All Forum Posts by: Robert Adams

I am a firm believer in listing slightly below comp value and getting more applications and selecting better tenants. It pays off in the long run if you are planning on holding the property long term. Getting rent on time and having the tenant take good care of the property and reducing the risk of eviction and reducing the cost of turnover is key to good returns on long term buy and holds. If you are just looking to put a tenant in place for a future investor and need better numbers/returns to help resell the home then this strategy would not apply. Hope this is helpful. Happy Holidays!

We are seeing a strong demand for rentals as well as rental rate increases across the board. We are expecting rental rates to continue to increase in 2020. We are seeing landlords list rentals $50 to $100 a month more than the average comps and getting it in most cases. Thanks for sharing Eric.

Yes it was introduced as another bill that was shut down by Realtor Lobbyist and then they slipped several of the previously proposed items into SB 151 last minute and it was passed. Although it was not as bad for landlords as the initial bill, the new one that passed was not in the benefit of landlords either.  

You also have to provide a letter stating the HOA will allow it which most will not. There are other requirments as well. While it is legal there are many hurdles to do it correctly.

@Chris I was not referring to you regarding the "raging fan" comment. I also have no idea what they are doing in your market as I am not involved there. If they are new there then the margins are probably thinner than existing markets as they tend to give better offers when first emerging into a new market. I would like to mention that you are comparing the sales prices like most do. You would need to compare the bottomline numbers to the seller of each after "service fees" and all the other factors already mentioned. I come across sellers with ibuyer offers often so next time I get a current one I will provide a side by side comparison.

Here is some more info from other Vegas brokers (not from me or affiliated with me): 

https://www.youtube.com/watch?v=XwJ9y9bMTX4

https://youtu.be/k4v0R2eKpWA

https://www.youtube.com/watch?v=sOrEXeULkIM

@Andrew Taylor the side by side comparison is a joke and just as biased as the comps used for their offers. Huge surprise an opendoor employee would come on here and bash people that aren't raging fans of opendoor. 

To be clear I have no problem with sellers selling for a discount to a wholeseller or opendoor or any other ibuyer. I do have problem with them taking advantage of homeowners and not giving an accurate perception of what they are leaving on the table. The comps that I have seen from opendoor do not justify true market value and the service fees exceed traditional commissions. There is no need to go round and round saying the same thing. The bottomline is sellers should get the net proceeds to seller from ibuyers and net proceeds from traditional selling and then make an informed decision. If they are strictly relying on the buyers info they have no idea what they are leaving on the table.

@Chris most people that think they are not making money are looking at the purchase price and the final sale price. Opendoor is making money on all the different factors I mentioned above. To make it simple take all of those factors out of the equation and get the estimated net proceeds (ibuyer vs traditional) and see the difference. 

It is not the popluar stance I am taking but no one is trying to inform the public so at least if they google it and read it here maybe they will dig a little deeper and make an informed decision. If they are informed and choose an ibuyer then more power to them.

I would also add that you will probably see cases like that in the future. If the seller is not represented by an agent and the buyer/Opendoor is the agent for the buyer/Opendoor then they have a fiduciary duty to both sides to treat them fair. I don't think this is currently happening so I could see potential issues for them in the future.

@Jay in order for them to sue...or in order for complaints to be filed w BBB (as someone else mentioned) the sellers would have to at some point become aware of misrepresentation. Most will never become aware and those that do will often not say anything because of the embarrassment they feel for telling their friend how awesome it was only to find out they took a huge loss they were unaware of. Most people will not go back and do that research after the sale is finalized. They have already moved on to the next home etc. I think you are a much more savvy seller than most. I'm glad you get it.

In my opinion there is no doubt their model is currently getting them deals. It is hard to compare them to local brokers since they have SO much capital to advertise and gain the interest of uninformed homeowners. Then they buy and sell through their own brokerage, their own title company, and now their own mortgage company (these are also areas they make a margin I should have included in the post above).  Most deals there is no agent on the sellers side so they do both sides of the transaction on the acquisition side. This model will continue to be successful as long as homeowners are uniformed on the true cost of convenience and as long as the market is appreciating.

@Chris Martin I have no issue with sellers picking the brokerage that fits their needs even if that is opendoor etc. The problem I have is that these owners think they know what they are leaving on the table but in reality it is MUCH worse than what they think. It is corporate greed and there is NO ONE looking out for the homeowner. They think Opendoor is being fair and upfront with them when in fact they don't have an agent representing their best interest nor do they know the true costs and in most cases they don't even know the actual value of their home, so they lose on both ends. I have talked to several people that thought the cost of convenience was $10k to $15k when in reality its $40k to $60k. I did a press release on this topic over a year ago.There are now classes being held no to teach agents how to inform these sellers on process so the seller can make an informed decision. In my opinion 10 years from now there will be articles written on how many BILLIONS of dollars were transferred from homeowners equity to massive corporations. I have also noticed that when they start out in a new market they have VERY thin margins and in some cases minor loses to get positive word of mouth started. Then as they gain popularity in the market and gain market share they increase their margins. Meanwhile the deals in the beginning continue to run around and tell other sellers how great it was.

In conclusion the ibuyers have not affected my business very much. Once I explain the process to the sellers and the true cost of convenience I still get the listings anyways. The ibuyers are easy to deal with on the sale side once they relist, and I would never sell any of my properties to them so I am not really affected. I am on this and others threads mainly to help educate the uniformed sellers out there that are looking for honest info.

Hope this helps.

Its not just about what they paid for the home and what they sold it for. Most of their profits come from the fee structure (which they purposely structure differently so the consumer is more confused when trying to compare it to a tradtional sale). 

They make a margin off each of these steps:

1. Fair market price (is it really fair market if they use old comps or cherry pick low comps?) they supply the seller with a report of value that is biased for them THE BUYER and the seller accepts it as fact when in fact they should have a Realtor give them a second opinion on what the actual value is. (I have read on this thread that some was offered $45k over what a Realtor said the proeprty comped at. I find that VERY hard to believe as I have seen nothing but the opposite here in Vegas.) 

2. They offer slightly less than what they claim to be a Fair Market Price (again making a margin here).

3. They make a margin on their fees that are up to 12% per their own website.

4. The renegotiate repair credits once the offer has been accepted. They may or may not make the repairs before reselling.

5. The markets they focus on tend to be highly appreciating markets, so they make a margin on the appreciation while holding the asset.

To take all the variable out of the equation and know the true cost of convenience do the following:

To make this debate as simple as possible compare 2 things:

1. Net proceeds to seller after selling to an ibuyer like open door, offer paid, or a dozen others.

2. Net proceeds to seller after selling traditionally with a knowledgable Realtor.

If you compare these to things you will see the true "cost of convenience" and can make an informed decision. If option ones gives the seller a check for 300k and option 2 gives the seller 340k the "cost of convenience" is 40k. Then the seller can choose if convenience is worth 40k or not.

ibuyers purposely make the process different than traditional selling so sellers think the "cost of convenience" is lower than it actually is. They do this by using a different fee structure, justifying "fair market offers" with low and old comps. Just cut to the chase and compare the 2 items above.