“I’ll say this for people: No dog defends another dog’s food.”
As noted long ago, iBuying as such is a very stupid idea. A flipper came up with it, and it may be that he didn’t really even get the math of flipping, he just started at the perfect time – the bottom of the Big Short real estate bomb; iBuying has lived in no other market than this one, steadily steaming upward for years, now screaming like a tea kettle. In any case, owning a house to fix and flip for resale only makes sense because that’s what you have to do in order to do the rest – where owning non-producing assets (financed!) is always a bad idea. Even then, you have to cheat the original seller – you have to buy even lower the the home’s actual as-is Fair Market Value. You have to control your turnover expenses. And you have to get in and get out fast.
Corporations can’t do anything fast, nor can they control costs. Buying low is only possible where Zestimates don’t grow, so the pure iBuyer business model would seem to have been completely frolicked ab initio – which is of course what I have been saying all along.
iBuyers with a value-add like Curbio or EasyKnock may have a business for a while, and Redfin uses the promise of iBuying to upsell its slow-moving discount listings. Pacaso is an international small-business: A niche offering with any profit potential emerging from its being a time-share: The only winner will be the management company, in the form of recurring fees, and today’s buyers will probably never see a resale return on their “investment.”
That is to say: None of them will matter, going forward. The claims that Zillow has some great data-prescience have always sounded absurd to me: Real estate is a black swan business, and Zillow has seemed to me to be nothing but flat-footed for years now – since Spencer Rascoff did the math on iBuying and went off to find what he hopes is a better way to milk suckers, Wall Street and Napa Valley at the same time.
The truly devastating iBuyer news last week hit at OpenDoor and OfferPad: There will be no deep-pocketed Seattle-based super-sucker to buy them out.
In other news:
