We’ve recently started a study on the iBuyer models and their impact on the rising costs of buying a home. While that study will take a few months, we stumbled across something last week that we felt was important to share with you now.
If you aren’t familiar with ibuyers, they buy homes directly from the seller. Once the seller moves out of the home, the ibuyer will typically paint or invest in some minor updates to the home and then put it back on the market at a higher price. We have not seen many cases in which the iBuyer invests heavily in a full home remodel and they typically only purcahse homes within a certain area and age.
While viewing properties on OpenDoor (one of the biggest ibuyers in the United States), we noticed that homes sold directly by OpenDoor (homes they purchased recenty and relisted) left out sales history in their listing. Specifically, the sales history that included how much Opendoor paid for the home a month or two prior.
If you view the property history on Opendoor, they are selling it for $485,000 and it looks as though this home last sold in November 29th, 2018. But if you look at that same property on another site, like Redfin, you will see that this home actually sold to Opendoor on December 1st, 2021 for $441,400.
That is a price increase of $43,600 that isn’t shown to you on Opendoor’s website.
On Opendoor’s property page, the list their property at $606,000 and they show it last being sold in 2018. But if you look at that same property on Zillow, it shows that this home sold for $488,900 on November 12th, 2021.
That is a price increase of $117,100 that isn’t show to you on Opendoor’s website.
On Opendoor’s website, their property is listed at $711,000 and, according to their property history, it last sold on April 16, 2018. But, again, we looked at the same property on another website and noticed that not only was this property sold on August 17th for $697,800, but that after it listed, Opendoor lowered the price from $725,000 to $711,000.
So, not only was their original price difference $27,200, but their website does not show that the listing price was lowered.
As a consumer, you have a right to know the actual purchase history. If the ibuyer stands behind the $117,000 value they put back into the home with remodels and upgrades, then there should be no reason as to why they are not including their purchase in the homes purchase history.
You also have a right to know if the price has been lowered on a property to ensure you create an offer that is negotiable and works best for you financially.
If you have an agent, we would hope this is the first thing shown to you before presenting an offer to an ibuyer. If you are working without an agent, please be sure to do your due diligence on the property history and price reductions that seem to not be shown to you on certain ibuyer properties.
Stay tuned next year for more research on the true costs of iBuyers to homebuyers. By looking at the three properties listed in just this snippet, and the almost $200,000 increase in price since purchased by an ibuyer, it should be an interesting report!