You keep 80% of the GROSS profit, so if there were $10k in closing costs, and $5-10k/year in taxes/HOA/condo fees, and the furnace and AC need replacing, etc...
Lofty makes this sound risk-free but it certainly sounds possible that your obligation to them would cancel out your entire NET profit. Buyer beware, as always.
Your point is very valid. Closing costs and other fees related to real estate transactions are something we do not cover at the moment.
Our belief is that there shouldn't even be all these fees for home buyers and sellers, because most of the process can be automated to a degree. At a minimal the fees can be reduced. It's early now, but we really do intend on becoming the most honest and transparent ibuyer model on the market.
As such, we are looking for ways where we could build on top of our service to help people reduce their transaction fees either through partnerships or some new service that we would provide. Partnering with listing agents, where they give us a portion of the commission, and we refund it back to the customer is one way of doing this.
But the goal is always to align our interests with our clients'. The more money you make, the more money we make. If you make no money, we not only make no money, but we might lose money.
This is a good point. What if one spends $20,000 fixing up a property, and that contributes to what is ultimately a $50,000 increase in appraisal value?
EDIT: There is an existing response from another comment thread:
>That's a great point! This is why we deduct any home improvement costs from the gross profit calculation. So, if you spent 10,000 fixing the pipes and the gross profit was originally 100,000, we would actually deduct that from the gross profit. So our 20% share would be on top of 90,000 and not 100,000.
