Do you want content like this delivered to your inbox?
Share



Share

The Hidden Costs Of Selling Your Home "The Silicon Valley Way"

Home Group Team
Apr 24 7 minutes read

Getting your home sold in just one day with multiple offers might sound too good to be true, but these days there are many start-ups and tech-backed companies promising to do just that. They guarantee a sale in a certain time period, buy the house directly from you, or offer a platform where you accept and review online bids from buyers.

It sounds like a dream come true, right? Unfortunately, it doesn’t always work out and has some serious hidden costs.


Hidden Cost #1: Low-Ball Offers

The main reason why most sellers choose to list with a real estate agent is to maximize the value of their homes, and the data backs this up. According to NAR, the average “For Sale By Owner” sales price is $60,000 lower than the average price of a home represented by an agent. This is because a real estate agent who is immersed in their local market understands how to price a home properly, utilize staging to show off the home’s best features, make expert recommendations on any fixes that could be made to get a higher value, and negotiate with the buyer’s agent so you don’t end up cutting the price in order for the buyer to commit.

For flat-fee platforms, the offers you receive depend on how many people can actually see your home. One reviewer reported getting few showings and only receiving one offer, which was well below other properties in her neighbourhood.

“I got fewer showings than any other house and the only offer I got was WELL below my [asking price]. Other houses in the neighborhood (smaller and less maintained) sold for over my asking price with other agencies.”

Purplebricks Customer

With companies that offer to buy your home outright, you may not receive the full value of your home. Even worse, you may not even receive an offer at all. For instance, your home could fall outside of what their algorithm deems valuable, like if your home was built before 1960. If you’re okay with losing out on potential profit or receive an offer you want to accept, you still have to consider fees. Though your fee will vary, the average is around 8-9%, which is more than the average real estate agent fee. 


It doesn’t stop there. One seller reviewing their experience with Opendoor reported being hit with repair costs and other hidden fees, including $8,000 in fees added an hour before he was closing on his property. Another seller reviewed their experience with Opendoor and shared how an inspector stated it would cost $200 to replace 3 light bulbs in their home.

All in all, the inspection added up to about $12,000 in ‘repairs’ which would have caused us to walk away with almost no money after the closing fees… 

The estimated cost of repairs were absolutely insane. For instance, the master bedroom has a ceiling fan with 4 light fixtures... The inspector took photos of the 'missing' bulbs, and estimated it would cost $200 to replace them.”

OpenDoor Customer

Hidden Cost #2: No Human Contact

If you’re the type of person who lets every call go to voicemail, this problem can sound like a positive. But consider the fact that when you sell your home, you’re probably going to want someone to call if your listing contains a bunch of errors and takes six weeks to show up on their website. Even worse: when any messages you send about those issues go unanswered. 

When selling to a company that buys your home outright, the relationship can end as soon as you accept their offer. One seller who reviewed her experience with Opendoor detailed how she was charged $400 to take the trash out of her house.

“In the end, I lost out on a good $20,000 - $40,000 on the house alone, plus another $7,500+ for false claims of repairs they said they had to do (which in reality I had fixed on my own already so they had nothing to do).”

OpenDoor Customer

Hidden Cost #3: Unexpected Surprises

The main issue a seller will run into is a lack of one-on-one representation. For example, when you list with a service like Purple Bricks that promises to sell your home for a flat fee, you’re matched with an “area expert” who may be stretched for time. 

My property was on the market for 90 days and had just 6 viewings. I withdrew my property and instructed [a local realtor]. 

They listened to the feedback and took on board that the price was too high. Within 11 days they had shown a total of 36 people around my property and 3 offers came in. My house has now sold.”

Purplebricks Customer

Another seller wasn’t so lucky. Over the course of eight weeks, their first agent was fired, then the next four quit within 1-2 weeks of the other, and another never even called.

Further, a real estate agent markets your home beyond simply hanging a sign in front and placing the listing on a website. When going the alternative route, if you don’t have an “expert” who is willing to do more than upload photos, you could end up having to do things like distribute flyers about your own home. 

When it comes to services that offer to buy your home outright, the relationship between you and the company can be minimal. One seller’s Opendoor experience highlights how this can become an expensive problem. The roof repair experts hired by the company left her home without completing the project. She was later charged $21,000 for the repairs and said that she was not able to negotiate with the company.

On top of the $26,000 upfront fee, they tried to charge me $21,000 for ‘repairs’. They refused to negotiate anything, and now I have to pay an attorney for the ‘assessment’ process.

OpenDoor Customer

In the end, the “Silicon Valley” way of selling a home isn’t for everyone. If you’re thinking about making your next move, start by getting in touch with a real estate agent to learn more about what you can expect from the selling process.

Sell Your Home For What It's Worth

Get your home's full value with help from an expert. Learn about the difference working with a Realtor makes.

We use cookies to enhance your browsing experience and deliver our services. By continuing to visit this site, you agree to our use of cookies. More info

Terms of Use

This website is operated by Home Group Realty Inc., a Brokerage who is a member of The Canadian Real Estate Association (CREA). The content on this website is owned or controlled by CREA. By accessing this website, the user agrees to be bound by these terms of use as amended from time to time, and agrees that these terms of use constitute a binding contract between the user, Home Group Realty Inc., and CREA.

Copyright

The content on this website is protected by copyright and other laws, and is intended solely for the private, non-commercial use by individuals. Any other reproduction, distribution or use of the content, in whole or in part, is specifically prohibited. Prohibited uses include commercial use, “screen scraping”, “database scraping”, and any other activity intended to collect, store, reorganize or manipulate the content of this website.

Trademarks

REALTOR®, REALTORS®, and the REALTOR® logo are certification marks that are owned by REALTOR® Canada Inc. and licensed exclusively to The Canadian Real Estate Association (CREA). These certification marks identify real estate professionals who are members of CREA and who must abide by CREA’s By-Laws, Rules, and the REALTOR® Code. The MLS® trademark and the MLS® logo are owned by CREA and identify the professional real estate services provided by members of CREA.

Liability and Warranty Disclaimer

The information contained on this website is based in whole or in part on information that is provided by members of CREA, who are responsible for its accuracy. CREA reproduces and distributes this information as a service for its members, and assumes no responsibility for its completeness or accuracy.

Amendments

Home Group Realty Inc. may at any time amend these Terms of Use by updating this posting. All users of this site are bound by these amendments should they wish to continue accessing the website, and should therefore periodically visit this page to review any and all such amendments.