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Soup to Nuts Real Estate.
I just dunno.
When a provider controls all aspects of the offerings, do buyers really shop for great service and pricing?
If the markets ever swing to favor buyers over sellers, how will these folks who want to control inventory as the foundation of their model revise their models?
Soup to Nuts Real Estate.
I just dunno.
When a provider controls all aspects of the offerings, do buyers really shop for great service and pricing?
If the markets ever swing to favor buyers over sellers, how will these folks who want to control inventory as the foundation of their model revise their models?
Reading that I couldn't help thinking that even if consumers begin to see agent commissions coming down, they're likely to start finding those savings added back into the transaction as new fees with less-threatening names than commission. The new players' goal is not to make the real estate transaction cheaper for consumers. It's to get a bigger slice of the fee pie for themselves.
[Continuing the food metaphors for the sake of continuity.]
Reading that I couldn't help thinking that even if consumers begin to see agent commissions coming down, they're likely to start finding those savings added back into the transaction as new fees with less-threatening names than commission. The new players' goal is not to make the real estate transaction cheaper for consumers. It's to get a bigger slice of the fee pie for themselves.
[Continuing the food metaphors for the sake of continuity.]
ooooooooo.... Pie.
Yes. The goal is to make it hard to comparison shop for services while garnering revenue.
Minimizing transparency.
I have to say, though, most buyers are doing well on costs using builders' lenders right now. For the builders, they get a good prequal from a lender they know will close the deal, or get fired. It is worth that confidence, moreso than the small ...slice of the loan pie..... that the builder reaps.
Too many lenders booger up new construction, and the builders' banks make it a sled ride for most qualified clients.
Soup to Nuts Real Estate.
I just dunno.
When a provider controls all aspects of the offerings, do buyers really shop for great service and pricing?
If the markets ever swing to favor buyers over sellers, how will these folks who want to control inventory as the foundation of their model revise their models?
I think that as long as they're in the USED HOUSE game, there are going to be people that take advantage of them because they don't want to hassle with prepping a house for a buyer.
And there are others that know their house is in fine salable condition that won't, and some of that stigma is going to rub off on iBuyers long term, just the same as some folks stigmatize a house that's been flipped.
I think that as long as they're in the USED HOUSE game, there are going to be people that take advantage of them because they don't want to hassle with prepping a house for a buyer.
And there are others that know their house is in fine salable condition that won't, and some of that stigma is going to rub off on iBuyers long term, just the same as some folks stigmatize a house that's been flipped.
Sure, they may be able to BUY houses, of some description and condition.
But, the junk that so many iBuyers are currently peddling in a sellers' market will not fly in a buyers market.
That will cut the sweetness of convenience sales back hard. Now, selling to iBuyers can net a nice payday for sellers. When that payday is sliced, the perceived and over-sold rigors of selling property may be more palatable.
Sure, they may be able to BUY houses, of some description and condition.
But, the junk that so many iBuyers are currently peddling in a sellers' market will not fly in a buyers market.
That will cut the sweetness of convenience sales back hard. Now, selling to iBuyers can net a nice payday for sellers. When that payday is sliced, the perceived and over-sold rigors of selling property may be more palatable.
Yes, at some point they're going to have to cut their offers back, and I can see that having a snowball effect. Their offers aren't as lucrative, therefore the semi-lucrative properties don't sell to them, leaving them the junkier properties, leaving buyers with a bad taste.
I remember I worked for a guy that considered himself an idea man, but I think his main motivation was to be spoken about with a lot of Silicon Valley buzz words. He had some good ideas. One not so good one; don't send your used car buyers to the auctions, put them at a desk upstairs and bid on the used cars according to an algorithm. That gave the buyers access to more inventory (nationwide vs the auction in Dallas or Jacksonville or whatever,) it theoretically saved travel costs, and allowed him to pay less for a position that required less expertise than it did before since (theoretically) AI was going to make the decision. Problem was they'd stink, or x, or y. The descriptions weren't dishonest, just that the buyers didn't get a great feel for the fact that this car had one mismatched tire, etc...and didn't have much flexibility either...a used Minivan that smelled like cigarettes is a lot harder to sell than a panel van that smells like cigarettes...
With a house, I see a similar question coming up with a house that smells like Cat pee. Or a dozen other things that are just a bit "off."
Yes, at some point they're going to have to cut their offers back, and I can see that having a snowball effect. Their offers aren't as lucrative, therefore the semi-lucrative properties don't sell to them, leaving them the junkier properties, leaving buyers with a bad taste.
I remember I worked for a guy that considered himself an idea man, but I think his main motivation was to be spoken about with a lot of Silicon Valley buzz words. He had some good ideas. One not so good one; don't send your used car buyers to the auctions, put them at a desk upstairs and bid on the used cars according to an algorithm. That gave the buyers access to more inventory (nationwide vs the auction in Dallas or Jacksonville or whatever,) it theoretically saved travel costs, and allowed him to pay less for a position that required less expertise than it did before since (theoretically) AI was going to make the decision. Problem was they'd stink, or x, or y. The descriptions weren't dishonest, just that the buyers didn't get a great feel for the fact that this car had one mismatched tire, etc...and didn't have much flexibility either...a used Minivan that smelled like cigarettes is a lot harder to sell than a panel van that smells like cigarettes...
With a house, I see a similar question coming up with a house that smells like Cat pee. Or a dozen other things that are just a bit "off."
Like ours. That was 200 yards from a freeway and backed up to a loud 4 lane. An “in-person†buyer would see, feel and experience this but an I-buyer? No way. Sure, they can look at a map but, you really have no idea of how loud it can be based on a map.
Thank goodness for OD. We got a top offer and ended up with 99.4% of the original offer since the market kept going up after the initial, contracted sales price. The no-penalty cancellation clause helped our position. OD did sell it but the next buyer, an investor, may not fare so well.
Bought Nov 2019 for $412,000
Listed Dec 2019 for $425,000
Sold Feb 2020 for $415,000 (after multiple price drops.)
So does anyone else realize the purchase price is not the price that was actually paid?
Here's what happens with Open Door and others like that:
The offer is $412,000 and the seller accepts the purchase contract.
Open door then does an inspection and then the seller is charged these deductions:
6-7% for Commission : 4% for Open Door and 3% for the buyer's agent when they flip it, only it is called an "acquisition fee" or some such nonsense.
$$$ charged to the seller for repairs to get the property ready for flipping. They have their own in-house construction/repair teams so they only have to pay an employee rate and can write off their material expenses as a cost of goods sold including their proprietary reusable/removeable smart lock and security camera system.
Admin/personnel fees, and any other garbage fees they feel like throwing into the contract addendum.
By this time the seller is so far into it timewise and have, in a lot of cases, already moved on to another house, they sign the "price adjustments" addendum. (Although they do have a cancellation clause for either side to use.)
So in the end, the purchase price is $412,000 recorded, but the seller can pay a fee upwards of 12+% so the figure the seller actually gets may be $370k more or less. Then Open Door puts some lipstick on it (new carpet and paint) with a couple of thousand invested. Offers 3% to the buyer's broker which was already paid by the previous seller, and that is why they can list it and look like they are only getting a $3000 profit when in reality they have already realized close to a $30,000+ profit when they purchased it.
So does anyone else realize the purchase price is not the price that was actually paid?
Here's what happens with Open Door and others like that:
The offer is $412,000 and the seller accepts the purchase contract.
Open door then does an inspection and then the seller is charged these deductions:
6-7% for Commission : 4% for Open Door and 3% for the buyer's agent when they flip it, only it is called an "acquisition fee" or some such nonsense.
$$$ charged to the seller for repairs to get the property ready for flipping. They have their own in-house construction/repair teams so they only have to pay an employee rate and can write off their material expenses as a cost of goods sold including their proprietary reusable/removeable smart lock and security camera system.
Admin/personnel fees, and any other garbage fees they feel like throwing into the contract addendum.
By this time the seller is so far into it timewise and have, in a lot of cases, already moved on to another house, they sign the "price adjustments" addendum. (Although they do have a cancellation clause for either side to use.)
So in the end, the purchase price is $412,000 recorded, but the seller can pay a fee upwards of 12+% so the figure the seller actually gets may be $370k more or less. Then Open Door puts some lipstick on it (new carpet and paint) with a couple of thousand invested. Offers 3% to the buyer's broker which was already paid by the previous seller, and that is why they can list it and look like they are only getting a $3000 profit when in reality they have already realized close to a $30,000+ profit when they purchased it.
That's not insignificant, and if the company had to sell enough shares to fund another year's growth at the current share price, you'd likely witness fairly costly dilution.
How Risky Is Opendoor Technologies' Cash Burn Situation?
We must admit that we don't think Opendoor Technologies is in a strong position regarding its cash burn. While the positive development in revenue might help the cause, the company has started to deal with more expensive real estate, leaving less margin for error.
After looking at that range of measures, we think shareholders should be highly attentive to how the company uses its cash, as the cash burn makes us uncomfortable."
So does anyone else realize the purchase price is not the price that was actually paid?
Here's what happens with Open Door and others like that:
The offer is $412,000 and the seller accepts the purchase contract.
Open door then does an inspection and then the seller is charged these deductions:
6-7% for Commission : 4% for Open Door and 3% for the buyer's agent when they flip it, only it is called an "acquisition fee" or some such nonsense.
$$$ charged to the seller for repairs to get the property ready for flipping. They have their own in-house construction/repair teams so they only have to pay an employee rate and can write off their material expenses as a cost of goods sold including their proprietary reusable/removeable smart lock and security camera system.
Admin/personnel fees, and any other garbage fees they feel like throwing into the contract addendum.
By this time the seller is so far into it timewise and have, in a lot of cases, already moved on to another house, they sign the "price adjustments" addendum. (Although they do have a cancellation clause for either side to use.)
So in the end, the purchase price is $412,000 recorded, but the seller can pay a fee upwards of 12+% so the figure the seller actually gets may be $370k more or less. Then Open Door puts some lipstick on it (new carpet and paint) with a couple of thousand invested. Offers 3% to the buyer's broker which was already paid by the previous seller, and that is why they can list it and look like they are only getting a $3000 profit when in reality they have already realized close to a $30,000+ profit when they purchased it.
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