Worth, San Antonio, Houston, Las Vegas, Atlanta, Orlando, Tampa, Raleigh-Durham, Charlotte, Nashville, Minneapolis-St. Paul, and Sacramento metro areas.
Opendoor strives to make buying and selling real estate simple. They do this by:

~ Not needing to send anyone out to do an inspection
~ Offering convenient options when it comes to maintenance and repairs
~ Allowing the seller to choose their closing date timeline
~ Providing the opportunity to “rent” the home back from Open door for 14 days after closing to remain in the house before moving.

The Ugly

Most of the “ugly” aspects of Opendoor and Purple Bricks are related to the financial side of the transaction. While they do pride themselves on making the experience as convenient and straightforward as possible, its’ downfall comes in regards to the overall purchase price of the home and fees.  Their seamless home buying and selling experience does come at a cost. These transactional costs are double the average price, and then you throw in a handful of holding and rehab fees, and it gets pretty costly.

Opendoor charges on average of 7% for their services, but their website says that it could be as high as 13%. The fee is based on how long they anticipate it’ll take to sell your home, based on the information you provide and the comps in the area.
Purple Bricks on the other hand said the listing fee in the Henderson and Las Vegas areas was a "low fixed fee of only $3,600."  Wow!  That sounds fantastic!  But wait... then in the fine print at the bottom it says, “typical buyer agent fee applies.”  That is typically an additional 2.5 - 3% of the sales price. Then they add other “standard” fees and repair fees so it ends up being much more than the typical 5 to 6% total fee that real estate agents charge. 
To add to this, they charge this "low fixed fee" regardless of whether your home sells or not because in the fine print they give you the option to "Pay Later", well those terms state your are obligated to make payment in full for the Sell Side Fee of $3,600 when any of the following occurs ("payment event"), whichever happens first. 
~ upon closing; or
~ if YOU terminate our appointment to act as your Broker; or
~ six months from the date when YOU agree to use our Products & Services, whether or NOT there is a Closing.
In addition, they are under bidding the actual value of your home ranging from 5% to 12% less than the fair market value.  Why would you give your equity away and pay all those fees by using these types of companies to sell your home?  Use a Realtor.  Educate yourself.  Before you list your home on Opendoor, Purple Bricks or the like... and wait two hours for your magic (but probably too low) offer, contact me to see exactly how much your home is worth and how I can get you the most for your home in the least amount of time.

Don’t be fooled!





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