Hey everybody. It’s Tom Townsend and with Townsend Realty Group. Hey, I’m coming to you to answer a couple of questions and also inform you about how we differ from other agents. Lately, we’ve been getting a lot of questions about advertisements that people are hearing on the radio about guaranteed offers, what all that is about and these instant offers, and so on and so forth. We’ve done some other videos in the past about cash buyers and what’s going on in the market. So I am here to answer hopefully all those questions, and I thought the best way to do it is just kind of talk about the market as a whole, the real estate market as a whole, how it actually works, how it’s changed over the last handful of years and all the opportunities that are, that you as a client or someone that’s looking to buy or sell property, how that all boils down to you. So this is a great video for anybody that’s looking to sell a house, buy a house right here in Cherokee County, Canton Georgia area. And so hopefully let me kind of explain to you how this all works.
So historically, the real estate market worked primarily in the retail area and the wholesale area. Basically what that means is that 70% or about 80% of the market, when you had to sell your home, you would sell it on the open market. And that’s the traditional stuff that agents have been doing forever and ever, you get the house cleaned up, you make it look pretty, you put it on the open market and people come and see it and buy it. That is what we refer to as the retail market. It is driven by agents. Primarily people that are selling in that space are using an agent to do that.
On the other end of the spectrum over here is the wholesale market. There was about 20% of the market, historically has always been wholesale. Those are properties that are quick sales. They’re usually cash, investors are coming in and buying it. Those are the people that do the ugly houses, They want to buy your ugly house. And usually, there’s a time element that is involved with that. Somebody has got to sell it like now for a lot of different reasons, but they don’t have a lot of time. The retail side, you were more flexible with time, You were trying to maximize your profits on this retail side. So the wholesale side has a lot of different layers to it. I’m just trying to keep it really easy and simple for you. So that was the difference.
That was the market up to about three or four years ago, actually a little bit longer than that. And what has happened is this new technology companies have gone in and basically are trying to capture as much of this blue area as they possibly can. They’re trying to replace the agents or the retail side of this market with technology. Those are the companies that I’m sure you’ve all heard of. The Zillows, the Offerpads, Opendoor, there’s about six others that have recently popped up into the market. These folks, once again, their whole goal is to capture as much of this market as they possibly can. And they’re doing that with offering cash, a huge convenience for you. Very simple, no open houses, no showings, you don’t have to do repairs so on and so forth. They’re making it really simple.
There’s no relationship necessarily with an agent in particular in guiding you through that whole process. But that’s what they’re all about. They are capturing a big part of the market. Today, they have about 10% of the market. So right now, traditionally you still see about 70% of all the sales selling traditionally in this retail area, this iBuyer, or this technology piece is about 10%. And then the wholesale market’s about 20% of the market itself. So here’s one of the things here’s where guaranteed offers come in, what really prompted the whole thing.
So everybody’s saying, well, what does the guarantee offer really mean? So what that is all about, our agents are pushing back on these technology companies because they’re capturing their market share, right? So what they’ve done is they said, hey, listen, we can do the same thing by giving you a guaranteed offer. So if I can’t sell your house traditionally on the open market, after a certain period of time, we’ll go ahead and guarantee an offer. There’s a couple of different ways that they’re doing it, but they’re primarily reaching out to these technology companies and bringing in an offer from them to make an offer on your property. Some of them have investors over on this side that they’ll bring and buy it. Other large firms, they have enough cash where they’ll go ahead and they’ll buy it as well. Sometimes at a massive discount, It’s a convenience fee, you know, nothing in life is free. So don’t anticipate that you’re going to get a full retail market for a property with that guaranteed offer. Okay? So that’s basically how that guaranteed offer kind of works. Here’s the other thing that I want to make sure that everybody understands.
Most, all agents in the market right now are still only playing in this retail market. If you’re in a situation where this piece makes sense, where you want a cash offer, let me back up just one step here, most of these folks, the difference between what they’re doing and the investors are doing is they don’t necessarily want a really ugly house. They want to have a house that needs just a little bit of work, maybe some paint, carpeting, and that’s about it. If your home has a lot of issues with it, has major expenses in order to make it marketing. That is a totally different beast. This is a different market. This is a different wholesale market than what these folks are looking for. They’re not looking for super ugly ones.
To get it back where I was, most agents are only playing in this one retail market right here. They have not branched over yet to bring this as a service offering to their clients. Sometimes some of them will, some of them won’t, may have a couple of investors on the back end, for when they have an opportunity with a house that needs a lot of work.
We, on the other hand, I know Townsend Realty Group, we, on the other hand, we play in all three of these, we bring all three of these solutions to all of our clients. Do we make as much money when we end up working with one of these companies on your behalf? Absolutely not. We don’t, but that’s the model that we’re in. And actually some of these, folks, this model right here works really well with our clients. Those are people that, you know, they don’t, maybe their house does need a little bit of work. They don’t have the financial means and the time to go ahead and do that. And they want an easy, quick solution to get rid of their home and move into a home that better fits their lifestyle. So sometimes this model works really well for them. So when we consult with folks, we sit down, we find out what your goals are, we find out what your needs are, and we present all of these options to you. And when we work with these folks, these cash buyers down here, we reach out to all of them and bring all the offers back to you, and compare it to what we think we could sell the property for traditionally. And then really the choice is up to you after that, of what direction you want to go.
That’s kind of how the whole market has always been and how it’s changing, hopefully, that was helpful and gave you an idea of how we differ from other agents. Give us a thumbs up if this was informative to you, make sure you subscribe to our YouTube channel and we’d love to be able to answer any other questions that you may have about what this whole real estate market looks like and how it’s all playing out. Hope everybody’s having a great day. Talk to you soon.
Thanks.
