Disclaimer: iBuyer company program details can frequently change. HomeLight always advises that you check a company’s website for the most up-to-date information.
If you’re planning to sell your home in 2022, you may be weighing the possibility of working with an iBuyer such as Offerpad and be curious to learn more about this option. So how does Offerpad work?
Assuming you’re in a market where Offerpad operates and your home qualifies for one of its programs, you could receive a cash offer from the company in less than 24 hours. People searching for a home can also browse Offerpad-owned listings and work with one of the company’s transaction managers to make a purchase.
When selling to Offerpad, you skip many of the typical hassles associated with listing a home for sale, such as staging, showings, and open houses. Should you choose to accept an offer from Offerpad, you’ll pay a service fee amounting to 5% of the sale price.
In addition to Offerpad, other notable iBuyers include Opendoor and RedfinNow. For the purposes of this article, we’ll focus on how Offerpad works. We’ll also introduce you to some other potential real estate platforms to explore, such as HomeLight’s Simple Sale website, an additional “sell my house fast” solution for sellers to consider.
What is Offerpad?
Offerpad is considered an iBuyer. iBuyers (instant buyers) are well-funded proptech companies aiming to make the process of selling a home — along with other real estate challenges — easier to navigate.
Digital pricing tools
While house flippers have been around for decades, iBuyers have only existed since about the mid-2010s. They are defined by their use of algorithmic technology to make quick offers on homes and their ability to provide a mostly online experience for their clients.
Another thing that separates iBuyers from other house buying companies is the types of homes they purchase. Homes in terrible condition or that need a lot of repairs are unlikely to be a good fit for iBuyers. iBuyers tend to look for properties in good condition that fall within a certain price range, and usually pay closer to market value than most other cash-for-homes options.
Did you know? Offers from iBuyers such as Offerpad, Opendoor, and RedfinNow got sweeter for sellers in a fiery housing market. A Feb. 2022 report from real estate brokerage platform zavvie found that iBuyer offers peaked in Q2 2021 at 104.1% of market value, before tapering to 99.4% in Q4.
Quick virtual offers
To sell a home using Offerpad, users go to the website and fill out a short questionnaire about their home. Then, you have the option to upload photos or take Offerpad on a 15-minute virtual tour of the home. Within 24 hours, Offerpad sends either a no-obligation cash offer or information about other options.
Take the cash or list
Homeowners can choose to take the cash offer or list their home for sale on Offerpad’s website with the possibility of having a “backup” cash offer. The website caters to sellers who want — or need — a quick sale with minimal fuss. If you’re facing a sudden family situation, don’t want to manage home preparation, inherited a property from out of state, or need a quick move for another reason, Offerpad can offer selling solutions.
How does Offerpad work for home sellers?
Home sellers have two main options with Offerpad. These include Express Cash Offer or Flex List with Confidence.
Express Cash Offer
If you select Express Cash Offer, you’re accepting the cash offer you received after initially contacting them. Some of the advantages to selling to an iBuyer include that you don’t have to perform repairs, clean, stage, or show your home. Homeowners who want a simple, speedy real estate transaction are often drawn to this solution.
Express Cash Offer lets you pick your closing day up to 90 days from offer acceptance, and might even give you three extra days to stay after closing. Offerpad typically performs a home inspection and may charge the seller a repair credit based on the findings.
Offerpad says that they’ll pay for a local move, too.
Flex List with Confidence
With Flex List with Confidence, homeowners list their home for sale on Offerpad’s website. You’re listing your home for sale on their marketplace, but the website would indicate that it’s a step above the for-sale-by-owner process.
Offerpad provides sellers who choose to list with marketing tools, access to free services, and help with repairs. Some sellers qualify for Offerpad’s “backup cash offer,” which means they cancel their listing and accept a backup cash offer from Offerpad for up to 60 days.
Offerpad “Solution Experts” are local experts in your area and will help you market and sell your home. The website’s tools include 3D virtual tours, 2D floor plans, and a dedicated property page. The company says it will send you yard signs and coordinate professional photography.
If your home needs more significant work, Offerpad Flex can advance funds toward repairs, but you have to use their project manager and contractors. They don’t require a cash deposit or charge interest on the advance.
Are there any alternatives to Offerpad?
Opendoor operates in many of the same markets as Offerpad and may be an alternative where you live.
HomeLight’s Simple Sale platform is another option for selling your home quickly and with fewer hassles. With Simple Sale, you can receive a competitive all-cash offer to buy your home, on your timeline.
You can skip staging and repairs, and sell without agent commissions or upfront selling costs. Answer a few basic questions about your home’s condition, how much work it needs, and your selling timeline to get started with Simple Sale today.
Service fee: Some transaction fees apply. No hidden fees or agent commission costs, and requesting a no-obligation offer is free.
Locations: Available across most of the nation — input your address to see if we could provide a cash offer for your property
Closing window: After we’ve collected key details about your home, we’ll provide a cash offer in as few as 48 hours, with the ability to close in as little as 10 days. You have the flexibility to pick a move day that works for your schedule, typically within 30 days of closing.
How does Offerpad work for homebuyers?
Offerpad also lists homes for sale in certain locations and buyers can make an offer through the website. Buyers who purchase a home through Offerpad have flexibility with their move-in date and receive assistance from one of Offerpad’s transaction coordinators.
If the buyer is working with a real estate agent, the agent can send over the offer to Offerpad via email. Offerpad requires homebuyers to be prequalified for a home loan in order to purchase a home on their website. More information about this process can be found on the company’s buyer FAQ page.
Does Offerpad serve your area?
Is there a cost to use Offerpad?
If you select Express Cash Offer, Offerpad charges a fee of 5% of the sale price. For example, if the offer is $300,000, the service fee would be $15,000. If you sell with their Flex List with Confidence option, they estimate sellers will pay 6% in commission costs based on industry averages.
For both selling options, it’s estimated sellers will pay 1% in closing costs, which is standard for most real estate transactions. (An exception would be if you sold to a We Buy Houses company, which will often cover a seller’s closing costs in full). Offerpad says it does not charge fees to buyers who purchase a home on its site.
How does Offerpad make money?
Offerpad makes money in a few different ways, including service fees, rising home values, and repair costs. For example, Offerpad charges a 5% fee to sellers who sell their home directly to the company. Offerpad can also make money if the homes it purchases appreciate before they are resold. The company makes additional revenue from add-on services including mortgage, title insurance, and brokerage services.
What’s it like to buy or sell a home with Offerpad? Online reviews* give some insight. Here’s what people are saying online about Offerpad.
Trustpilot: 4.6 out of 5 stars, with 164 reviews
Reviewers on Trustpilot raved that Offerpad saved them money and time, and they enjoyed a stress-free process and were given flexible deadlines. One negative review was posted by a customer who didn’t like that Offerpad lowered their initial offer by more than $10,000 after the home inspection. Another client was unhappy that the company wanted $17,000 of updates made on their home.
Sitejabber: 4.7 out of 5 stars, over 12,000 reviews.
Positive reviewers report that they had a great experience, appreciated the company’s professionalism, and found the site easy to use. A few reviewers feel they received lowball offers. Buyers who posted say the minimal cosmetic changes that Offerpad made to their home were of poor quality, but quality levels may differ depending on the contractors used in various locations.
Better Business Bureau: 3.1 out of 5 stars, over 70 reviews.
Home sellers who left reviews with the Better Business Bureau (BBB) say that there were no glitches, everything went smoothly, and they received acceptable offers. A few feel offers were too low. Buyers who purchased homes from Offerpad expressed concerns over what they feel were poorly done repairs, leaks, or shoddy work. Others say that they tried to buy homes but had offers canceled without explanation, or that Offerpad didn’t communicate with their agents.
*Review notes as of April 11, 2022
Pros and cons of using Offerpad
Why would a homeowner want to either use or pass on Offerpad’s services? Here’s a quick list of pros and cons.
Why sign up for Offerpad’s service?
- Sell your home quickly for cash. There are situations when your primary goal in a home sale is speed. If it’s time for an elderly relative to move into assisted living, and you need the money from the home sale to fund their move, a quick sale for cash is a good option. With Offerpad, you can sell and close quickly and receive cash.
- Avoid having to make repairs (or coordinate them yourself). As a home seller who needs a quick sale, you may not have time to make repairs or handle all the preparations needed to sell. Or, even if you have time and you’re able to fix and prep your home, the thought of managing it all might be overwhelming. With Offerpad or another iBuyer, you can sell without making repairs or you can utilize their services to manage them.
- Don’t have to keep your house clean for showings. If you have small children, multiple pets, or both, it’s hard to stay on top of keeping the house clean for showings. Plus, then you have to pack up the kids and dogs and go elsewhere while buyers visit your home. If you sell to Offerpad, you can skip this hassle.
Some cautions to consider when using Offerpad?
- The offer may be less than if you sell with an agent. Offerpad’s all-cash offer can be quick and convenient. But their offer may be below the market value or less than what you might receive otherwise, especially in a hot seller’s market. If your home is in reasonably good shape, an agent may be able to achieve a higher selling price for the property.
- Some buyers felt repair work was done poorly. Some Offerpad clients posting buyer customer reviews have complained of issues with the repairs and improvements that Offerpad made before reselling the house. Your experience may differ.
- If you change your mind, you’ll pay a 1% cancellation fee. If you no longer need to sell, or realize you could make more money by listing on the open market, Offerpad may charge 1% of the contract price if you cancel after a signed acceptance of the sales agreement.
How do HomeLight’s seller and buyer services work?
HomeLight Simple Sale is also a cash buyer service, but we operate nationwide. If you work with Simple Sale, you’ll get a no-obligation full cash offer for your home. You can avoid paying agent fees and enjoy flexibility in selecting your close date. You can sell your home without having to make repairs, stage, or keep it clean for showings. With Simple Sale, you can close in as few as 10 days.
A lot of times sellers who need or want a fast sale think that a cash buyer is their only option. But an experienced real estate agent still might be able to sell your home quickly and get you more money than a cash buyer might pay. It’s worth the time to talk to a proven agent in your area to learn about your options.
HomeLight can also match you with a local, top agent. After answering a few questions, we’ll connect you with some of the highest-performing agents in your market. We analyze over 27 million transactions and thousands of reviews to determine which agent is best for you. Our service is 100% free, with no catch. Agents don’t pay us to be listed, so you get the best match.
Other services and tools offered by HomeLight
HomeLight offers additional services*, too, as well as more tools for home sellers.
- HomeLight Home Loans: HomeLight has a convenient, prompt mortgage service. If you decide to work with HomeLight Home Loans, a dedicated loan officer will see you through to closing in as few as 21-days. We offer competitive fees, and have an earnest money guarantee.
- HomeLight Trade-In: What if you’re selling so that you can buy another house and move? In hot markets, it’s hard to shop for a new house if your offer has a sales contingency in it, and you might have to rent for a while before you can buy again. With HomeLight Trade-In, we give you a guaranteed offer on your home, and when you find your new home we buy your existing house. This frees up the equity in your old home for a down payment on your new home. After you move out, we’ll sell your old home and if it sells for more than our guaranteed offer, you keep the upside, minus applicable program fees.
- HomeLight Cash Offer: Cash offers stand out in a crowded buyer marketplace. If you’ve found your next home, but circumstances mean that your offer might not be as strong as others, HomeLight Cash Offer steps in to help. We make a cash offer on the house on your behalf and then sell it back to you. This can give you a major advantage in a bidding war for your dream house.
* Some services are not available in all states
Additional tools and resources
- Home Value Estimator: Want to find out how much your home is worth before accepting a cash offer? Our home value estimator analyzes up-to-date sales information for comparable properties and provides a ballpark estimate of your home’s value.
- Agent Commissions Calculator: How much will you pay in commission to an agent when you sell your home, and how does it compare to Offerpad’s fees? Our commissions calculator helps you figure that out.
- Net Proceeds Calculator: How much will you make selling your home? Use our calculator to estimate the cost of selling your home and the net proceeds you could earn from the sale.
- Home Affordability Calculator: It’s not a good idea to strain your budget, so how much house can you afford to buy? After answering a few questions about income and expenses, our calculator gives you a home-shopping budget.
- Best Time to Sell Calculator: If you’re trying to sell quickly and for the most money, when is the best time to list? The best time to sell calculator analyzes sales data where you live to determine the best time for you to list your home.
- Informative blog posts in the HomeLight Seller and Buyer resource centers give you access to expert advice, checklists, and quick tips.
Frequently asked questions about Offerpad
Here are some quick answers to common questions about Offerpad.
Is Offerpad legit?
Yes, the company is a publicly-listed company that trades on the stock market. Offerpad is accredited by the Better Business Bureau and holds an A+ BBB rating.
Can I cancel a contract with Offerpad?
While you can cancel a contract after agreeing to sell your house to Offerpad, they may charge home sellers 1% of the contract price to cancel.
Does Offerpad pay closing costs?
Offerpad gives buyers a credit of $1,000 towards closing costs. Closing costs average 1%-3% of the total transaction.
It’s good to have options when selling or buying a home
Offerpad seeks to be a different kind of iBuyer, offering homeowners the chance to test the market, use their repair services, or take a cash offer and stay for a few days. They have good customer reviews and high ratings on numerous consumer websites.
The company might lower an offer if the home inspection reveals additional issues, but you can receive a fast, easy sale with Offerpad. An experienced agent might also still be able to sell your home fast and for more money.
Before you decide to work with a cash buyer, consider the pros and cons and review your options. It might be worth it to request multiple offers from several of these services, or talk to a top agent near you to see how quickly and for how much they could sell your home on the open market. When it comes to home selling, you have more options now than ever before.
Header Image Source: (John Vanderlinde / Unsplash)