Should I Get an Online Quote to Sell My House?
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Some days, it seems you can’t escape them. They come at you from all directions. On the drive to your kids’ school, streaming the news or checking your Facebook page, billboards, push alerts, and promotions for online house-buying companies pop up everywhere.
If you are thinking about selling your home, those low-hassle, convenient, fast-sale pitches may pique your interest. You may be curious about getting an online quote for the sale of your home. But, you’re probably concerned about clicking a link or calling a number that potentially opens a Pandora’s box of never-ending solicitations and shady deals.
You’re not alone in that skepticism. Recent research by the real estate consulting firm 1000Watt showed that 55% of sellers polled thought house-buying company sales propositions are too good to be true. Like you, they thought there had to be a catch.
These buyers will provide an online quote to purchase your home—often sight-unseen. While they are sometimes comprised of small, local online buyers or investors, the companies reshaping the home sale landscape are larger investor groups and iBuyers (instant buyers), which tend to be corporations funded by large capital groups.
Investor groups such as “We Buy Houses” and “We Buy Ugly Houses®” typically purchase homes in cash for less than market value in as little as 10 days. Well-known iBuyer companies like Opendoor and Offerpad typically provide cash offers closer to market value, depending on the home’s condition and the company’s business model. These online quote companies may sell the home to a contractor, make repairs then sell the home to another homeowner or investor, or convert the property into rentals.
Selling to an investor group or iBuyer isn’t attractive to everyone. In addition, the opportunity may not even be available in some markets.
Like many other innovations propelled by technological advances, investor groups and iBuyers have their place in the kaleidoscope of real estate sales options. Whether it’s the right choice depends on your selling objectives and priorities.
To help you figure out whether a high-tech alternative will work for you, we’re giving you the basics about online home buyers — why these services are advantageous to some sellers, what kinds of companies offer online quotes, and the pros and cons of using an online process.
Why would I sell my house through an online quote?
The online-quote model can benefit home sellers who are looking to achieve one or more of the following objectives:
- Minimize public interaction: If you, your spouse, kids, and pets don’t want to be inconvenienced by a parade of potential buyers, agents, inspectors, appraisers, and contractors, online quote companies offer few interruptions. The only site visit may be a one-time assessment after the initial offer is presented. Transactions are finalized with very little foot traffic for what could be a nearly contactless home sale.
- Get cash fast: Unexpected expenses that pile up due to job loss, hospitalization, or even inflation might cause you to consider how to quickly convert your equity to cash, so you can relieve debt.
- Preempt a market downturn: You also might be motivated to sell ASAP to maximize market conditions or minimize an anticipated decrease in your home’s value due to changes in zoning, the neighborhood or adjacent property, or other factors beyond your control. Because they can close in as little as 10 days, online quote companies may be the solution to help protect your hard-earned equity.
- Close a quick sale: Perhaps, you want to be free to take your equity and pursue your dream home, dream job, the love of a lifetime, or a life in another city or country. With an online offer, you can be on to the next adventure — cash in hand — in less than the time it takes to get a passport.
- Need the certainty of a sale: Being stuck paying two mortgages or having a deal crash when the buyer’s financing falls through often tops the list of terrors in sellers’ real estate nightmares. If those and other slow or no-sale scenarios keep you up at night, you can rest easy knowing the chance of an online quote company pulling out of a sale is close to zero.
- Bypass the necessity of staging, prepping, or even cleaning out the property: Whether it’s a home you’ve lived in and loved for years or a home you’ve inherited in another city or state, it can take enormous effort and cost to clean out, stage and maintain a house in ready-to-show-at-a-moment’s-notice condition.
- Skip the cost and hassle of repairs: Maybe, you don’t have the ability or time to make simple repairs yourself or pay for maintenance compounded by decades of deferred maintenance. Even though costly repairs may cause a decrease in the final offer, many investor groups expect to make repairs, so there’s no haggling over buyer demands for the sellers to make changes to the property. On the other hand, the larger iBuyers such as Opendoor are looking for properties in fairly good condition that do not need a lot of repairs.
- Desire for privacy: Even if your family isn’t the star of riches-to-rags drama like the Roses of Schitt’s Creek, there are times when protecting your privacy is a priority. If your family or property has become locally famous or infamous or even if you’re going through a bankruptcy or divorce, selling to an online quote company assures only real estate professionals enter the property and keeps curious onlookers out. There will be no for-sale signs in the yard or public showings.
- Avoid exhaustive inspections: Since many online quote companies plan to repair or renovate the property and pay with cash, there’s typically no need for an appraisal to satisfy a lender or an elaborate inspection.
- Receive a streamlined process with no negotiations and fixed costs: Online house-buying companies offer an alternative for individuals who are unwilling or unable to host open houses and showings or don’t want to get involved in tedious negotiations with buyers. Receiving and accepting an online quote to purchase your house is usually a convenient, relatively simple process with minimal paperwork for owners who inherit property or simply live out of state.
- Get a flexible move-out date: Once the preliminaries are completed, many online quote companies allow the seller to choose the closing and move-out dates.
- Dodge the stress, time, and energy involved in negotiation: While the online quote company may adjust the offer after a home visit, there is typically no negotiation involving buyers’ demands to fix certain items or provide credits or other compensation.
If the prospect of receiving a convenient, online cash offer is something you’d like to consider, you can explore a proven option on HomeLight’s Simple Sale platform.
Once you enter your address and answer a few questions about your home and selling timeline, Simple Sale generates a free, no-obligation, all-cash offer.
Sell when you’re ready without the hassle of paying for repairs, prepping for listing, or dealing with showings. You can typically close in as few as 10 days and you won’t pay a program fee or closing costs.
What are the drawbacks of selling a home through an online quote?
While the online quote model works well for sellers who prioritize the certainty of a quick sale, the convenient sales process does come with some caveats. Homeowners who sell to a house-buying company may experience drawbacks including:
- Inability to leverage special home qualities: Some sellers may be disappointed their home’s unique features and charm aren’t reflected in the online valuation and offer.
- Lack of negotiations: Sellers typically receive a data-driven, non-negotiable offer that can’t generally be influenced by additional information provided by the homeowner (however, the seller can still decline the offer).
- Fewer proceeds: You may face a decision to accept a lower price compared to an agent-assisted sale.
- Absence of competition to drive up the offer: With an online quote, sellers lose potential revenue due to the absence of bidding wars between buyers to drive up the sale price.
- Accumulation of hidden charges: Depending on the house-buying company and their business model, sellers may become subject to added convenience fees or other unexpected costs. It’s important to read offer agreements carefully before committing to any online quote.
- Lack of an ally with expert advice: Online sellers can miss out on the advocacy and expert advice an experienced real estate agent provides.
- Risk of being exploited: Sellers can potentially fall victim to a disreputable company or be taken advantage of by an aggressive or unprincipled investor.
- Possibility the deal may fall through: You could unknowingly work with a company that lacks the necessary cash reserves to close the deal on time. Some online offers may come from a house buyer that looks like other cash buyers, but they actually have no money to close on your property. Instead, their goal may be to sell the contract to an investor or other buyer for more money.
How common is selling a home through an online quote?
According to GlobeSt.com, housing data analysts at CoreLogic report instant buyer transactions doubled in 2021 compared to pre-pandemic levels.
Last year, iBuyers purchased more than 71,000 homes, a 500% increase compared to the purchase of 14,000 homes in 2020.
These online house-buying purchases accounted for about 1% of all U.S. home sales. In certain metro areas, the number was as high as 6%.
While a relatively small number of homes are sold to online companies, investor groups and iBuyers are making a big impact on the market. Their ability to close with cash has increased pressure on other buyers to present cash offers to be competitive, especially in a sellers’ market.
The National Association of Realtors Confidence Index Survey, May-July 2021 indicates that the rise of individual home purchasers making all-cash offers has been driven by intense competition from investor groups and instant buyer companies. Agents said iBuyers and front-facing websites that offer to quickly purchase the properties for cash represent an estimated 2% of transactions.
In the past five years, 75% of all iBuyer purchases have occurred in Texas, Arizona, Florida, Georgia, and North Carolina, particularly in cities experiencing large population growth.
Still, high-volume, large online buyers aren’t operating in every market. If you live in a smaller city or rural area, the opportunities may be limited to individual online buyers or small investors.
Who provides instant online house-buying quotes?
Investor group programs such as “We Buy Houses” were founded as early as 1996. Around 2010, the first larger online quote companies applied real estate tech’s ability to showcase homes virtually to meet society’s growing expectation to access 24/7 on-demand services.
These days, online buyers can be classified based on what they plan to do with the property after purchase.
For example:
- iBuyers: Since they tend to purchase homes in relatively good condition, these so-called instant-buyer companies usually offer more for your home than an investor or flipper.
- Investors and flippers: Often called “we buy houses” companies, these online buyers purchase homes, fix them up and then sell them at a profit. If you’re selling a home that needs a lot of repairs to become habitable, flippers may be your best option.
- Buy-and-hold investors: This kind of house-buying company typically purchases houses with low-end offers and converts them into rentals. By “holding” them as income properties, they anticipate benefiting from increased property values over time through normal appreciation.
- Trade-in companies: Trade-in companies help sellers who need money to purchase their next home. They purchase your existing home for cash. With that cash in hand, you can buy your new home without a contingency and with an attractive cash offer, which can significantly strengthen your position in a bidding war.
- Local investors: These typically small, locally owned companies keep cash on hand to buy properties to rent, redevelop or resell for a profit.
How much do house-buying companies pay through online quotes?
An online quote company’s motivation for purchasing a property is to make a profit.
Their quick digital tour or online valuation relies on data collection rather than the intangibles. While they might entice a traditional buyer into offering more, your home’s architectural detail, lovely landscaping, or other charming features aren’t as likely to impress or fetch a higher price with a house-buying company.
The company’s offer is largely dependent on data from the sale of comparable properties and overall market conditions.
One typical online quote formula might be: Market value minus the estimated cost of repairs and 10% to 20% convenience fee to account for the seller paying no agent commissions or closing costs.
For example, if the market value of a home is $400,000 and needs about $30,000 worth of repairs, less the 15% convenience deduction might leave the seller with $314,500.
Some sources suggest sellers receiving an online quote from a “we buy houses” investor can expect to walk away with an offer for 70% of the after-repair value (ARV). However, the range varies widely depending on the market, the condition of the home, and the company making the offer. Flippers may only offer 50% of ARV for homes in disrepair; others may offer up to 85% or more for a prime property.
In many cases—especially with investor and flipper groups— the seller will likely make less than market value and substantially less than if the property were to become the subject of a bidding war, which happens frequently in today’s competitive market.
Knowing the value of your home is the cornerstone of a successful sale for both agent-assisted and online offer transactions.
With HomeLight’s free Home Value Estimator tool, you can receive a ballpark estimate of your home’s worth in less than two minutes.
The best way to maximize that information is to pair it with a full comparative market analysis customized for you by a top real estate agent.
What does an online quote process look like?
Each online quote company has its own procedure for generating offers and purchasing homes. Typically, the process can be completed in only a few simple steps.
Step 1: Determine if you’re eligible to receive an offer. You can find out the states in which the house-buying operates by going to its website.
Step 2: Enter your home’s address into an online form.
Step 3: Answer questions about your home such as square footage, number of bedrooms and baths, upgrades, etc.
Step 4: Receive an offer. If your home meets the online house-buying company’s criteria, you may receive an offer in as little as 24 to 48 hours.
The offer is typically based on homes in the area that sold recently that are similar in age, features, and square footage. The offer usually includes a breakdown of fees and costs associated with the sale.
Some companies might adjust the offer if repairs are needed. But, usually, the initial bid is the best offer. It’s non-negotiable and counters from the seller are not entertained. A representative from the company is likely to follow up on the phone or by email to discuss the offer and answer any questions.
Step 5: Decide whether to accept the offer. The offer is typically valid for at least a few days, and can be quickly updated even after the expiration.
Step 6: Be prepared for a possible onsite assessment or inspection. In performing their due diligence, the house-buying company may examine the property’s condition by evaluating mechanical systems, structural integrity, updated or unique features, and look for signs of water, termite, or other damage. They may also investigate unpermitted work, liens, or other potential legal issues. If repairs are needed, the company may provide an estimate on what it will cost and deduct that amount from the net proceeds you receive in the sale.
Step 7: Accept the offer, often with the option to choose the closing and move-out dates. (Or, alternatively, decline the offer.)
Step 8: Close the sale and usually receive payment in a matter of days.
If you’re interested in investigating the possibility of receiving a cash offer within a week and closing in less than two weeks, HomeLight’s Simple Sale platform provides you with an all-cash offer and allows you to:
- Sell your home in a matter of days, not months
- Maximize your home sale with a competitive offer
- Receive a cash offer
- Skip the repairs, prep work, and open houses
- Execute a quick, convenient sale
HomeLight’s Simple Sale provides an online quote at a competitive price. Based on your answers to a few basic questions, you will receive a no-obligation online offer quote, typically within 48 hours.
If you accept the offer, you can close in as few as 10 days, with no hidden fees, agent commission, or prep-work. It takes the stress and uncertainty out of selling your home.
Simple Sale also allows you to easily compare that cash offer with the estimated sales price you would receive by listing with a top-notch real estate agent. That’s because HomeLight can provide you with a list of recommendations for top-performing agents in your area.
What are the benefits of using a real estate agent?
The speed and certainty of receiving an online quote from an investor or iBuyer are attractive to some sellers.
Working with an agent may involve more intermediate steps than a sale directly to a house-buying company. However, in today’s market, agent-assisted sales can close quickly — and they tend to be more profitable.
In fact, the February 2022 Realtors® Confidex Index showed 84% of listings were on the market for less than one month, an increase of 10% from 2021.
The benefits of working with a top-notch real estate agent include the potential to:
- Sell your home for more money
- Market special features or upgrades
- Identify and target the right buyer pool
- Leverage the Multiple Listing Service (MLS)
- Take advantage of agent connections (contractors, investors looking for properties, etc.)
- Identify strategic repairs that can reap tremendous ROI and avoid expensive changes that are a waste of time and money
- Set the right asking price from the beginning based on an analysis of comparable sales and current market conditions
- Ensure your home shows at its best in photos and in person
- Weigh the strength of offers based on your circumstances (price vs. flexible move-out date)
- Coordinate with potential buyers and their agents for a smooth transaction
- Negotiate so that you get the most money possible at closing
Depending on your circumstances, you may want to consult with a top real estate agent before accepting an online offer from a house-buying company.
For a successful home sale, examine all your options
While the options can be overwhelming, never before have sellers had so many customizable ways to optimize their equity and meet their goals.
Each option has its benefits and drawbacks.
The online quotes generated by house-buying companies are often a great solution for owners who want to avoid the hassles of showings and negotiations and prioritize a fast closing over extracting the highest price for the property.
Because the quotes are fast and free, it’s worth your time to fill out several forms to see if there’s a big difference in estimated value, terms and conditions, and other essential information. Even if you choose to go with an agent, it’s typically time well spent because it may provide you with insights into the pricing and the market.
A traditional, agent-involved sale sometimes works best for sellers who want to get top-dollar for their home and value the experience and expert advice of a trusted ally to walk them through the process.
Whether your research leads you to explore online offers or begin the search for an agent, HomeLight offers a variety of resources including its Simple Sale platform and its free Agent Finder to help you efficiently maximize your equity and meet your sales goals with minimal stress.
Header Image Source: (Point3D Commercial Imaging Ltd. / Unsplash)
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