Are you familiar with what an iBuyer is?
These are buyers that are making instant cash offers, thus the “i” in iBuyer, with flexible terms, usually at a heavily discounted price. Some of the biggest known iBuyers just pulled out from buying real estate last week.
Zillow, Redfin, Opendoor And Realogy Suspend iBuyer Programs As Coronavirus Weakens Housing Market.
This makes for very interesting food for thought. Zillow is a billion dollar company that has gathered great data throughout the years. Why do you think they’ve pulled out? What do they know? If you had that information, would you sell now rather than later?
The following was a great read by Brenda Richardson from Forbes regarding the impact a seller had.
The ripple effect of the iBuying tumult is upsetting people like Jeramiah Dooley, who is trying to sell his two-story townhome in Charlotte, North Carolina. After receiving bids from Zillow, Offerpad and Opendoor, Dooley told Forbes that Zillow made the highest offer on the home, and he signed a contract on January 13.
“They gave me up to 90 days to close, which was perfect because I am scheduled to actually move on the 30th of this month,” Dooley said. “Then the day before yesterday, I got the same email that looks like everyone else has gotten, basically blaming the latest public health orders issued for a wholesale cancellation of every house that Zillow had under contract to buy.”
Dooley said he was given 48 hours to choose between two options from Zillow: “I could take a check for $5,000. That’s $1,000 in earnest money that they were contractually obligated to pay me for breaking the contract and $4,000 extra for the trouble. Or they would pay for a Realtor to relist the house. They were just going to cancel the contract and walk away.”
Faced with that dilemma, the father of two said, “I chose the money. I didn’t have any choice. And the $5,000 doesn’t come close to the cost of what I put into getting the house ready to sell as well as what it’s going to cost me now that I have an additional mortgage payment that I have to take care of until I can find someone to buy the townhome.”
He noted, “I understand the financial part of it. I understand that Zillow feels like there is going to be a downturn in the market, and they need to get out from under these contracts now. Even if they have to pay some money to get out, the chances are the houses will be available on the market for less money in the next few months. I understand that. It stinks for me personally, but I understand how the math works.”
Dooley said he could fully grasp if Zillow had said it would halt any offers that were in the negotiating stage. “But this was a contract that had been in place for almost exactly three months, and then we were less than 10 business days from closing. And we would have never had to have been in the same room,” he pointed out. “The contracts were done. The lawyers could have sent the papers back and forth.”
He said, “What has offended me the most, what I think has insulted me the most is that every step along the way, they have blamed these health orders. They have blamed this on decisions being made by health-care officials. They have blamed this on wanting to protect their employees and customers. They’ve very much latched onto this is a COVID-19 problem to the point where when they sent me the termination agreement, the agreement is called the coronavirus termination agreement, which is insulting. It’s taking this epidemic and using it as air cover for making a financial decision that just ends up screwing every customer that they are trying to do business with.”
Dooley added, “We absolutely could have closed on this house without ever having to break any sort of guidelines around social distancing. And so for Zillow to blame what’s going on from a health-care standpoint for their financial decision to break this contract and put that burden back on me and their customers is really insulting.”