It’s doesn’t get any easier for buyers. Either you find yourself caught up in competitive situations, or scared to touch anything that has been on the market for more than a month:
I would agree that the business of selling homes hasn’t changed much. Internet technology has provided great assistance, but nobody has figured out how to replace realtors yet.
But outsiders think our industry is ripe for a change.
Here’s another start-up coming this summer:
Rabois’s startup was code-named HomeRun, and the seed for the idea was planted more than a decade ago, as VentureBeat reported in April.
“My friend [PayPal and Palantir cofounder] Peter Thiel suggested that I come up with an idea to innovate in residential real estate,” Rabois told VentureBeat in April. “It’s the largest part of the economy unaffected by the Internet. And that was definitely true then, and even with things like Trulia and Zillow, it’s fundamentally true today. But the process of [selling a home] hasn’t been transformed by technology.”
Now, that could change. OpenDoor will launch in July, its website promises.
The startup will “work with sellers directly to purchase home[s],” “work with local partners to rehab, maintain, and improve our portfolio of properties,” and “partner with local brokers and Realtors to market, list on [the multiple listing service], and resell to retail buyers and investors,” according to the site online now at opendoor.com.
That description sounds even more interesting than what Rabois told us originally. It shows that OpenDoor will do a lot more than just run a self-service website.
“We don’t have more information to add at this time,” Rabois wrote in an email to VentureBeat after this article was posted.
Their website (click HERE) promises to provide:
A transparent and simple sales process.
Full certainty on the price and close date.
Receive an instant offer online and funding in as soon as three days.
They expect that sellers will contact them, looking to sell their house for a small discount in order to close in a few days. The I-News said HERE that the discount would be less than 8%.
But sellers already think their home is worth at, or above, actual market value, so the 8% will sound more like a 10% to 15% discount to them. If there are sellers willing to dump and run, then guys like Tom Tarrant will be much more efficient in procuring the sale, because the folksy personal visit will be more effective than a website offer.
Even though it doesn’t sound like he has sold homes previously, the opendoor guy has confidence in his model:
“We have to value the home, sight unseen,” he said. “You can put in your address and we tell you what it’s worth instantly. And we’ll want to buy it from you for that price.”
Underneath the covers, HomeRun will analyze lots of data — some being proprietary, some not — to make an split-second calculation, with minimal human interaction. It’s “pretty complicated stuff,” Rabois said.
To do such work at scale would be vastly more complicated. So, at least initially, HomeRun will focus exclusively on the U.S..
“This can be a $10 billion to $100 billion [business] if we just do the U.S. correctly,” Rabois said. “I don’t want to get distracted. Focus is the most important thing for startups.”
They are going to determine what to pay for your house from a central command tower, pay out the cash in a few days, and then rehab and flip?
A better idea would be for a start-up to hire the best agents in town and create an exclusive marketplace.
The decline in foreclosures continues, but the pundits and media don’t really look into it much further. Here is the best quote they could come up with in this article, linked below (hat tip to Stormin’):
“We have now registered two and a half years of continuous decreases in the number of homeowners who are in some stage of the foreclosure process. This consistent decline means fewer Americans are experiencing the distress of delinquency and default,” said Anand Nallathambi, president and CEO of CoreLogic.
The foreclosure notices and the number of properties actually foreclosed have dropped considerably in San Diego County.
We have had 1,500 to 2,207 notices sent out per quarter over the last 12 months, but only 450-610 properties foreclosed per quarter. The big gap makes you think that the banks/servicers are still throwing loan mods at anyone who wants one, and cancelling any notices soon thereafter.
A time lapse film on the Cocos fire:
Occasionally, the ivory-tower set comes up with these wacky ideas to have banks share risk with borrowers. Fannie and Freddie may not be interested just due to the complexity, but if a private bank gave it a run with a good marketing push, they might find an audience. Hat tip to Scott S. who sent this in from Bloomberg BusinessWeek:
Entertaining as it is, playing the financial crisis blame game gets us nowhere. A more useful contribution from Mian and Sufi is the shared-responsibility mortgage, their prescription to make economies less vulnerable to debt-fueled bubbles. In such a mortgage, lenders take some of the hit if housing prices fall and reap some of the reward if they rise. “Had such mortgages been in place when house prices collapsed, the Great Recession in the United States would not have been ‘Great’ at all,” they argue. “It would have been a garden variety downturn with many fewer jobs lost.”
Their claim is bold, perhaps too bold, but the strategy for making debt less dangerous by putting a twist into the 30-year fixed-rate mortgage is sound.
If an index of home prices in a home’s ZIP code fell, say, 30 percent, then the borrower’s monthly payment of principal and interest would also fall 30 percent. That’s not achieved by stretching out the length of the loan, which lenders sometimes will do: Despite the smaller payment, the mortgage would still get paid off over 30 years. Financially speaking, it would be equivalent to getting a reduction in principal.
If prices recover, payments go back up, but never above the original amount. Lenders would ordinarily charge a higher rate for that protection, but Mian and Sufi calculate that they would be willing to forgo a bump on the rate if they were given some upside potential: 5 percent of any capital gain the homeowner gets upon selling or refinancing the house.
Read full article here:
At the end of this video is a solution to what might be ailing Phase 2 sales on this side of the street:
A real-life example that epitomizes the struggle of many to move up.
Jaimie Adler said it’s getting cramped in the Lexington, Massachusetts, house she shares with her husband, two daughters and an au pair who occupies the former office. They’d sell, Adler said, if more homes were on the market in the Boston suburb.
Adler is staying put — and she’s not alone. The dearth of residential listings nationwide is now feeding on itself, with homeowners such as Adler reluctant to sell because of the difficulty in finding a place to buy. For others who refinanced into historically low interest rates, the prospect of rising borrowing costs makes selling less appealing.
Adler and her husband, Jeffrey Palter, are planning to expand or rebuild their 1,250-square-foot (116-square-meter) home after talking to an agent about listing it last year. Selling would be too risky, Adler said, because they might get stuck renting an apartment like a friend whose house hunt in the area lasted a year.
“We’ve decided to stay and work with what we have,” said Adler, 42, who runs a public-relations company from her guest bedroom. “We found some bigger homes in the neighborhoods we liked, but they’re more money and they’re still 25 years old, so they need the same amount of work.”
Mark Fleming, chief economist of property-data firm CoreLogic Inc., said the inventory is even tighter than it seems. Some properties are not desirable because they’re in unpopular locations or lack the amenities that buyers want, he said in a report last week.
The “inventory of homes for sale that buyers actually want to purchase is even less than what’s on the market now, and many people who are looking (and qualified) to buy a home are holding off because they can’t find the right one,” Fleming wrote. These “buyers waiting in the wings are the new ‘shadow demand.’”
About half of mortgaged homes have below-market loan rates, Fleming said. Some 3.57 million likely sellers may be discouraged from listing their properties because the cost of financing their next home will be higher, he said.
Adler, the homeowner, said a local builder approached her a few months ago and said his client wanted to buy her house, built in the 1940s, and renovate it.
She and her husband instead decided to improve the house themselves because they like the quiet neighborhood and the area’s schools, she said. Adler said she’d prefer to have at least 2,000 square feet of living space, an open floor plan, a finished basement and a “fantastic kitchen.”
“There are gorgeous homes in this town, but they start at a million dollars,” she said. “It makes more sense to stay and renovate so you get exactly what you want.”
Adler said the chances of her putting her house on the market are minuscule. An agent suggested last year that she list the property for $725,000, she said.
“The only way I would list this house is if I could buy something first,” Adler said. “It would take me inheriting a million dollars to buy something first — or winning the lottery. And I don’t play the lottery.”
Robert Shiller says in the video below,
If he thinks homeowners/homebuyers are losing interest because sellers keep asking more, then I’d agree. The Case-Shiller Index for San Diego may be creeping up at roughly 1% per month, but list prices seem frothier.
But mortgage rates in the 3s will ignite the frenzy all over again!
San Diego’s Case-Shiller Index had another nice monthly gain, up 1.34% from February’s number. The total gain for the first three months of 2014 is higher than the first quarter total in 2013!
The YoY increase is staying among the best in the country too, ranking the third highest of the Composite-20 cities. The SD CSI was +18.9% YoY, behind only Las Vegas (+21.2%) and San Francisco (+20.9%).
Our current 199.60 index is still 20% below the San Diego all-time high of 250.34, recorded in November, 2005.
These are the non-seasonally adjusted numbers below (though the seasonally-adjusted number was the same this month):