Quick iBuyer Sale? Do the Math.

Written by Tony Finley, CFO Long Companies

The allure of the quick offer is simple and compelling. The “painless” convenience is undeniable but the question is at what cost?  Opendoor.com states “your net proceeds can be higher with Opendoor.” [1] Every seller situation has different facts. Calculate your expected returns before making a quick decision.

Quick cash or more cash?

Opendoor’s website shows an example of where a seller of a $200,000 home would net more with Opendoor ($183k) compared to a “traditional” process netting only ($180k) [2].  The sum total of the Traditional column is off by $1,000. The sum total should show $200,000 minus $21,000 equaling $179,000 (not $180,000), but that’s not point here.

From Opendoor.com [3]

Question: Can an iBuyer produce higher net proceeds to a seller when compared to the Traditional broker/agent sale process? Let’s review and analyze each line individually.

Offer Price: The iBuyer starts with the same sale price for both sales methods. Collateral Analytics’ Research estimates iBuyers are discounting their purchase prices three to five percent below market values. [4] With only a 3% price discount, the comparison of cash proceeds is breakeven at best. 

  • Advantage: Traditional

Seller Fees: Sellers may pay commissions somewhere in the range of 6-8% for both the listing agent and the buyer’s agent sales commissions. Opendoor says their service fee “can range between 6-14% based on how long we expect it will take to sell your home.” [5] The service fee “covers the costs of buying, maintaining, and eventually selling your home.” [6]

  • Advantage: Traditional

Staging and home preparation costs: Referring to the traditional sale, Opendoor estimates “these costs at about 1% of the sale.” [7] The comparison is to the iBuyer where “There are no staging, storage, or prep costs when you sell your home to Opendoor.” [8]

However, home staging is not just a cost of sale, staging has the potential to increase the value of the home or reduce selling time. Research from the NATIONAL ASSOCIATION OF REALTORS® showed 44% of buyers’ agents said that staging a home increased the dollar value offered at least one percent, compared to other similar homes on the market that were not staged. [9] Higher home value from staging is a potential benefit of the traditional sale thus negating the costs in the comparison.

  • Advantage: Traditional

Seller concessions: Opendoor’s “analysis of home sales data indicates that when buyers in Phoenix, Dallas, Las Vegas, and Atlanta ask for concessions, they ask for about 1.5% to 2% of the sale price on average.” [10]  There are no concessions when selling to Opendoor.

  • Advantage: Opendoor

Repair costs: Repairs may be required from a buyer’s inspection or Opendoor’s “free home condition assessment.” [11] There is no discernable cost difference between the two sales methods.

  • Advantage: Draw

Homeownership and overlap costs:  Assuming 1% of sales prices for transition costs with a traditional sale, iBuyers may not incur these costs.

  • Advantage: Opendoor

Closing costs: Closing costs cover items like title insurance, escrow fees, and HOA transfer fees. Closing costs will be incurred by the seller using either method.

  • Advantage: Draw

Yes, there are cost advantages to both sales methods. However, reasonable adjustments to the seller’s cost assumptions tell a different story.

Conclusion: “When you sell to Opendoor, the service we provide is simplicity, certainty, and convenience. In return for that service, we charge a fee.” [12] If the sellers’ net iBuyer proceeds are lower, then the seller has an investment question: is the convenience worth the cost?  Adjusting brokerage commissions to 6%, removing staging costs and applying a minimal 3% price discount, iBuyer proceeds are lower than a traditional sale.  This is a best-case scenario. If fees are higher or the price discount is more severe, the seller’s net sale proceeds will be reduced further. In short, convenience has a cost but you have to do the math to find out.

References


[1] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[2] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[3] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[4] “iBuyers: A new choice for home sellers but at what cost?” by Dr. Michael Sklarz and Dr. Norman Miller August 07, 2019 https://collateralanalytics.com/wp-content/uploads/2019/08/CA-RESEARCH-iBuyers-A-new-choice-for-home-sellers-but-at-what-cost.pdf

[5] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[6] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[7] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[8] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[9] Copyright ©2019 “2019 Profile of Home Staging.” NATIONAL ASSOCIATION OF REALTORS®. All rights reserved. Reprinted with permission. March 2019, https://www.nar.realtor/research-and-statistics/research-reports/profile-of-home-staging

[10] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[11] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

[12] https://www.opendoor.com/w/guides/how-opendoors-costs-compare-with-traditional-home-sale

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Cathy Erchull takes over as Long Realty’s designated broker

Long Realty’s management team is getting a new look as Cathy Erchull assumes the post of Designated Broker for the company, taking over from John Mijac. July 29 will be her first day on the job.

It’s a homecoming of sorts for Erchull, who began in real estate in 1999 as a sales agent with Long Realty. Now, after an extended sojourn with another large local brokerage, she’s back where she started—but with much greater responsibility.

Erchull’s realty career includes time in sales; teaching as an Arizona Department of Real Estate instructor and acting as branch manager and regional manager for her previous brokerage. She obtained her Arizona broker’s license in 2002 and is a Graduate, REALTOR® Institute (GRI) member.

Her professional service includes stints as President of both the Tucson Association of REALTORS® and the Multiple Listing Service of Southern Arizona (MLSSAZ), a wholly owned TAR subsidiary. She also served as a Regional Vice President of the Arizona Association of REALTORS®, was named Realtor of the Year for 2018 and is currently serving as a Tucson Association Charitable Foundation board member and Chair of the Professional Development Committee and Co-Chair of Risk Committee for TAR.

The Designated Broker is central to the core business of any brokerage: selling real estate. Duties include reviewing sales contracts and employment agreements, supervising company advertising, ensuring sales agents and associate brokers keep current with continuing-education requirements, dispute resolution and in general overseeing the efforts of the company’s licensed sales pros.

“Cathy is an excellent problem-solver with high ethical standards and a deep knowledge of our industry,” said Rosey Koberlein, CEO of Long Companies. “The designated broker carries tremendous responsibility, and Cathy is a perfect fit for the position. We’re delighted that she has joined us.”

Mijac, Erchull’s predecessor, was a veteran of many years with smaller brokerages before joining Long Realty in 2012. He was named designated broker in 2015. His new position will be branch manager of the company’s top-performing Foothills office.

For more information, contact Cathy Erchull at cathye@longrealty.com or call (520) 918-5444.

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Rudy Ruiz and team join Long Realty’s Foothills office

Joining the cadre of top-performing real estate pros at Long Realty’s Foothills office is Rudy Ruiz, an experienced sales agent with a background in consultations and complex negotiations.

Ruiz is head of the Ruiz Foothills Team, comprising himself and sales agent Shannon Osborne. They come to Long Realty to take advantage of its strong market share and professional agents.

Based on his 2018 sales, Ruiz takes a seat at Long Realty’s Director’s Circle for 2019. The Director’s Circle is among the highest of the company’s recognition categories for sales achievement.

A second-generation Tucson native, Ruiz attended the University of New Mexico, in Albuquerque, earning a bachelor’s degree in psychology and taking pre-law courses before switching to real estate.

His time in New Mexico proved life-changing, when a local sales agent provided less-than-stellar service while listing a family home. “It was such an awful experience I set out to do something about it,” Ruiz said. His solution, Ruiz said, was to enter the profession himself “and give clients an exclusive service satisfying all their real estate needs.”

With a practice focused on luxury properties and remodeled homes, Ruiz works with buyers and sellers throughout greater Tucson, from Oro Valley to Vail to Starr Pass.

“Rudy’s skills set and personality are custom-tailored to our service area and clientele,” said Baron Gauna, Foothills office manager. “They’re a welcome and great addition to our office.”

Long Realty’s Foothills office is the highest-volume residential real estate office in Southern Arizona.

For more information, contact Rudy Ruiz by email at Rudy@RuizFoothillsTeam.com or by phone at (520) 342-9809.

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Sandy Northcutt wins Long Realty’s Samuel H. Woods service award

More than 500 Long Realty sales pros and staff gathered at the company’s yearly recognition event to honor 2018 achievements, held Feb 27 at Lowes Ventana Canyon Resort. Amongst the recognition, is the prestigious Samuel H. Woods Community Service Award. Taking home this award for 2019 is Sandy Northcutt, a sales pro with the company’s Dove Mountain office.

Named for Samuel H. Woods, a former Long Realty member renowned for his community-service engagement, the annual award recognizes a sales associate or employee who best exemplifies a commitment to community involvement and ‘service above self’ while inspiring others to do the same.

Northcutt is broadly active in the Dove Mountain/Marana community. An avid animal lover, her donations to area rescue organizations—HOPE Animal Shelter, Equine Encore Foundation, Pima Animal Care Center, Humane Society of Southern Arizona and Ironwood Pig Sanctuary (home to some 550 potbellied pigs)—include food, money, blankets, foster placements and other necessities.

She also donates to the Cotton Blossom thrift store in Marana, supports Interfaith Community Services and contributes to numerous charity events at The Highlands at Dove Mountain active-adult community. Northcutt also helped bring the Ben’s Bells Kindness Initiative project to the Highlands community and donates to the Long Realty Cares Foundation, the company’s philanthropic arm.

And that’s just for starters. Joined by her four-person team of realty pros, Northcutt supports the Community Food Bank of Southern Arizona in Marana (including its Thanksgiving food drive), the Dove Mountain Day in the Park event, the Marana Unified School District’s holiday gift drive and the office’s partnership with Cotton Blossom and MHC Healthcare.

“I can’t think of anyone who deserves the Woods award more than Sandy Northcutt,” said David Winter, manager of the Dove Mountain office. “She sets a very high standard for herself and then inspires others to join her in exceeding it. The entire community benefits from her energy, caring and leadership.”

The award includes a donation to the Samuel H. Woods Memorial Scholarship Fund in the name of the recipient. Administered by the University of Arizona Foundation, the fund supports a scholarship for a student studying regional land development at the UA’s School of Geography and Development.

Licensed since 2005 with multiple real estate designations including a CRS designation (Certified Residential Specialist), Northcutt is a platinum-level member of Long Realty’s 1926 Circle of Excellence for 2019, a recognition reserved for the company’s highest-performing agents.

For more information, contact Sandy Northcutt at snorthcutt@comcast.net or (520) 409-5301.

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Long Realty’s Lisa Bayless donates K-9 dog to Oro Valley PD

The newest member of the Oro Valley Police Department’s K-9 unit received a hearty “welcome aboard” at the Feb. 20 meeting of the town’s mayor and council. The arrival of Canine Diesel brings the unit up to full strength following the November retirement of a longtime department mainstay.

Diesel joined the force as a gift from Lisa Bayless, a real estate sales pro with Long Realty’s Oro Valley office. Bayless said Diesel’s acquisition is actually a sort of community effort: She’ll fund the $12,000 purchase price by donating a portion of her commissions from the sale of Oro Valley properties she identifies as “Dog House” listings.

“That way we’re all helping with this very important project,” Bayless said, “and Diesel will return the favor by helping the entire community.”

Bayless, an Oro Valley resident and specialist in area residential properties, said she didn’t think twice about offering assistance when she heard the police unit was under-strength.

“One of the reasons people move to Oro Valley is because it’s a safe town,” Bayless said. “The OVPD obviously plays a large role in creating a safe environment for all residents to enjoy. I was happy to support their efforts because I love Oro Valley and I love dogs.”

On active duty since November, Diesel is a two-year-old male Belgian Malinois from the Czech Republic. A dual-purpose canine nationally certified in narcotics detection, Diesel is also trained in patrol tactics. He stepped into the duty-roster slot left open by the retirement of Canine Emerson, an Oro Valley K-9 stalwart since 2011.

A native Tucsonan, Bayless has been an Oro Valley REALTOR® for more than 11 years and ranks in the top one percent of all Tucson-area sales agents. Bayless focuses her practice in Oro Valley, Marana and greater northwest Tucson. She is active with numerous nonprofits and served as board president of the Boys & Girls Clubs of Tucson.

Diesel joins Canine Justin and Canine Bruno in the K-9 unit, which assists in searches for narcotics, people and bombs. His handler is OVPD Officer Kevin Peterson.

For more information, contact Lisa Bayless by email at lisab@longrealty.com or by phone at (520) 668-8293.

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Erin Frame joins Long Realty’s Foothills office

Already the leading real estate office in southern Arizona, Long Realty’s Foothills office adds even more depth to its market coverage with the arrival of experienced sales pro Erin Frame.

Frame’s focus is representing residential properties in the Catalina Foothills. A Seattle native (and devoted Seahawks fan) and seven-year Tucsonan, Frame was first licensed in August, 2017 and worked with two area brokerages before making the Jan. 30 move to Long Realty.

Frame builds her practice on a history of strong negotiations, relocations and working with investors. At first principally a buyers’ agent, Frame has expanded her portfolio to support both buyers and sellers. Her 2018 sales record wins her a seat at Long Realty’s President’s Club for 2019, an honor reserved for high performers.

“Erin is hard-working and an excellent listener,” said Baron Gauna, office manager at the Foothills office. “She takes the time to understand her clients’ wants and needs. She’ll be a great match with our market segment and clientele.”

For more information, contact Erin by email at EFrame@LongRealty.com or by phone at (520) 268-4789.

 

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Jillian Barnes joins Long Realty’s Houghton/Southeast/Vail office

Already 60-plus agents strong, Long Realty’s booming Houghton/Southeast/Vail office makes room for one more as Jillian Barnes joins the crew. First licensed to sell real estate in 2006—in addition to a manufactured-home sales license from 2003—Barnes worked with several other area brokerages before making the jump to Long Realty.

Barnes’ background includes deep sales expertise in the manufactured-home market (over the past 15 years she’s sold 650-plus units). In a recent career re-focus Barnes expanded her practice to include single-family properties, mostly in Vail and southeastern greater Tucson. A residential-sales specialist and native Tucsonan, she works with buyers and sellers. She also works with investors and is herself an investor in properties to rehab and resell.

Other points of focus for Barnes include working with first-time buyers and facilitating short sales and REO foreclosures.

Barnes holds an associate’s degree from Pima Community College and is the proud mother of two boys, she’s also involved in Big Brothers Big Sisters of Tucson.

“In addition to her enthusiasm, energy and drive to achieve every goal she sets, Jillian brings more than a decade of experience in representing a variety of residential properties,” said Don Geisler, office manager for the Houghton/Southeast/Vail branch. “She’s a communicator and a problem-solver, and she knows our market very well. She’ll hit the ground running and be a great fit in our office.”

For more information, contact Jillian Barnes by email at JBarnes@LongRealty.com or by phone at (520) 407-8681.

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Long Realty’s Donau, Zaky elected 2018 REALTOR® of the Year

Two Long Realty sales pros have received high honors from those who know them best—their immediate peers and colleagues. Cha Cha Donau, of the Green Valley office; and Joe Zaky, of the company’s Sierra Vista office, were both named REALTOR® of the Year for 2018 following votes by their respective local associations.

Donau, a longtime resident of Tubac, specializes in residential properties in the Green Valley/Tubac area. In addition to her recent appointment, Donau has also been the Long Realty Pro of the Year for the Green Valley office. Licensed since 1989, she worked with several new home developers in the region before joining Long Realty in 2006.

The Green Valley Sahuarita Association of REALTORS ® was founded in 1978; its membership comprises some 300 professionals from all aspects of the real estate industry.

 

 

Zaky works with buyers and sellers to represent properties throughout southeastern Arizona. Licensed since 2010, Zaky came to the sales end of real estate after a 15-plus year career in the homebuilding industry, including nine years as general manager of a Texas-based builder of manufactured homes and modular homes. He holds the Short Sales & Foreclosure Resource (SFR) designation from the National Association of REALTORS®.

His election, by the Southeast Arizona Association of REALTORS®, was based on a vote of the organization’s directors and broker-members. Founded in 1971, SAAR represents some 220 REALTORS®.

“I’m delighted that Cha Cha and Joe have received these honors,” said Rosey Koberlein, CEO of Long Companies. “Their excellent service to their clients, and their professionalism, are no secret within the company. It’s wonderful that their fellow agents see the same qualities we do.”

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Bailey Francis joins Long Mortgage team at Oro Valley office

Getting a mortgage processed at Long Realty’s Oro Valley office just got even easier with the addition of a third in-office mortgage consultant. Joining the Long Mortgage Company team is Bailey Francis, a 10-year mortgage veteran. Francis’ start date was Dec. 3.

Francis began her mortgage career with Long Mortgage in 2009 and is coming back home after working for a different company. Before becoming a mortgage consultant, she was a licensed real estate agent and holds a bachelor’s degree—with a focus on finance—from the Eller College of Management at the University of Arizona.

“Bailey has vast experience in the mortgage industry and will bring a great deal of knowledge to our company,” said Reneé Gonzales, managing director of Long Mortgage Company. “She is a fantastic addition to this office and to our entire mortgage team.” As well as overseeing Long Companies’ mortgage operations, Gonzales is president of Long Title Agency and executive vice president overseeing the organization’s core services division.

“An experienced home-financing professional, Bailey is committed to providing exceptional service and comprehensive financing solutions from application to closing,” Gonzales said.

Francis joins mortgage consultants Ed Arriola and Gwen Musselman at the Oro Valley office.

For more information, contact Bailey Francis by email at BaileyFrancis@LongMortgage.com or by phone at (520) 918-5806.

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Long Realty’s Barb Frohling retires at half-century mark

Wrapping up a remarkable 50-year career with Long Realty Company—spanning more than half of the 92-year-old company’s lifetime—Barb Frohling has retired, effective September 28. In a true up-through-the-ranks story, Frohling climbed the corporate ladder from part-time secretary and receptionist to the company’s director of commissions.

Frohling started with Long Realty during the summer of 1968 as part of a Palo Verde High School cooperative-education program. “That was my first job, and I never left,” Frohling said.

Since then, she’s worn “six or seven different hats,” with the company, Frohling said. Her trajectory included stints in the company’s insurance, licensing, human resources, accounting, and commissions divisions. As director of commissions—her final posting—Frohling was responsible for ensuring agents receive their commissions, promptly and accurately, once their transactions close.

Along the way, she earned sales licenses for both insurance and real estate, but never worked under either license. “It was a great way to learn the business and the terminology, and to understand what the agents were going through,” she said.

Tucson—and Long Realty—was very different in 1968. “When I started, we had one office, a little building on East Sixth Street at Campbell Avenue, with maybe a dozen agents,” she said. “They were mostly older, second-career people. The average agent now is much younger. It’s good to bring in new blood, and the technology has gone through the roof.”

The building is still there but the company has moved on, now fielding some 1,400 sales pros from its mix of 41 company-owned and independently owned franchise offices.

Greater Tucson has moved on, too. When she started with Long Realty, “Oro Valley was not in existence,” she said. “The southeast side was not developed. Marana was a farming community.”

Frohling leaves some big shoes to fill at Southern Arizona’s leading brokerage. “Barb’s been a mainstay of this organization for generations,” said Rosey Koberlein, CEO of Long Companies. “She was on duty throughout our greatest period of growth. She’s part of the living history of the company, and she’ll be tremendously missed.”

A part of HomeServices of America, a Berkshire Hathaway affiliate, Long Companies comprises four separate businesses: Long Realty Company, Long Mortgage Company, Long Title Agency and Long Insurance Group. Long Realty Cares Foundation, a community-building philanthropy, is under the umbrella as well.

“We don’t think of it as Barb retiring because her character and high standards are part of our tradition now.” said Laura Mance, president of Long Realty.

Added Tony Finley, Long Companies’ chief financial officer: “Barb is dedicated, smart and graceful. Most importantly, she cares.”

The feeling is mutual. “The whole reason I’ve been with Long Realty so long is that I’ve enjoyed the work, but, even more, working for and with the people in the company,” Frohling said. “From our agents and staff to the managers, and all four of the CEOs I’ve worked with, they’ve all been nice people.”

Next on the Frohling agenda: “Travel with my husband and getting back on my bike.” A competitive road cyclist with a fistful of state championships, Frohling is still recovering from a July crash. Attending football and basketball games at the University of Arizona is another must-do. “I’m a huge fan,” she said, with season tickets for both sports.

Beyond that, retirement planning is still in the “to be announced” phase. “What a fabulous 50-year foundation to her next adventure,” Koberlein said. “Whatever Barb does next, she’ll do it with energy, enthusiasm, and total commitment. Why would she change now?”

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