Zillow Stops Buying In Majors Cities.–Why and What Cash Buyers Are Still Buying in Eugene Oregon.
Robert Grand: Hey, everybody. I’m Robert Grand with Grand Real Estate Investments here in Eugene, Oregon. And today is right at the end of my day, another busy day, but I was recently asked the question, “Are we still buying homes and making cash offers?” And I was kind of like, “Hmm, interesting that somebody would think that we aren’t doing that.” But it made me realize that maybe, with anything, if there’s a market shift or anything going on, people might think that even the cash home buyers are bailing out too and maybe not buying as many homes.
I think, for a lot of them, that could be the case because they may have bought on very thin margins. And I did a little bit of research today and talked to a few other people and realized that the big cash home buyers out there in the world and the US, which they call them iBuyers, which Zillow, Redfin, Offerpad I think, and Compass, they’re some of the major players out there in the world of making these automated offer, trying to make the real estate world a computerized transactional-based process. They stopped buying cash home-buys and making those purchases.
And the reason for that is they were buying on such thin margins that they can’t risk potentially being wrong. And I think that’s probably the biggest reason why people might be thinking people aren’t buying homes for cash right now, because we definitely are. We always run everything by a very specific number. It comes down to an exact formula, and it is 70 to 75% of the ARV, which is the after repaired value minus the cost of sales, minus the repairs, and minus our profit. So our number is very calculative and it’s very dependable. And we know with that, then we can get a loan on the property in the end when we want to convert it over to being a rental property.
But in the iBuyer world, their margins are so thin and they’re not local companies doing this or offering these services. They’re internet-based companies. They don’t know the local markets, they don’t know the local conditions, they don’t know the temperaments going on and what’s affecting things on a local level, so of course it makes sense that they would just have to bail out and say, “We’re not buying any homes anywhere,” because they’re not local people.
I’ve been local to Oregon my whole life. I was born in Medford and I’ve lived in Lane County for the last 40 years of my life. I know every single street. I know every single piece of property, pretty much all around Lane County, especially in Eugene and Springfield, that potentially could be a house that I would want to offer on. I have all the areas built in my brain as to what I want to do and that’s the difference between a local person and choosing to sell your home to a local cash home buyer than one of the big iBuyers out there in the world.
But, at the end of the day, I always say, if you have at least 45 days to get your home sold, you don’t need a cash offer because the market times are still good enough to get your home sold inside of 45 to 60 days and net you more money than what I can pay you. Well, like I just said, the numbers that I worked through before, it always equates to less than you taking a listed home and putting it on the market and getting a retail price for your home, no matter what the market may bear. It will always be more if you put it on the market. And what you pay for when you ask for a cash offer on your home is time and convenience. Time being, you have less than 45 days to get your home sold, and convenience being you might not want to put it on the market because you’ve got to do some repairs, because you got to do some things, because it’s just not market ready.
So, in those situations, of death, divorce, facing foreclosure, other financial hardships, just all those gamut, those big life factors out there, those are the situations when you might want to be calling us. But even if you do call us, if you have the timeframe, we still want to get you the maximum amount of money for your property. And doing the cash buyer route, selling your home for cash, is the last ditch effort, the last thing that you should be thinking of when you’re trying to get your home sold. And with Grand Real Estate Investments, we recognize that that’s the last ditch thing and we left so many people on the table when the offers just didn’t fit for a cash buy that we started realizing that we needed to be able to offer the service of actually the retail side of real estate, which is where we came from. Grand Realty is our real estate company, and if we can get somebody more money, we let them know and we want them to shift over to there if we think the timing’s right. But in the end, if the timing at all goes bad, then they can always come back and accept the cash offer, which is a cool concept that we offer being kind of a hybrid approach. We call ourselves investor agents.
But that’s just my perspective right now. If cash home buyers or people offering cash for homes, if they are still buying or not, the answer is yes, they are still buying, at least we’re still buying, and we’re one of the bigger home buyers here in Lane County offering cash for homes. So we’re still buying and I hope that all the other people out there that are local investors don’t have cold feet and I hope they’re still buying too. So with that, have a great day. Take care.