A Buying Trend On Pause Or Going Away?
We all saw the ads for deep pocketed companies willing to buy our home on the cheap and easy. No cleaning it up for showings, no fixing of leaks, no new painting required. In exchange for a quick and mostly painless transaction, the iBuyers would purchase the home – normally below the fair market price. They would then fix up the home and put it on the market for sale at the then going market rate.
Zillow pulled out of the market last year after incurring hundreds of millions in losses during what was a strong period of price appreciation and low interest rates. A September 2022 Motely Fool article pointed out that Opendoor lost money of 43% of the homes it sold in August 2022. Its stock price has seen a decline from $25.32 a year ago to $3.04 (10/06/2022). Only one of the remaining large players in this field showed a profit in Q2.
This is a difficult market to guess where home prices/interest rates/demand will travel in the 90 days goal of purchase/rehab/sell cycle for ibuyers. Most formulas for this type of sale have been wrong, or unfavorable for the original home seller. Time will tell if this goes back to a very niche category or comes back with any strength before the next cycle of rising prices/high demand/low interest rates.
Please give us a call at Premier Funding Network to answer any of your mortgage questions, 714-283-9900.