In 2022, Zillow Predicts That Phoenix housing market will climb ANOTHER 20%?! (attorney, inspection)

[WanderingRebel]

Originally Posted by KurtAZ

Why wouldn't they? They pay below market, hit you with a bunch of fees including "refresh fees", slap on some paint and maybe some new carpet and put it back on the market. Then charge the buyer similar fees in the form of commission.

For example: Buy a home worth $500k for say $475k, seller thinks they are getting a deal since they don't have to prep/fix anything and the sale is a done deal. Then the iBuyer charges (on average) 5% "Service fee) so $23,750 in this case ($48,750 so far). Seller figures they would have paid 6% to a realtor so why not. Then they add in a $10k "repair fee" ($58,750 so far).

They then put let's say $5k into paint and "upgrades" ($53,750), put the house on the market for $500k. They are going to pay a buying agent ~2.5% ($12,500) or sell it through their own process and keep that money ($46,250 - $58,750) deduct some closing costs ($10k -ish?) and they just made $35,250 - $48,750 on a flip (basically)

Obviously in a declining market, they will offer less to make up their margin but from what I understand, most of these iBuyers want to make at least $30k per unit.

Well, Zillow was bleeding money with a similar program and they stopped it. Plus, homes are sitting on the market now. Doesn't make a lot of sense to be a house flipper in this current environment.

[KurtAZ]

Originally Posted by WanderingRebel

Well, Zillow was bleeding money with a similar program and they stopped it. Plus, homes are sitting on the market now. Doesn't make a lot of sense to be a house flipper in this current environment.

Well...people and companies with money know how to game a downturn. Stocks start dropping, buy the undervalued stocks on the cheap. Housing downturn? I don't know...maybe low balling every seller out there and then wholesale the properties to corporate renters/investors? Really depends on what their investment strategy is, long term or short term and how much inventory they can or are willing to carry.

I don't know...I am sure they have a strategy for market downturns, whether it be, like you said, pausing their purchasing to gauge the bottom or artificially propping up comps with higher purchasing offers (like they have been doing) or maybe taking the inventory they already have and spinning off a property rental product/business to put some cash flow in place. Again, I don't know, unlike a small investor, the big boys have much more capital to play with and it is all in percentages. My gut says they put in extremely low offers, hit the seller with fees and then put the house back on the market even if they are making a smaller percentage on it. I guess time will tell if all these iBuyers dry up and go away.

[hindsight2020]

Originally Posted by kell490

What about the inventory they get stuck with if prices quickly decline when buyers dry up they have to dump lot of homes cause prices to fall even more. They won't want to get stuck holding anything that 46-58k profit turns into a 45-60k loss.

In sha allah.

[jdahunt]

It sure looks like the number of homes for sale keep rising higher each and every day.

The houses I've watching are also dropping in price, some as much as 10+%...how low will they go?

I don't think we will even see it getting really bad until after the first of the year.......we'll see.

[locolife]

Originally Posted by jdahunt

It sure looks like the number of homes for sale keep rising higher each and every day.

The houses I've watching are also dropping in price, some as much as 10+%...how low will they go?

I don't think we will even see it getting really bad until after the first of the year.......we'll see.

Nobody knows for sure but it seems like the consensus amongst the experts is that we're in a cooling market that is moving to a more normal/healthy position.


https://www.azcentral.com/story/mone...p/10158478002/

[hikernut]

Purely anecdotal... I've been seeing more open house signs in Gilbert. We had one in our neighborhood recently. They are asking nearly 2x what they paid for it less than two years ago. Will be interesting to see how long that one takes to sell, and if they need to drop their listing price at all.

One other house in our neighborhood is listed, but it's much bigger than any other houses in our neighborhood. They dropped the price 10% a couple of months ago. Still "sitting".

[KurtAZ]

Originally Posted by hikernut

Purely anecdotal... I've been seeing more open house signs in Gilbert. We had one in our neighborhood recently. They are asking nearly 2x what they paid for it less than two years ago. Will be interesting to see how long that one takes to sell, and if they need to drop their listing price at all.

One other house in our neighborhood is listed, but it's much bigger than any other houses in our neighborhood. They dropped the price 10% a couple of months ago. Still "sitting".

Seeing a lot of this in Chandler as well...so called "protected markets" due to their proximity to Intel and Tech Corridor. Just using Zillow as an indicator we are down 3.5% over the past 30 days and 4.3% from the peak in June. I wonder how many of those homes on the market are investors trying to cash in or homeowners trying to profit before it falls any more. I am seeing a few that were purchased this year re-listed well above what they paid for them. Average days on the market around 25. There are quite a few price cuts and some are sitting on the market since June. Hopefully this all normalizes and we are out of the "funny money" phase.

[WanderingRebel]

Originally Posted by KurtAZ

Well...people and companies with money know how to game a downturn. Stocks start dropping, buy the undervalued stocks on the cheap. Housing downturn? I don't know...maybe low balling every seller out there and then wholesale the properties to corporate renters/investors? Really depends on what their investment strategy is, long term or short term and how much inventory they can or are willing to carry.

I don't know...I am sure they have a strategy for market downturns, whether it be, like you said, pausing their purchasing to gauge the bottom or artificially propping up comps with higher purchasing offers (like they have been doing) or maybe taking the inventory they already have and spinning off a property rental product/business to put some cash flow in place. Again, I don't know, unlike a small investor, the big boys have much more capital to play with and it is all in percentages. My gut says they put in extremely low offers, hit the seller with fees and then put the house back on the market even if they are making a smaller percentage on it. I guess time will tell if all these iBuyers dry up and go away.

The writing is on the wall for at least one of these companies. https://www.azfamily.com/2022/08/10/...-home-sellers/

[adjusterjack]

In my little microcosm of a modest middle class subdivision in 85032, homes recently have been taking more than a month to sell, no bidding wars, some price drops, and some sold for less than asking. One is one the market for 3 months now and the seller is still holding out for $575,000 (4/2 with no pool) when a 4/2 with a pool sold last month for $560,000, down from an asking price of $575,000. Comparable interiors.

My Zestimate is down from $488,000 to $469,000 in just a couple of weeks. Not that I care. I bought the house 3 years ago for half that and it's my forever home.

Anyway, the cooling off is here. It's just a matter of how soon and how deep it's going.

[KurtAZ]

Originally Posted by WanderingRebel

The writing is on the wall for at least one of these companies. https://www.azfamily.com/2022/08/10/...-home-sellers/

I saw that...yeah but anyone that even THOUGHT of dealing with an iBuyer had to have known they were getting lowballed and then getting fee after fee piled on. It is not that hard to recognize that a business is not going to make you the best offer you are going to get and then make no money on the deal. People don't work for free...if a company wants your house it is because they are going to make money off of it.

OpenDoor got fined cause they kept telling people that they were getting the best price they were going to get for their property. Which after all the fees and comparing what they COULD have sold for with a Realtor...is almost always false. iBuyers are going after the instant gratification crowd and taking them for what they can get.