Offerpad offers homeowners the opportunity to sell their home easily and quickly. In some markets, sellers can close in as few as 10 days, which is an amazingly rapid pace for something as complicated as a home sale.
However, Offerpad’s speed can come at a price. Their service fees sometimes run as high as 10%, which is much greater than what you’d pay with a traditional agent.
Offerpad’s service fee is also significantly higher than what some of their competitors charge. By comparison, Opendoor — one of the largest iBuyers — caps their fee at 5%, making it up to 50% cheaper than selling to Offerpad. Request and Opendoor offer now.
Still, if you’re a seller who needs to sell quickly and isn’t too worried about price, Offerpad could be a good option. Read on to learn about how selling to Offerpad works, their fees, pros and cons of choosing them, and a survey of reviews from customers.
Offerpad: Facts & Stats
|Service fee||6-10% (7% avg)|
|Time to close||As few as 10 days|
|Locations||AL, AZ, FL, GA, NV, NC, SC, and TX|
|Eligible homes|| |
|Reviews||2.51 / 5 Avg rating across 113 reviews (as of 2/12/21)|
* Varies by market
What Is Offerpad?
Offerpad is an iBuyer – a technology-driven real estate company that extends fast cash offers on homes. To determine how much they offer for a given property, Offerpad uses a combination of data analytics and recommendations of in-house market experts.
In theory, this hybrid approach of algorithms supplemented by a human touch helps them arrive at the fairest possible price — not only for Offerpad’s bottom line, but for home sellers, too.
Of course, the fairest price for both parties isn’t going to be the highest possible price. Offerpad’s offer is likely going to be lower than what the market could deliver in a conventional sale.
This is due not only to Offerpad’s fees — which average 7%, but can range as high as 10% — but also because of factors like Offerpad’s home repair deductions.
Still, Offerpad sellers don’t have to spend time and money on things like home staging, marketing, and showings, and they could potentially sell their home in less than two weeks, total.
Locations Where Offerpad Buys Homes
Offerpad buys homes in 14 U.S. markets, concentrated in the Southwest and Southeast:
- Birmingham, AL
- Phoenix, AZ
- Tucson, AZ
- Orlando, FL
- Tampa, FL
- Jacksonville, FL
- Atlanta, GA
- Las Vegas, NV
- Charlotte, NC
- Raleigh, NC
- Austin, TX
- Dallas-Fort Worth, TX
- Houston, TX
- San Antonio, TX
How Does Offerpad Work?
Selling with Offerpad has five main steps:
The Five Steps
- Offer Request
- Offer Calculation
- Offer Acceptance
- Home Inspection
Let’s look at each step in more detail.
The seller begins by filling out an online form on Offerpad’s website. This form asks for photos of the property, as well as basic information like square footage, age, style, appliances, finishes, and desired closing date.
Offerpad will also want to know if you’re working with an agent or performing repairs and renovations.
Only certains homes will be eligible for Offerpad. They only purchase homes that are:
- Single-family residences (no manufactured, pre-fabricated, or mobile homes)
- Built after 1960
- Worth at most $500,000-$600,000 (depending on the market)
- On a lot that’s less than one acre
After receiving the property photos and information, Offerpad uses proprietary technology known as an automated valuation model (AVM) to figure out how much the property is worth. The AVM’s number is then examined and revised by Offerpad’s market experts.
What does Offerpad’s AVM look at to arrive at its number? Only Offerpad knows for sure, but it likely looks at recent sales of properties similar to yours, as well as local market dynamics.
Offerpad delivers a non-negotiable cash offer within 24 hours; once it’s received, the seller is essentially in the position of “take it or leave it.” The offer is valid for four days.
If you decline Offerpad’s offer, your business with them is concluded; you won’t be charged any fees.
If you accept their offer, you’ll then select a closing date, and you’ll have the opportunity to sign up for Offerpad services like free moving, or an extended stay in the property after closing.
Once the paperwork is signed, Offerpad will send an inspector out to the property. This inspection is included in your service fee. The inspector will look at the house’s condition and, if necessary, recommend repairs.
If the inspector decides that repairs are necessary, you’ll have two options:
- Perform the repairs yourself (Offerpad will require documentation of your work, including photos, receipts and contractor information)
- Have the cost of the repairs deducted from the sale price
This is the point of no return during the process.
You have the option of refusing the repairs, which will invalidate the purchase agreement. However, if you accept Offerpad’s repair deductions and then back out of the deal before closing you’ll be charged a 1% cancellation fee
With Offerpad, you can schedule a closing day that works for. In most states, you’ll be able to close in as few as 10 days.
Before closing, Offerpad will hire a title company to do a title search, and arrange for escrow. They’ll also confirm that any agreed-upon repairs were done, and that the property is in acceptable condition.
On the actual day of closing, the seller will sign the sale documents at an attorney’s or title company’s office to formally transfer the title and complete the sale.
Offerpad’s service fee is 7% on average, but it could be as low as 6% or as high as 10%.
So how does Offerpad calculate their service fee?
Three big factors that Offerpad uses to determine their fee are:
- Profit margin: They need to make money on the sale, which means they need to sell for more than they bought at.
- Carrying costs: Second, it’s going to take a while — weeks or months, depending on the market — to turn around and resell the property. During that time, they’ll be responsible for expenses ranging from utilities and upkeep, to property taxes. If the home is in a flat market, that could translate to months of carrying costs, eating into their potential profit.
- Risk: There’s always a chance that the market is going to enter a downturn before they manage to resell the property. Part of their service fee is essentially crash insurance.
When you look at the fee like that, you can see that properties in slower markets, and during volatile periods, will incur higher service fees, while properties in hotter markets, during times of financial stability, will incur much lower ones.
The service fee isn’t the only cost you’ll incur if you sell to Offerpad. You’ll end up paying an additional 1-2% for closing costs and repairs. All-in you’re looking at a total cost of 8-12%. Here’s a complete breakdown of the cost of selling to Offerpad, compared to selling with a realtor:
|Cost||Offerpad||Conventional sale w/ realtor|
|Service fee||6-10% (7% avg)||None|
|Repair costs||1% (deducted from offer)||1% (paid upfront and out of pocket)|
As you can see above, selling to Offerpad is typically going to be more expensive than a traditional home sale.
Offerpad Pros and Cons
- Selling to Offerpad is Easy: You won’t have to clean, declutter, paint or make major renovations.
- Free Moving Service: Offerpad has a free local moving service for sellers, as long as you’re relocating within 50 miles.
- Fast Closing: With Offerpad, you can close in as few as ten days, since there are no lenders involved. A conventional closing takes between 30 and 45 days.
- Flexibility: Sellers choose their own closing date, and can even stay in the property (for up to three days) after the closing date, if they need to.
- High Fees: With service fees that can hit 10%, selling to Offerpad can be significantly more expensive than a conventional sale, where commissions are typically 6%.
- Potentially Lower Offer Prices: The offer you receive for your property may be less than what you’d get if you listed your home on the open market.
- Narrow Eligibility: Offerpad only considers a single family home, built after 1960, on less than one acre of land, and valued at less than $600,000.
- Offers Are Non-Negotiable: If you aren’t happy with your Offerpad offer, you can’t counter with a higher number; their offers are very much a “take it or leave it” proposition.
- Repairs May Be Overcharged: Some Offerpad customers have alleged that Offerpad inflated repair costs.
- Limited Range: Offerpad only operates in 14 U.S. cities; if you live outside one of those cities — which are heavily concentrated in the South — you won’t be able to use Offerpad.
Offerpad Reviews and Complaints
Offerpad has mixed reviews online:
- 2.75-out-of-5 rating from the Better Business Bureau (based on 57 reviews)
- 1.5-out-of-5 rating on Yelp (based on 22 reviews)
- 2.78-out-of-5 rating on Sitejabber (based on 33 reviews)
Let’s survey a sample of the reviews to see if we can spot any patterns.
A Positive Experience in Florida
This positive review from Yelp puts some concrete numbers to the Offerpad model; an offer that was less than $2,000 less than what the seller had been planning to list at, and a three week process.
An Untimely Cancellation
This negative review from Sitejabber presents a home seller horror story — an abrupt cancellation of the sale, the day before closing, after the seller had already relocated out of state. Considering that a stable, secure sale is one of the main reasons that many sellers go with an iBuyer, this is a very worrisome complaint.
Offerpad In a Nutshell
This review from Reviews.io essentially summarizes the ideal Offerpad customer, their pros and cons, and puts Offerpad in the context of the larger market. These sellers were highly motivated to leave their neighborhood, received an unimpressive offer, and concluded that a traditional sale might take longer, but is probably the way to go.
Offerpad is one company in the increasingly crowded and diverse iBuyer market, and depending on what your needs are, one of Offerpad’s competitors may suit you better. Let’s compare and contrast them to some of their biggest competitors.
|Fee||5%||6-10% (7% avg)||6% selling fee + 1.4-7.9% service fee (2.5% avg)||NA|
|Customer rating||2.51 (122 reviews)||4.09 (860 reviews)||None available||4.8 (710 reviews)|
|Why they're unique||Free moving service||Low service fee||Most locations||They'll help you buy a new home before your old one sells|
Offerpad vs. Opendoor
These two companies are very similar; both extend non-negotiable cash offers within 24 hours (though Opendoor sometimes takes 48 hours), conduct inspections and deduct repair costs, close in as few as 10 days, and charge a service fee that often exceeds a conventional 6% real estate commission.
All that being said, Opendoor does have an edge in two areas.
First, Opendoor operates in more cities than Offerpad.
Second, Opendoor’s average service fee is much lower than Offerpad’s. Opendoor’s service fee is capped at 5%, while Offerpad’s is around 7% on average.
The bottom line? Opendoor will typically be a better choice given the two companies’ service fees. However it might be worth getting an offer from both before you make a firm commitment.
Offerpad vs. Knock
Offerpad will buy your home, but Knock takes the iBuyer model a step further and provides a start-to-finish home trade-in experience.
It works like this: once you sign with Knock, they essentially act as a short-term lender by purchasing your next home for you, and then subsequently selling your old home. For the seller, this provides a smooth transition between old home and new home, with no worries about paying two mortgages, or crashing in a hotel between closing and move-in dates.
For the seller, this costs the same as a conventional sale — a 6% real estate commission.
Knock’s advantages here are clear. If you’re selling an investment property, or a home that you inherited, Offerpad’s cash-in-hand service is clearly preferable. But if you’re a family that’s going to need a new home, Knock’s all-inclusive service is probably a better value.
Here’s How to Sell Fast Without an iBuyer
Offerpad’s value proposition is pretty clear; they offer a fast, frictionless sale, but their offer is going to be below market value. If speed and ease are your top priorities, they can seem like the ideal partner.
But what a lot of sellers don’t realize is that an experienced local agent can often produce a quick sale, while getting a much higher price for the seller.
How do they do it? A good agent can using everything from an aggressive pricing strategy, to timing the market, to leveraging their extensive network to build pre-sale hype to cut that average 30-45 day closing period in half — while bringing in thousands or tens of thousands more than an iBuyer would’ve offered.
Our partner Clever Real Estate connects sellers with experienced, pre-vetted real estate agents in their area who can help you sell as fast as possible.
To sweeten the pot further, Clever can offer pre-negotiated listing commission rates of $3,000, or 1% if your home sells for over $350,000. Even after factoring buyer’s agent commission, which is typically around 3%, you’re looking at a 33% savings compared to the lowest possible rate (6%) you could get from Offerpad.
That could be a difference of thousands of dollars — money that stays in your pocket. If you’re looking to sell your home quickly, you owe it to yourself to at least find out what Clever can do for you — contact Clever today for a free, no obligation consultation!
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