There has been a lot of discussion around our office lately about Purple Bricks, Offer Pad, Open Door, 72-Sold, etc. In order to give this article its proper due, the writer must disclose this is my opinion, and unless I use actual statistics, it’s still just my opinion.

Let’s first start out by defining what these companies do. They make huge promises in their commercials of “no commissions” and “stay in your home for X months”, and “Make even more money”, etc. Often they are an automated service with phone representatives which may or may not even live in the United States. Some of these companies will “buy your home” sight unseen, and often you will never come in contact with a human.

Open Door, in particular, will make you a cash offer on your home. The initial offer is contingent on fees and repair costs. Often, the company will have your property relisted before it even closes escrow, and they will delay close until they find a buyer for more money than they purchased your house for initially. They don’t disclose this tactic in their contracts openly. This often leaves the seller waiting and delaying close of escrow, but not knowing why. Open Door also is supposed to go into the home and do repairs, but many times they do not, although they negotiate the price based on intended repairs. In my area the homes are typically in terrible shape, dirty, and no repairs have been performed. Also, in 2021, the company reported a net loss of $662 million up from the previous year’s $253 million loss. This is not a good business strategy. It does, however, speak to why Open Door is not doing any repairs on homes and trying to back-channel the deals without the seller even knowing.

This strategy is much the same throughout all the companies. A seller must also take in mind that anyone can walk up to your home, give a fake email and name to the operator, and gain access to the home. You certainly would not want to use any of these services if your home is not vacant…and be sure your homeowner’s insurance will cover losses if you list your house with these “virtual” companies.

Let’s not forget either that these services know nothing about your home, will never visit your home, and could care less about your situation. One article on Reddit was fascinating to read regarding Open Door’s lack of responsibility when closing escrow. https://www.reddit.com/r/RealEstate/comments/pdz871/opendoor_sucks/

The home buyers signed all their closing docs and the Open Door representative never showed up to sign. Days later the buyers found out the home still had not closed escrow legally, yet they were living in the house already. They called Open Door and the response was ” they are overloaded with closings and can’t give us any date when they might get to us!” Many comments followed, but few were correct. Their agent advised them correctly that they should not be in the home until it legally closes escrow, and the property records in their name. Until then, they are illegally trespassing in someone else’s property, and anything could happen. I.E. Fire, pipe bursting/Flood, etc. Who then is responsible and who is going to pay for the damage? Not to mention that Open Door could actually file a lawsuit against the buyers and their agent for allowing them access even though the Open Door representative told the agent to take the keys out of the lockbox and “toss it” because Open Door didn’t need it anymore.

Is this the kind of service you deserve?

The answer is no. I have clients who continually use my services in light of all this new proptech BS. Why, because I’m worth every penny.

I actually work for my clients. I find them homes they love, and negotiate better deals on both ends, and I get them what they want. I do all this while building relationship and trust. Now…I can’t do everything! I don’t read your contract to you line by line for 12 hours, but I do tell you to read it. I also answer all questions up front and have clients sign documents in places where signatures are not normally required…why? Because you need to know what’s going on. And if you don’t know, or don’t want to know, then you have only yourself to blame. And that’s where these companies are capitalizing. They’re selling you a pipe-dream. Good agents can help you make money on your investments, and their wisdom is priceless when looking for deals. I have made my clients billions of dollars collectively with their investments. It’s a win-win scenario. Love your Realtor, they work hard for you in many ways that are intangible and priceless. And every time you call them all worried and stressed out, they take that to bed with them every night also.

Don’t shortchange your agent, help them help you and forget these short-change companies who are preying on your lack of knowledge.

Things to be aware of in Arizona concerning Real Estate selling.

• I can sell my house on the cheap as a pocket listing with an agreeable agent.
• I can use an online service like “Open Door” to sell my home easily.
• How can I list my home without paying Realtors steep commissions?

These questions, generated by commercials on TV, lure unsuspecting homeowners into potentially dangerous situations. If it were so easy to sell your home using some of the above methods, everyone would do it. The truth is, it’s not that easy, and often costs a homeowner more than they can afford. Let’s start by tackling these issues from top to bottom.

Pocket Listings

Selling your home as a “pocket listing” comes about when a homeowner starts with these questions or statements:

• “Most agents just put the house on the MLS and then do nothing! Why should I pay for some other agent, who actually works, to bring a buyer to my house when the listing agent sits back?”

Unfortunately, some agents out there do fit that description. But you must ask yourself, “If I landed on this guy’s website, and I’m reading his blog post, shouldn’t I believe he’s an active REALTOR?” The answer is yes. Lazy agents who only list the home on the MLS are either new or they simply don’t care. Any agent you list your property with should be able to show you their efforts to generate buyers. Different approaches and styles exist, but all active agents engage an audience. This leads to the next thought or statement.

• “I’ll approach an active agent and tell them I want a pocket listing. If they’re willing to work hard, they should be able to produce a buyer for my house, right? Then I’ll pay them a commission.”

Although not illegal, pocket listings are basically obsolete. In Arizona, all Realtors who market a property in any way, shape, or form must submit the listing to the MLS. Along with putting the property on the MLS is the promise to pay a commission. Although the amount cannot be regulated, the property must be submitted. Therefore, if you are currently working with a REALTOR who says they can list your home without putting it on the MLS, while marketing the home, is acting against the laws of their local association. On the flipside, if you’re not in a hurry to sell your home, and your level of confidence is high in your agent, perhaps a pocket listing can work for you. The agent will simply pull from their pool of buyers to sell the property. They will have to do this without any advertising. As a seller, you’re agreeing to sign a contract to sell your home. What do you think an agent will do? They can’t advertise…They can’t send out emails…They can’t post of FB or Craigslist… Answer, they do nothing and the initial complaint at the beginning facilitates the outcome. TRUTH: A good agent is always working, and they’re worth they’re weight in gold. Don’t waste your time, go with someone who works hard.

Online Services

• “I want to list my with a service like Open Door or Purple Bricks because I don’t want to pay high commissions“.

Sounds fair, right? So…let’s get this ironed out. A seller wants to utilize an non-localized online service, hand over their house and keys to someone on the phone they don’t know, and allow anyone to walk up to the door, punch in a fake email address and have access to their house?

Consider this, the online service does not understand your property, will not visit your property, can’t explain any details to a buyer, may not know any of the local restrictions, CC&Rs, how to get HOA information, who to contact at the city or county, easement violations, and heaven forbid you get into escrow…how will the service negotiate with a buyer’s demands, inspections, repairs, contractors, or missed deadlines? If they don’t, you can be sure the contract you’ve signed says they are not responsible.

If the online service utilizes local agents to do the work at a cut-rate, you can bet those agents are not concerned with the outcome. After all, they’re selling their “expertise” cheap, and it’s likely because they’re not full-time Realtors, or they’re new and need the money.

We’ve encountered these services while representing buyers. We’ve walked up to doors and felt as if we had to win the game of Survivor to get the door open. Conversely, we’ve strolled up to the door, punched in a fake email and gained immediate access. Either way, strangers gain access to the house, unsupervised.

“That’s why we carry homeowner’s insurance…” I sincerely hope the sentiment is consolation. Be sure all valuables are out of the home and if occupying the home, this could be very dangerous.

Realtors know who is going in and out of the home. We know names, brokerage, phone number, and everything about the Realtor gaining access. Buyers who only want to work with the listing agent can still call directly and we’ll walk them around personally. While we’re there, we’ll also check systems, smells, lights, and other safety precautions to ensure your home is kept safe.

At the end of the day you’re still paying for the service, and still paying a commission to a buyer’s agent. Why assume the risk?

Is it really that hard to sell my Prescott Home myself?

Had a friend recently tell me a joke, hopefully no one will take offense. “Why are divorces so expensive? Because they’re worth it.” It’s only funny in a sad/morbid sort of way… Back to the question.

“Is it really hard to sell…” Depends. We’ve worked with very experienced sellers who have purchased and sold dozens of homes. They still prefer to use a Realtor. Why? Because they’ve learned it’s worth it. Why would super-experienced people use an agent while a first-time home seller cut corners? Could be bad advice, inexperience, watching reality TV, etc.

No, it’s not hard to sell a home yourself. If you’ve done it before and have experience more power to you! As long as everything goes according to plan, smooth and silky like….you shouldn’t have any issues. Of course, that is wherein they say, “lies the rub”. Most transactions do not go smooth, and most have multiple and seemingly insurmountable obstacles. As a seller, you’re not guaranteed to have an unrepresented buyer on the other side. The buyer will likely have an agent and that agent represents the other party, not you.

Discuss the commission during the listing process. Good agents can tell you why they earn their commission. I’ve honestly only experienced a single incident when a seller tried to talk me out of part of my commission. Story: I acquired the buyer, negotiated a better deal than was originally offered with better terms, got the buyer to put down non-refundable earnest money, and closed the deal without a hitch. Oh, did I mention the seller claimed to be an attorney from southern CA? The day before close they tried to renegotiate a well-earned commission because I handled both sides. Fair enough, except because of how I handled the initial offer not only did I offset my commission, I made them more money.

Good agents aren’t greedy, and they’re not chasing the paycheck. You know why? Because they’re doing well enough to not have to. These are the best and most secure agents to utilize. Closing a deal does not make a Realtor a living. Repeat business, ethical behavior, experience, and positive relationships make Realtors a living.