Coldwell Banker Launches New Program For Seller’s In iBuyer Era
One of the most talked about trends in real estate over the past 12 months has been the introduction of the iBuyer into the local real estate market. Programs such as Zillow Offers, OpenDoor and Redfin all operate in the Broomfield and Denver metro market and have automated programs that provide an “instant offer” for your home.
The biggest question surrounding these offers for homeowners is whether or not they are being offered fair market value for the home. Next, they would like to know what the fees are associated with each of the iBuyer programs. The final question is what timeframe a homeowner can expect to have their home sold.
Each program is slightly different in terms of the offer itself, fees and timeframe. Fortunately, Zavvie.com, a local tech company has created a comparison platform to provide the consumer with an instant comparison these metrics. Additionally, the tool uses the traditional agent-listed home as a baseline metric. This allows the homeowner to see the real cost of working with an iBuyer.
In a recent article published by Forbes, author Chase Marsh examined whether or not the cost associated with iBuyer services was worth the convenience. He explained that “while iBuyers provide the convenience of selling quickly, matching expert investors against consumers isn’t always the best thing for the consumer. Zillow recently explained that 90% of sellers (paywall) who engaged its Instant Offers platform decided against the iBuyer offer and chose a traditional agent instead. If 9 out of 10 consumers pass, the pricing can’t be that compelling. Choice is good, but a home is generally your largest asset, so you may want to consult an expert before iSelling.”
iBuyer and Traditional Brokerage Comparison
In my Broomfield neighborhood, the average sales price in 2019 is $691,000. Using this purchase price I tested a Zavvie iBuyer comparison to see what my neighbors could expect if they decided to sell through an iBuyer instead of a Realtor®.
Open Market Sale: $691,000
Service Fee: $0
Professional Fees: $41,460
Prep and Repairs: $8,292
Closing Costs: 5,528
Cost of Selling: $55,280
Estimated Net Proceeds: 635,720
Money Left on the Table: $0
Instant Sale Offer: $669,994
Service Fee: 6.9% ($46,230)
Professional Fees: $0
Prep and Repairs: $19,496
Closing Costs: $0
Cost of Selling: $65,726
Estimated Net Proceeds: $604,268
Money Left on the Table: $31,452
Instant Sale Offer: $679,737
Service Fee: 6.8% ($46,222)
Professional Fees: $0
Prep and Repairs: $21,275
Closing Costs: $5,437
Cost of Selling: $72,934
Estimated Net Proceeds: $606,803
Money Left on the Table: $28,917
Instant Sale Offer: $664,742
Service Fee: 7% ($46,532)
Professional Fees: $0
Prep and Repairs: $23,265
Closing Costs: $7,976
Cost of Selling: $77,773
Estimated Net Proceeds: $586,969
Money Left on the Table: $48,751
The estimated time to close for the three iBuyer services I mentioned is as quickly as 7 for Zillow Offers or RedfinNow and 10 days for Opendoor and can be stretched out to as long as 60 days for Opendoor and RedfinNow and 90 days for Zillow Offers. This is where you will see the biggest difference and potential advantage of the iBuyer service compared to a more traditional listing approach. The average days on market for my neighborhood is currently 55 in 2019. If you add on a typical escrow period of approximately 30 days you have a total close to the Zillow Offers maximum of 90 days. However, the seller net proceeds continues to be substantially higher with a more traditional approach even if you add 3 months of principal, interest, taxes and insurance (PITI).
What if there was a hybrid?
For many sellers a primary concern is that a home will not sell for an acceptable price on their timeline which is why they are turning to the iBuyer programs. What if a seller was given the option to have a guaranteed offer for their home that was good for approximately 45 days while the home was being listed on the open market. This would assure the seller that the home will sell on an acceptable timeline, but also gives them the opportunity to earn top dollar for their home.
The Coldwell Banker CataList+ program is a hybrid of the traditional listing process and iBuyer model. With CataList+ the seller has the opportunity to list their home on the open market with a Coldwell Banker Realtor as well as have a guaranteed cash offer for the first 45 days the home is listed. This offer can be accepted at anytime during the 45 day period, guaranteeing a successful sale.
CataList+ Seller Benefits
Life can be unpredictable, and uncertainty is scary. cataLIST+ provides sellers with peace of mind that their home will sell at the best possible price with you by their side.
Sellers aren’t forced into an uneducated decision about one of the biggest financial transactions of their life. Every step of the way, they have choice, flexibility, and the guidance of a trusted real estate advisor.
CataList+ Fee Structure
The fee structure for CataList+ is similar to that of programs such as Zillow Offers and Opendoor. Instead of paying the Realtor® their professional fee upon closing, the seller will pay a 7.75% convenience fee. The listing agent is then paid from this convenience fee at closing.
Upon activating the CataList+ cash offer and 45 day window, the seller will be obligated to pay a $250 fee at closing regardless of whether or not they sell the home through CataList+ or the open market. It does not cost anything to receive the initial cash offer however.
Finally, there is a $450 fee should the seller elect to close the transaction with a title company other than Guardian Title (owned by Realogy).
While I am obviously an advocate of the traditional listing process, I also understand the benefits of an iBuyer program to some sellers. Having certainty your home will sell in a changing market is something every homeowner desires. However, this is where my support stops for the majority of iBuyers. As I explained earlier, the net proceeds for homeowners is significantly lower when using an iBuyer service.
When I am listing a home my primary job is to get the home sold as quickly as possible and maximize the sellers net proceeds. While iBuyer services sell a home quickly it does little to maximize a sellers net proceeds and therefore falls short in half of an agents primary goals.
The CataList+ program is a wonderful option for sellers who would like to sell the home quickly but are also looking to maximize net proceeds. If the market is moving slowly the seller has an offer to turn to at any point but still has the flexibility to sell at their preferred price on the open market.
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