All Forum Posts by: Andrew Taylor

We're working on one now that's got about 2,000sf of first-floor area. It was gutted to the studs when we bought it, so no demo/cleanup costs to speak of. Our budget is $125k and we will spend every bit of that and then some.

This is on top of the $50k the seller had to spend doing mold remediation prior to closing because he didn't leave the HVAC running when he moved out after Harvey.

I would advise against making a flood house your first flip, but if you're going to do it, have a mold inspection done BEFORE you agree to purchase. Get your mechanical trades over there to tell you what's going to be required (lots of times you have to upgrade what's there, not just replace what got wet).

@Chris Martin The service fees he's talking about are actually displayed prominently on the cost comparison we (OD) send to every seller who requested an offer. I assume they also show up on a HUD statement but that's outside of my lane, so I'm not positive about it.

Opendoor is extremely conscious of "market perception," and they go to great lengths to avoid doing things that might reflect negatively on the company. I know of instances of the company mailing refunds to sellers after closing because we didn't use all the repair credit we asked for. It's real easy for a former owner to walk into their old house and say, "Hey, they charged me to paint this room but then they didn't paint it!". Sometimes the home assessor feels like a repair needs to be made, but then the reno guy decides the house doesn't need it later on.

I also know we occasionally buy properties we know we offered too much money for, to keep from looking like a "bait and switch" deal. To be honest, I suspect this happens regularly in all new OD markets while the company gets settled and learns the market. I guess they figure it's a cost of doing business.

Oh - and I'm sorry you feel bad about being "bashed for not being a raging fan of Opendoor." That's rich, based on your string of posts in this thread. Pot calling the kettle black, as it were.

I have no problem with your not being a fan. What I have a problem with is your making up imaginary information to support your position. Post some facts and we can have an intelligent discussion about it.

@Robert Adams You say, "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." As I have said - multiple times now - this information is included in the offer summary sellers receive when they request an offer. You can claim all you want to that it's ginned up, but that sounds suspiciously like a straw man argument from a broker who doesn't like the way the numbers look.

Of course, the flip side of that numbers comparison is that you can't guarantee that you'll sell the same property for what the comparison estimates it'll sell at, can you? You'd like to think you can - and more importantly, you'd like potential clients to think you can - but in reality you may not be able to get that price. What if the market takes a dive shortly after listing? More tariffs are announced? Large local employer shutters its doors? School district suddenly gets downgraded? Starbucks closes? Maybe it's just an uglier house than its neighbors.

Opendoor is making a bonafide offer with that comparison. If the seller's property is as-stated and doesn't require repairs (admittedly, this is rare, but there's already been one poster on this thread who had it happen to them, so it's possible), then that seller can have cash in-hand in two weeks. Period.

People will pay for this convenience. That's the proposition here. It's not for everyone; there are some sellers who, either because of circumstances or personality, must have every last dollar they can get for their property no matter how long it takes. Opendoor is not for them.

Opendoor is for the guy who just got divorced or transferred. It's for the family whose child is getting bullied at school. It's for families with young children and pets who can't reasonably be expected to prepare and maintain a home for showings for months. And, lots and lots of times, it's for people who just don't want to mess with any of it.

@Robert Adams There's a lot of fail in your posts on this subject. You and @Casey Powers could start a traveling "Opendoor Misinformation" roadshow.

Again, for the record, I'm an employee of Opendoor and I will happily answer any questions I am able to. Frankly I hope there aren't too many folks on here falling for the FUD being pumped out by real estate "pros" with ulterior motives.

Also for the record, I want to reiterate the process for selling a home to Opendoor: Request initial offer > Accept/deny offer > Home assessment > Revised offer (typically with repair credit ask) > Accept/negotiate/deny revised offer > Closing.

Negative comments typically come from two camps: realtors, and sellers who have had a negative experience. Of the latter, they can be further broken down into two groups: those with an unrealistic idea of their home's value, and those who didn't understand the process (namely that we're coming out to verify the information they provided).

Regarding values: OD goes to a lot of trouble to research and value properties accurately. It's not foolproof; it doesn't work every time with 100% accuracy. But for someone to say, "They offered $295k and I know for a fact my home is worth $325k," is just hogwash. There is no way to know for sure, and realtors know it can't be verified, it can't be proven, and by the time their clients realize it, they're already locked into a six-month listing agreement. At that point, the realtor simply shrugs and says, "Well, the market dipped." (Opendoor, by the way, tracks properties where the seller declined to sell to us after requesting an offer. When that home eventually sells, we compare the sales price to our offer. If the delta is above a certain threshold, we'll go back and adjust the AVM for that area so it doesn't happen again.)

The reality is, Opendoor provides a side-by-side comparison of the numbers involved in selling to us vs. selling traditionally. It's much easier to understand than a HUD statement. There's zero obligation to request an offer and see this comparison. Realtors don't mention this because it shows that even with fees that are "higher than a realtor's 6% commission," the end costs are about the same either way. Don't believe me? Try it and see.

Got questions? Reach out and I'll do my best to answer them (until OD marketing/legal shuts me down, anyway). (On that note, these are my opinions, not those of Opendoor. Any mistakes are mine and mine alone.)

I'm not sure what you're asking, but I work for an iBuyer and I can answer your headline question: yes, they're on the rise. We make offers on over 4,000 homes per month in the Houston market, and we've been active in the market less than a year.

We're not really competing for the same sellers as typical investors, though, since we buy basically at retail. The vast majority of our sellers just want to avoid the traditional sales process; they're not "distressed" sellers in the usual sense, and they wouldn't for a moment consider an offer at 70% of ARV less repair value.

So, long story short, yes iBuyers are on the scene, but no, you shouldn't be worried about them since they're not direct competitors. Hope that helps.

@Jenae Young General contractors aren't licensed in Texas. Only specialty trades (electrician, plumber, HVAC, etc.) are required to be licensed.

Are you looking for someone to price the work? Or do you already have a budget? Those are two different scenarios. I can give you an estimate to do whatever is on your scope of work, and it may or may not jive with the number you have in mind. Alternately, you can give me your scope of work and your budget, and I can tell you whether I can do the work for what you want to pay.

As a third option, if you're just looking for a ballpark rehab estimate to find out if your deal's numbers are realistic, shoot me a PM and I can give you a tool that'll get you pretty close.

@Natalie Kolodij This is a great explanation of how to record the various transactions related to the purchase and sale of a flip. I have a quick question, though - my borrower's statement includes a construction holdback. It's shown on the debit side of the ledger along with the origination, processing and other fees. Where/how do I account for this money? It's what I draw against after work is done at the house. (I can post or send you a copy of the borrower's statement if needed.)

Thanks in advance for your help!

Other than anal retentiveness, is there a good reason to separate interest, fees etc? Or can it all just go in one bucket until I have some need to know at that level of detail?

You're saying if I buy a $150k house, pay $5k in closing costs, $10k in wholesaler fees, $10k in rehab, $5k in holding costs and interest, and $20k in commissions, then my total COGS is $200k. Correct? Those numbers are all made up BTW. Just trying to make the math easy.

@Chris Purcell Is there something more important to your business than money? I'll hand all of this over to my accountant at some point in the future, but first I'm trying to understand the nuts and bolts of it. Just my personality type. Think of it like property management - it's hard to "manage the manager" if you don't have any idea what a well-run property looks like, right? Same deal here - I want an idea of how things are supposed to look before I start trusting someone else to handle it for me.

I don't have to be the smartest guy in the room, but I like to know something about what's going on.