Buyers Archives | Sunshine Guru

Everything You Need to Know About iBuyers and the “Instant Cash Offer”

Technology is changing the way we do almost everything, and real estate transactions are no exception. In fact, a new crop of tech companies wants to revolutionize the way we buy and sell homes. iBuyer startups like Opendoor, Offerpad, and Properly are rapidly expanding into new territories, and now established players, like Zillow, are starting to get in on the action. Also known as Direct Buyers, these companies use computer algorithms to provide sellers with a quick cash offer to buy their home.

While the actual market share of iBuyers remains small, their big advertising budgets have helped create a noticeable buzz in the industry. This has left many of our clients curious about them and how they work. In this article, we explain their business model, weigh the pros and cons of working with an iBuyer, and share strategies you can use to protect yourself if you choose to explore this new option to buy or sell your home.

FIRST, HOW DOES THE iBUYER PROCESS WORK?

While each company operates a little differently, the basic premise is the same. A seller (or seller’s agent) completes a brief online form that asks questions about the size, features, and condition of the property. Some also request digital photos of the home.

The iBuyer will use this information to determine whether or not the home fits within their “buy box,” or set of criteria that matches their investment model. They are generally looking for houses they can easily value and “flip.” In most cases, their ideal property is a moderately priced, single-family home located in a neighborhood with many similar houses. The property shouldn’t require any major renovations before listing.¹ These qualities make it easier to assess value (lots of comparable sales data) and help to reduce risk and minimize carrying costs.

Once the iBuyer has used their algorithm to determine the amount they are willing to pay, they will email an offer to the seller, usually within a few days. The offer should also disclose the company’s service fee, which is typically between 7% and 12% of the purchase price.²

If the seller accepts, an in-person visit and inspection are scheduled. The iBuyer will ask for a reduction in price to cover any defects they find during the process. Once the sale closes, they will make the necessary updates and repairs and then resell the home on the open market.

WHAT ARE THE PROS AND CONS OF SELLING TO AN iBUYER?

Of course, the biggest benefit of selling your home to an iBuyer is convenience. For some homeowners, the stress and disruption of preparing and listing their home can feel overwhelming. And what busy family with kids and pets wouldn’t want to skip the hassle of keeping their house “show ready” for potential buyers? Additionally, many sellers like the predictability of a cash buyer and the flexibility to choose their closing date.

However, this added convenience does come at a cost. An iBuyer is an investor looking to make a profit. So their purchase offer is usually below true market value. When you tack on service fees of up to 12% and deductions for updates and repairs, studies show that sellers who work with iBuyers net a lower amount than those that list the traditional way.³

In fact, a MarketWatch investigation found that transactions involving iBuyers net the seller 11% less than if they would have sold their home with an agent on the open market.²

WHAT ARE THE PROS AND CONS OF BUYING FROM AN iBUYER?

Buying a home from an iBuyer is a lot like buying a home from any investor. The pros are that it’s usually clean, neutral, and moderately updated. You’ll often find fresh paint and modern finishes. And because it’s uninhabited (no one is living there), you don’t have to work around a seller’s schedule to see the home.

However, there are some pitfalls to avoid when working with iBuyers. Speed is of the essence, so sometimes the renovations are rushed and the quality can suffer. Also, their investment margins don’t leave much room for negotiating a price reduction or additional repairs. That leaves buyers —who have already invested hundreds of dollars in an inspection—little recourse if any issues are uncovered.⁴

That’s one of the reasons we always recommend viewing properties with an agent. During your visit, a real estate professional can point out any “red flags” at the home, provide background information about the neighborhood, and help you assess its true market value. That way, you don’t invest time and money in a high-risk or overpriced property. Safety is also a concern. Some companies allow buyers to access their homes via a smartphone app. While it may seem convenient, it provides an easy way for squatters and others to enter the home illegally.⁵

Luckily, since most iBuyers (and traditional sellers) pay a buyer agent’s commission, you can benefit from the guidance and expertise of a real estate professional … at no cost to you!

HOW CAN I PROTECT MYSELF IF I CHOOSE TO WORK WITH AN iBUYER?

While it may seem like the “quick and easy” way to go, working with an iBuyer can present some unique challenges. For example, they are notorious for presenting a strong initial purchase offer and then whittling it down with a long list of costly updates and repairs once they complete their inspection.² And unlike a traditional buyer who is incentivized to make a deal work, iBuyers can easily walk away if you don’t meet their demands.

Just like you wouldn’t go to court without a lawyer, you shouldn’t enter into a real estate transaction without an advocate to represent you. Having a professional agent on your side can be especially important when negotiating with an iBuyer. Remember, they employ sophisticated representatives and a team of lawyers who are focused on maximizing their profits, not yours. You need someone in your corner who has the skills and knowledge to ensure you get a fair deal and who understands the terms of their contracts, so you don’t encounter any unpleasant surprises along the way.

Overall, we think the emergence of new technology that helps to streamline the real estate process is exciting. And if we believe a client can benefit from working with an iBuyer, we present it as an option. But there is—inevitably—a cost to the convenience. After all, most iBuyers eventually list the properties they acquire on the open market, which is still the best place to find a buyer if you want to maximize the sales price of your home.

EXPLORE YOUR OPTIONS

Do you want to learn more about iBuyers and other options currently available in our area to buy or sell your home? We can help you determine the best path, given your unique circumstances. Contact us to schedule a free, no-obligation consultation!

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Buyers are you worried when your pre-approval letter says you are approved for more?

A colleague recently asked if he should get a new approval letter for his buyer. The reason was that he was negotiating on a house, and was planning on offering less than the approval amount that the buyer could afford. I’ve also been in a situation where my buyer has cash in the bank for a cash purchase, and the bank balance is far more than the purchase price.

The question is: Are you giving away too much information by letting it be known that you CAN spend more than you want? Perhaps, but I don’t think this is a significant objection to overcome.

Let’s say a buyer has a mortgage approval for $400,000. A house is listed for $375,000 but is only worth $360,000. Will it make negotiations more difficult if a seller sees a letter that says the buyer can spend $400,000? Not if I’m good at what I do.

There is absolutely no justification for a negotiation to include a dialog of “but he has the money.” What in the world does that have to do with the price of Tea in China? Nothing.

This reminds me of sellers that “need to get” to a particular price in order to buy a new property. How is that my problem? It’s not. The house is worth what the house is worth. If it’s like all the other houses on the block, it’s probably worth close to the other houses. If it’s unique, it’s worth what a buyer is willing to pay. It’s certainly not worth what my bank balance says I have. That’s like my other favorite saying “How can I be overdrawn? I still have checks left!”

Next thing out of my mouth when someone says that to me is: prove it. Show me some justification for your price. I’ve proved my client can buy it. Now you prove your worth. If you can’t? We’ll be on our way.

Snowbird Condos in South Florida – Lauderdale Oaks in Lauderdale Lakes

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Previously we wrote about our favorite collection of condominiums that are favored by Snowbirds throughout South Florida and today we are adding Lauderdale Oaks in Lauderdale Lakes to the selection because so many of our clients have discovered the community.

Lauderdale Oaks is located along Oakland Park Boulevard in central Broward between I-95 and the Turnpike, and once you enter the community the tranquility will amaze you compared to the busy congestion that surrounds the community. Don’t let it deter you, however, as the community is located conveniently close to I-95 for easy access to the airports, and the central location means residents have access to both the beach (3.5 miles east) or to attractions further west in Weston and Sunrise. Golf, shopping, movies, dining, and entertainment are plentiful in any direction.

Inside Lauderdale Oaks the community features 716 condominiums in 19 buildings. Being a 55+ community means the homes are very affordable which is a surprising change from incredibly expensive new construction nearby. A large club house features an auditorium with seating for 300 and many activities all year long. Three pools, shuffleboard, bocce ball, and plentiful walking trails create a tranquil oasis where it’s easy to relax.

Homes available in Lauderdale Oaks

BEAUTIFUL 2/2 CORNER UNIT CONDO ON SECOND FLOOR. ALL REMODELED KITCHEN WITH GRANITE COUNTERTOPS, STAINLESS STEEL APPLIANCES, WASHER/DRYER, TILE THROUGHOUT WALK-IN CLOSET IN BOTH BEDROOMS. ENJOY THE GARDEN AND CLUBHOUSE VIEW FROM YOUR SCREENED FLORIDA ROOM. AMENITIES INCLUDE 2 HEATED POOLS, CLUBHOUSE WITH GYM, SAUNA, BILLIARD & CARD ROOM, LIBRARY, DANCE, SHOW, BBQ AREA, SHUFFLEBOARD AND MANY MORE ACTIVITIES. PARADISE FOR SNOWBIRDS OR TO LIVE YEAR ROUND. CLOSE TO STORES, RESTAURANTS, PUBLIC TRANSPORTATION, MEDICAL FACILITIES, MAJOR HIGHWAYS. COME SEE THIS ONE. NEED 700 CREDIT SCORE AND $18,000 MIN INCOME YEARLY.

$79,900 Active

2901 NW 47th Ter 245A Lauderdale Lakes, Florida

2 Beds 2 Baths

Very Spacious 2/2 centrally located close to major highways, shopping and dining. 55+ community. Quiet, 1st floor entry, garden apartment. Large screened balcony.

$79,000 Active

2950 NW 46th Ave 109A Lauderdale Lakes, Florida

2 Beds 2 Baths 1,021 SqFt

Enjoy living peacefully in Cypress Chase! Beautiful and Spacious 2 Bedrooms, 2 Bathrooms 2nd floor corner unit in Lauderdale Lakes. 55+ community verified. Easy to show. Don't miss this opportunity to own this gorgeous unit.

$71,500 Active

2999 NW 48th Ave 253 Lauderdale Lakes, Florida

2 Beds 2 Baths

BEAUTIFUL UPDATED 1BED/1BATH CONDO. NEW APPLIANCES, TILE THROUGHOUT, WALK-ING CLOSET. FIRST FLOOR ENTRY IN THE ACTIVE 55+ COMMUNITY OF CYPRESS CHASE. CENTRALLY LOCATED TO EVERYTHING. 20 MINUTES TO THE BEACH AND 10 MINUTES TO ALL MAJOR HIGHWAY. WELL MAINTAINED BUILDING. COME AND SEE THIS TOTALLY FURNISHED, TURN KEY CONDO. UNIT RENTED FROM JAN 4TH – MAY 4TH.

$69,950 Active

2901 NW 48th Ave 163 Lauderdale Lakes, Florida

1 Beds 1 Baths

2 bedroom 2 baths with additional enclosed family room that could be used as an office or 3rd bedroom,first floor,all ltalian tiles,back door leads out to the pool area

$67,000 Pending

2999 NW 48 AV 138 Lauderdale Lakes, Florida

2 Beds 2 Baths 960 SqFt

Cute as a button--check out this 1 bedroom, 1-1/2 bath, fully-furnished condo. It features tile floors throughout and is freshly-painted, clean, and ready to move in. Perfectly located right across from the beautifully-remodeled clubhouse and all its amazing amenities--pool, billiards room, table tennis, men's and women's exercise rooms and saunas, library, card room, banquet room, ballroom, and bocce courts. You will enjoy this vibrant, active community.

$64,900 Active

3061 NW 47th Ter 232B Lauderdale Lakes, Florida

1 Beds 2 Baths

Beautiful turn key very clean and excellent condition. all tile through out, AC only 5-6 years old, low maint. internet and antenna included. Electric, plumbing redone. Good location access to main road, close to shops, airport and beach. Community offering: Heated pool, BBQ area, billiard and exercise room, shuffleboard, petanque, bingo shows and much more. Adult community 55+

$60,000 Active

2801 NW 47th Ter 306B Lauderdale Lakes, Florida

1 Beds 1 Baths 768 SqFt

Amazing opportunity to own this bright spacious 2bedroom/2bath Condo, move in ready with a great view of the garden courtyard from screened balcony. Well maintained building and community. SS appliances. Laundry Facilities on site. Easy access to major highways.
This is a 55+ community.

$59,000 Pending

2999 NW 48th Ave 351 Lauderdale Lakes, Florida

2 Beds 2 Baths 960 SqFt

Move in ready with all tile flooring through out.Low maintance of 206 Mo,internet included.Good location close to shopping,Airports Beach and Sawgrass mall. Community has 3 pools,BBQ area,exercise room,Shuffleboard court,Pool tables,Shows.55+ community

$52,900 Active Under Contract

2900 NW 47th Ter 205B Lauderdale Lakes, Florida

1 Beds 1 Baths 768 SqFt

Centrally Located Condo with access to major transportation and shopping. Community Pool. Priced to sell.

$38,000 Active

3071 NW 47th Ter 322 Lauderdale Lakes, Florida

1 Beds 1 Baths 610 SqFt

Beautiful and tastefully decorated 2/2 condo turn key, ready to move right in. Relaxing view of the canal from enclosed patio. Clubhouse, swimming pool, cable, Wi-Fi, Canadian station. Impact door and windows.
Make this your relaxing retreat today. Also can be rented as 1 bedroom for less.

$1,800 Active

2801 NW 47th Ter 202 Lauderdale Lakes, Florida

2 Beds 2 Baths

Can I use my condo in South Florida as a short-term rental or Vacation Rental By Owner?

Your Guru gets asked every now and again to help a buyer, who fancies himself/herself an investor, locate a condo that can make a little income (or perhaps a lot of income) on the side. You should know that there are virtually NO condos in the area that allow AirBnB, VRBO or short term rentals.

Why can’t I rent my condo short term?

Here’s the reason: The over-supply of condos in 2005 heralded the “beginning of the end’ of the condo building boom in South Florida. We led the nation in the real estate “bust” and in turn, led the nation in the recovery.

Cash investors bought up the bargain-priced inventory and used those condos as rental properties – in any way they saw fit. There were traditional long-term rentals, but those investors also treated their investments like short-term rentals and even as alternative to hotel rooms.

Lending on condominiums ground to a halt because so many condos had more tenants than owners. Most lenders didn’t see condominiums as viable investment for their lending portfolios – they believed they’d lose money on every one of them.

Condominium boards also got an earful from angry residents as tranquil buildings turned into transient communities and party-pads. Associations responded by enacting rules requiring anything from a year of ownership before an owner could rent their unit, to restrictions on lease length, and outright bans on short-term leases. In most cases here in South Florida you’ll find a condominium association will have a minimum of a 6-month lease, or 12 month lease, or a restriction that a unit may only be leased once or twice per year.

Our marketplace and season has matured as well. We don’t get as many snow-birds as in the past who drove the short-term rental demand. The Fort Lauderdale and Miami metro areas are not as tranquil as they once were, contributing to the decline in demand for quiet short term housing.

Homes for sale in the Lakeside Elementary School District in Pembroke Pines

Pembroke Pines is known for its great schools and Lakeside Elementary is considered to be one of the best. Lakeside Elementary has a Great Schools rating of 8 out of 10. Parents give complements to the great teachers, the involvement of the local PTA and a great administrative staff.

If you’re looking for a home in this great school district, check out the homes available in Lakeside Elementary

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