Instant sales are popular in cities such as Phoenix and have come to Raleigh and Charlotte North Carolina. Will they come to Chatham County? In many cases, buyers pay sellers about 80% of a home’s value.
Speaker 1: What are instant sales? So I sold my house with the instant sales [inaudible]
Speaker 2: Yeah, so there’s several companies right now that are advertising and they’ll tell you, “Hey, don’t put it on the market. Don’t have showings. We’ll make you an offer right now.” First thing that people need to know in Chatham County, they don’t do it here. That is for Charlotte and Raleigh, and they’re looking at Asheville, Durham, Greensboro, and Wilmington. But right now, if you call somebody in Pittsboro and say, “Hey, saw this great ad. You’re going to make me an instant offer on my house,” they’re not doing that in Pittsboro yet because they just don’t have enough data. We don’t have enough sales. There aren’t enough comparable sales for them to make a good financial decision. But even though they’re not in Chatham now, they will be eventually. One of the neat things, even though these concepts are fairly new to the North Carolina area, they’ve been experimenting in other places in the country.
One of the places they’ve been experimenting for quite some time, they’ve been around for about six years, is in the Phoenix, Arizona market. They are getting really big there. So just to give you a little bit of perspective, these instant sales options are 0.2% of all the transactions that happen in the US. It’s $25,000, so it’s one-fifth of 1%. 99.8, is that right?
Speaker 1: Yeah.
Speaker 2: Our traditional sales methods. But in the Phoenix, Arizona market, it’s about 6%, so hugely, hugely different, and it’s been there for a while. A lot of economists have looked at this data and say, “When …” I mean, this is going to be a growing phenomena. And when it gets saturated, when it gets to be fully balanced throughout the United States and all markets are utilizing them, that’s probably the market share that they’re going to cap out at is 6%, just like Arizona, so there’s always going to be a certain percentage of the population that does not want to do the showings and is willing to leave some of the reward on the table and take, I don’t know if it’s 80 cents on the dollar or 90 cents on the dollar, but they’re willing to take a loss to not go through that frustration. They just don’t want to go through the process.
So eventually, the rest of the country might be at that 6%, but what’s happening in Phoenix right now, and I find this fascinating, is that even though 6% are doing this instant sale option in Phoenix, 30% of people that are listing their homes are calling for those instant sales. You know you’re about to sell your home, there’s no risk to you whatsoever to find out what these companies will offer you, so they’re calling up, they’re getting a price, and the majority of those, 80% of those are saying, “Forget it. I’m going to go the traditional method.” However, this is the most fascinating thing that I’ve found out about it is these instant sale options are selling your data. You call me as an instant sale company and say, “Hey, I want to sell my house instantly,” and your house is probably worth $300,000. We tell you, “Okay, we’ll give you $275,000 right now,” and you say, “Forget it. I’ll go the traditional method.” Well, those companies are selling your data to other real estate agents like me.
It’s so pervasive. It’s such a big part of their business model. These instant sale companies are making more money from selling the data than they are from flipping the houses. People think, “Oh, well they just want to buy my house cheap so they can sell it for more money.” That’s not how they’re making their money. They’re making their money because you are contacting them, and then they are selling that data to other agents, and those agents are either paying hundreds of dollars on a monthly basis to be part of that information source, or they’re paying a 25% referral. Those companies are really making a lot of money off of that, so I find it interesting. People need to be aware that when you get these instant offers, even if they’re not going to buy your house, you’re going to be inundated with quite a few people calling you.