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So there's a recent N&O article about Opendoor being the top buyer of Wake County homes, being under investigation by the FTC, etc.
Maybe this will lead to legislation against high volume home flippers?
I personally think flipping is almost always disadvantageous to the buyer. I also think that OD's denial of being a flipper and re-writing the definition of a flipper to be disingenuous.
It isn't just OpenDoor. iBuyers who turn homes around for resale are ALL iFlippers. And, too often, that is a low level of cheap lipstick on a real pig. So much iFlipper inventory are real pigs.
Denial of being flippers is laughable.
Great clue: when a listing is turned so fast the property won't qualify for an FHA loan until a future date. "FHA loan Eligible after 10/21/2021" would be required on any flip purchased and closed on today. HUD/FHA requires "seasoning" for 90 days between closing and a next buyer's contract.
One plus:
Less competition, and lower or zero Due Diligence Fees, if you can hack the process.
A plus for sellers:
IFlippers' acquisition people have little clue what they are doing. They are overpaying for homes in deplorable condition, so that helps with the costs of convenience vs. selling for top dollar on the market.
I assume we haven't seen much evidence yet of out-of-town investors buying properties, securing them unoccupied, and waiting for prices to increase before they sell. This practice is widespread in some large cities around the world.
I assume we haven't seen much evidence yet of out-of-town investors buying properties, securing them unoccupied, and waiting for prices to increase before they sell. This practice is widespread in some large cities around the world.
Not yet, though it might be hard to track, unless someone really focuses on it.
In this market is essentially safe to assume that if someone sells their home to opendoor (or any of the I-flippers) it is for one of two reasons:
A. I-flipper offered the owner a price close enough to what they could get if they put it on the open market that whatever difference it is worth it to not have to deal with marketing/showings/uncertainty (this is less common now that Opendoor specifically screwed a lot of people over when the pandemic started and cancelled many of their sales contracts). Essentially paying for the convenience.
B. Owner of home knows that it is in rough shape and willing to take less money for it to not have to disclose issues they (or rather, their licensed RE agent) would be required to if put on the open market.
In scenario A. When the move-in-ready (ish) home goes live on the market by said I-flipper; it is usually priced significantly over neighborhood comps.
In scenario B. Home goes on the market in lipstick-on-a pig condition (they've even toned down the lipstick recently; they aren't even painting the walls apartment beige and replacing the carpet with the c-grade warehouse grey stuff anymore!) priced relatively in-line with more move-in-ready comps.
In both scenarios; buyers in the open market are very wary of I-flipper houses and thus they are now viewed as an "inferior good". Zillow used to do a better job of marketing the properties to look like a more traditional listing but that has waned recently. Opendoor is computer-generated with obvious virtual staging and water-marks all over the pictures in an effort to stop the scammers.
I have one client who is a teacher trying to buy a townhome in Western Wake for under $250k. After 7 declined (competitive!) offers on traditional-sale homes; we toured 2 Opendoor and 1-zillow-owned listings this week that had all been sitting for over 30 days (an eternity in this market)... in hopes of finding something where she wouldn't be in a competitive situation....and all 3 had very obvious not-cheap-fix issues that she couldn't take on.
Opendoor just purchased my neighbor's house. Can confirm - they are putting lipstick on a pig. Covering wood rot with a fresh coat of paint, etc. I feel poorly for whomever ends up purchasing and living in the house.
Stupid question....but if the buyer gets a good home inspector shouldn't they be able to spot the problems - aka the "lip stick" covering up the serious issues? I guess that point the buyer may have too much skin in the game and be tempted to not walk away and be out their DD fee?
Stupid question....but if the buyer gets a good home inspector shouldn't they be able to spot the problems - aka the "lip stick" covering up the serious issues? I guess that point the buyer may have too much skin in the game and be tempted to not walk away and be out their DD fee?
Yes. Many-a-ibuyer-listings history show one if not more cancelled contracts. Fortunately the folks at OD have no clue about the actual RE market in NC (or anywhere really) and thus DD is not as much of a factor for them.
Regardless that buyer is still out the $DD money they did put down (fortunately, generally not in the 5 figure amounts it is on many properties in this market) and money for inspections/any other due diligence expenses.
We bought our house right before the pandemic, but even then it was depressing to see obviously flipped houses with such poor quality work done. It's a sad waste of materials. Those Opendoor listings seemed like a red flag at the time for the same reason. We would've rather bought a lower priced un-updated house and had it renovated ourselves, which is what we ended up doing.
Stupid question....but if the buyer gets a good home inspector shouldn't they be able to spot the problems - aka the "lip stick" covering up the serious issues? I guess that point the buyer may have too much skin in the game and be tempted to not walk away and be out their DD fee?
Sure I guess so, but what value is Opendoor actually providing? They aren't making improvements to the home. They're hiding defects in order to artificially inflate the sale price.
I'm not involved in the housing market, but I understand that homes are selling extremely quickly and buyers are often forgoing inspections or surveys. Seems like Opendoor is taking advantage of this market dynamic.
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