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Should You Sell Your Home to a Startup?

By U.S. News & World Report

Selling a home isn’t for the faint of heart. Many sellers choose to repaint or hire a home stager to prepare and present their property in the best way possible. Then there’s the stress of cleaning up for last-minute showings, waiting for an offer and hoping the inspection or mortgage underwriting process doesn’t scare away the prospective buyer.

“The real estate transaction process can be really painful to some people,” says Mike DelPrete, an independent strategic advisor and consultant in real estate tech. “People want more certainty.” They don’t want to worry about painting and other home repair or improvement projects or search for a real estate agent, he explains. “They want to snap their fingers and get their house sold.”

[See: 10 Secrets to Selling Your Home Faster.]

Several real estate startups (also known as iBuyers) aim to lessen these pain points by simplifying and expediting the selling process and eliminating the time-consuming process of showing a house. OfferPad and Opendoor buy homes for cash on the seller’s preferred time frame. Opendoor’s closings can occur within three to 60 days and OfferPad’s closings are within five to 90 days, depending on the seller’s preference. Conversely, a traditional buyer seeking mortgage financing might need a month or more to close. What’s more, all three companies will fix up the property if needed and resell it for a small profit. And Knock will buy the home outright or offer a guaranteed price if it can’t sell your home within six weeks.

Opendoor launched in Phoenix in 2015, and operates in Dallas-Fort Worth and Las Vegas with plans to launch in other markets. Meanwhile, OfferPad was introduced in the summer of 2015. OfferPad currently buys homes in Phoenix, Las Vegas, Salt Lake City, Orlando and Tampa, Florida, and has plans to open in more markets later this year. Knock debuted in Atlanta last July and plans to expand to other markets.

All three companies offer a cash price online based on what it estimates the house to be worth based on current market conditions. “We pull all the publicly available information, ask what you’ve done to the house, what condition it’s in to get a better understanding of where the market value lies,” explains Sean Black, co-founder and CEO of Knock. “We get you what we think is the market price for the house. We give you a narrow range and schedule a home consult to verify the exact price,” Black adds.

The offer price may or may not be as much as you could get on the open market but the trade-off is a quicker closing and more certainty, since the startup assumes holding costs and market risks. The concept is especially appealing for sellers who have already moved out of their homes or need to move immediately so they’re not carrying costs on two properties.

[Read: Not All Dollars Are Spent Wisely: How to Avoid Overspending on Renovations.]

Unlike house flippers, who often do elaborate renovations on a tight time frame and resell at a huge markup, DelPrete says that iBuyers tend to get a smaller profit margin and make more modest changes but buy and sell a larger volume of homes. “The [profit] margin that we look to make is what would have been paid to other third parties [like the seller’s real estate agent],” explains Jerry Coleman, who is OfferPad’s co-founder and co-CEO along with Brian Blair.

While startups aim to streamline the experience for home sellers, they’re also trying to improve the homebuying experience. Some buyers worry that house flippers may have cut corners to save time or money, but Opendoor and Knock require that all homes have gone through an inspection checklist and offer a home warranty. Opendoor also includes a guarantee where it will buy back the home if the buyer is unhappy within the first 30 days after purchase. Still, transaction costs make it more expensive for homebuyers to return a home versus smaller purchases.

Another benefit to prospective homebuyers: Since the homes are already vacant, buyers can unlock the doors using the Opendoor app instead of first scheduling a tour with a real estate agent. “Our homes are self-service, on demand seven days a week,” says Eric Wu, CEO and co-founder of Opendoor. “People will visit the house every single day to plan their home. They’re making sure that this is the home of their dreams and we enable that.” OfferPad also has some homes that buyers can tour remotely or by requesting a code.

[See: 10 Ways Millennials Are Changing Homebuying.]

In addition to these three major startups, DelPrete expects other players to enter the online real estate space in the U.S. and abroad. In recent months, online real estate brokerage Redfin recently began testing a product called Redfin Now, which lets the company buy homes directly from consumers, and Zillow is piloting a product called Instant Offers that connects home sellers with investors. OfferPad will participate in the Instant Offer pilot program in Las Vegas and Orlando.

“You’ll continue to see innovations from these companies to make it easier for people to buy and sell houses,” DelPrete says. “The real estate industry can’t ignore this. It’s a loud and clear message that a lot of consumers find the current process painful.” Even if only a small percent of U.S. homes are bought and sold through iBuyers, it’s still billions of dollars worth of transactions, DelPrete says.

More from U.S. News

9 Easy Ways to Boost Your Home’s Curb Appeal

10 Unorthodox Ways Your Real Estate Agent May Market Your Home

10 Tips to Sell Your Home Fast

Should You Sell Your Home to a Startup? originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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