Florida and Zillow Home Values
In Florida Zillow Loses Money Flipping
Corporate Buyers are on the Rise
Zillow has already agreed selling approximately 2,000 of its properties to Pretium Partners. There are also institutional investors that are already appraising the property portfolio of the company. Other potential corporate buyers include Invitation Homes and American Homes 4 Rent.
Zillow already stated their plans earlier to market its homes to everyone. According to them, they are continuing to sell the rest of their inventory in the same way that they used to. They are open to selling their properties to all types of buyers, including families, individuals, nonprofits, institutional investors, and individual investors.
Increasing House Prices
The median price in the month of September for existing single-family homes in the US, the type of property that flippers purchase, has seen an increase from the same month in the past year.
However, Zillow continued speeding up this year’s purchases until they decided to stop mid-October. Approximately two-thirds of the properties that Zillow owned in their five largest markets have been listed at a loss. In Florida alone, some of the Zillow properties were posted at cheaper prices than what Zillow has paid for them.
While there are many flipping companies in Florida, there is still a very small chance for Zillow to sell at bargain prices in the open market. The situation is different from the housing crisis that occurred more than 10 years ago when foreclosures led to a surplus of properties on numerous markets.
House Flipping No Longer Spins Money as It Used To
House flipping is where you buy a rundown house at a cheap price, renovate it quickly, and sell it off for a profit. But while it used to be such an enticing project with attractive ROI, house flipping has now become less lucrative even for the seasoned flippers. Labor shortages and difficulties in the supply chain during the COVId-19 pandemic mean that it now requires more time and expenses to transform neglected properties into renovated gems with higher price tags.
Even though there are still some house flipping transactions for the past few months, sales of flipped homes have catapulted to the least number of profits in 10 years.
There was a slower pace to the increase of resale prices compared to how things were when the recent number of home flippers originally purchased their properties.
This is one of the reasons why most of the homes that Zillow has dumped will most likely get sold off to the corporate buyers that will turn them into rental housing. If not, there is a chance that these properties won’t be entering the market anytime soon.
Cash Remains King
Through the years, Zillow is a household name in the world of real estate. The website is the go-to place for checking the value of properties, comparing them against neighbors, searching for prospect candidates, and touring with real estate agents.
It wasn’t too long ago when the company tapped into the business called iBuying. Instead of individuals, companies placed their offers on the properties with the use of an algorithm for predicting the worth of the home and how much it can be sold off for.
There were enticing offers, quick and all in cash in exchange for an offer slightly lower than usual. The seller didn’t have to worry and deal with buyers, agents, renovations, or tours. Properties are sold as is in just a matter of clicks.
They don’t rent and buy old for the most part. With house flipping, they will buy your property today, apply a new coat of paint, install a new carpet, and do some touchups and fixes. The whole process doesn’t require a big investment and list it on the market again to sell it after one to three months.
Zillow wasn’t the first company to do it. There are also other companies competing against average real estate agents on a daily basis. But what sets the company apart is its scale. With their desire to be the game’s biggest player and with billions of dollars to back them up, Zillow pushed their limits, providing sellers with better deals in an attempt of acquiring as many properties as possible.
With the surplus of Florida homes for sale courtesy of Zillow dumping their properties, it still pays to be extra cautious. While it is easy to get tempted with their low prices, it still pays to be extra cautious before you let the dough roll out.
Make sure that you inspect and check a potential property prior to signing on the dotted line. This way, you can have the peace of mind that you will be making the most out of your investment and take advantage of Zillow’s somewhat embarrassing failure. Always be a wise buyer and don’t take the plunge recklessly.