All You Need to Know About iBuying

All You Need to Know About iBuying

The real estate industry was already undergoing historic disruptions thanks to an array of new technological applications for the basic practice of buying and selling property. Everything from blockchain and AI to the showing of homes via virtual reality platforms makes this sector a Brave New World indeed.

 

But just when you thought there was enough tech changing the game, a new phenomenon of the Digital Age is turning real estate on its head once again. It’s called iBuying, and it may be the hottest trend in real estate.

 

What is iBuying? This is when an individual or company buys and sells real estate assets strictly through connected digital platforms.

 

This new way to trade is being done by entrepreneurial, independent and self-employed speculators — but iBuying has also been embraced in a big way by both emerging and established companies, such as Zillow, OpenDoor, Knock, Offerpad and RedfinNow.

 

iBuying is actually much like house flipping, except the strategy is different. Operators don’t seek run-down fixer-uppers to remodel and sell at a sweet mark-up. Rather, they search out homes in good to excellent condition. They buy at a fair market value and then attempt to resell for a profit. That obviously means much lower margins than traditional house flipping. Thus, iBuying is high-volume trading at low margins.

 

The iBuying concept has not penetrated all areas of the U.S. as of yet. Most of the activity is seen in locations where average properties run in the $250,000 range.

 

Homeowners can get involved in iBuying. They start by going online to seek offers for their home. The first step is filling out basic information, such as the appraised value of the home, features, information about location, any recent remodeling that’s been done and so on. The homeowner hopes a company like OpenDoor or Knock will like what they see and make an offer.

 

The professional iBuyer has incredible tools at his or her disposal. For example, they deploy an Automated Valuation Model (AVM) which will provide an estimate of the home’s value. They also use AI applications to pour through hundreds of prospects and ferret out the promising deals while rejecting the marginal ones.

 

An iBuyer can sit back in his chair in a home office and ply the nation for real estate opportunities while never having to pound the streets, go out and show a home, talk to clients, tack up advertising signs or perform any other of the trappings of traditional real estate activity.

 

4 Real Estate Trends in 2021

4 Real Estate Trends in 2021

In 2020, the housing market experienced record sales due to extremely low mortgage rates and the new flexibility that comes with working from home. In addition, home prices have remained competitive as demand continues to increase. But what will the housing market look like in 2021? Take a look at what experts predict the trends will be this year.

  1. Low Inventory

    The number of homes on the market has been pretty low. It has been relatively easy for sellers to sell their homes but not as easy for buyers to purchase. Supply and demand will likely continue and increase home prices by quite a bit during the first half of 2021. But during the second half of the year, economic headwinds may start to cause prices to decrease slightly and the number of homes on the market to increase.

 

  1. Rising Home Prices

    Given the pressure to buy quickly because of low inventory, home prices should continue to increase, and there won’t be much room or time for negotiation. While this is great for sellers who stand to make a substantial profit on their home, it’s not the best news for buyers. If you’re looking to purchase a home in 2021, you must go into the process knowing what your max budget is. You need to be ready to walk away from home despite pressure to act quickly and spend more than you can afford.

 

  1. Incredibly Low Interest Rates

    Mortgage interest rates dropped to an all-time low in 2020, and this trend is expected to continue into 2021. Many economists expect interest rates to hover around 3 percent in 2021, increasing compared to 2020 rates but still incredibly low. Low interest rates are good news for both buyers and sellers because they help reduce overall mortgage costs and make buyers more motivated.

 

  1. More Online Services

    More virtual tools, such as online selling and buying, virtual real estate agents, online closings, and more have become quite favorable during the COVID-19 pandemic. As the virus continues to surge, these are expected to continue to be prominent in 2021 as well.

 

Buying and selling a home can be a stressful task. While the real estate market has faced many unprecedented challenges recently, there are some significant benefits to buying and selling homes right now. These positive trends are expected to continue into 2021, so be sure to consult with a real estate agent as soon as possible if you’re considering listing or purchasing a home this year.             

How to Determine if a Home is Worth Flipping

How to Determine if a Home is Worth Flipping

An essential skill in making a house flipping profit in the real estate business is knowing how to value a house properly. For individuals who are in the industry to make profits from low purchases. Here are ways to determine worthy homes to flip.

Average Value Determination: The house post-rehab value is determined by considering the cost of the houses in the general vicinity and the price of recently sold homes similar to the post-rehab vision. The final worth after repairs is the value you use for determining the worth of the house.

Standard cosmetic rehab: A general rule to estimate repair costs is $20 for every square foot. Based on this assumption, adjustments can be made upwards or downwards depending on the individual house’s specifications. This value will help determine whether to select the house for flipping.

Transactional expenses: Purchase closing costs are usually paid by the seller and account for 0.5 percent of the purchase price. The selling closing costs range between 1-6 percent, with an additional 1 percent as attorney fees. Holding costs such as property taxes, insurance, utilities, and maintenance costs should also be considered.

Offer price-setting- There are formulas to determine what offer price will be stated. One way is to get 70 percent of the average repair value deducting the repair costs. Another way is to subtract the repair costs, closing and holding expenses, and desired profit from the ARV to get the right offer price.

Geographical setting: Proximity to facilities such as shopping malls, transportation services, and school increases the property’s value while highways and airports decrease it. Different locales may have various school taxes, municipal and private trash collection companies with different days.

Physical attributes: As much as the seller wants the house to stand out, it shouldn’t be so significantly marked up in features that it overshadows the neighboring houses. It will only lead to a scenario where it will be too costly for that neighborhood. The most successful house flips are those that have the most work. However, if structural issues are suspected, it would be wiser to buy a house in better condition.

Lenders- Rehab lenders give between 65-70 percent of the ARV. This factor is because an investment is made with the anticipation of making money in the end. If the lender advises otherwise, then there will not be enough equity for the investing party to make money in the end.

Important Factors to Pay Attention to Before Buying a Home

Important Factors to Pay Attention to Before Buying a Home

There can be little doubt that the purchase of a new home can be one of the most meaningful and exciting events in a person’s life. But there are certainly several steps that most potential homeowners will need to take before signing off on a big mortgage. Here are just four important considerations to make before purchasing a new house and why buyers must always beware in the housing market.

 

  1. Where is the House Located?

In the current housing market, there can be little doubt that a house’s potential value over time will be in large part determined by its location. To illustrate this fact, simply consider that a vacant lot in Palo Alto, California recently went on the market for $9 million. Indeed, the going wisdom in real estate circles for decades has been that the least impressive house in a good neighborhood is better than the most impressive house in a bad neighborhood.

 

  1. Foundation Damage

If there is visible damage to a house’s construction, potential buyers may want to give a home purchase a miss. For example, cracked concrete or uneven and lopsided floors can both be signs that a house has suffered serious foundational damage over the course of its history.

 

Moreover, fixing these issues can be a major post-purchase investment that can add tens-of-thousands of dollars to a home’s “real” cost. If you don’t want to add to the already-sizable budget constraint of taking out a mortgage, in other words, it is important to be certain that there won’t be hidden repair costs to deal with once you’ve bought a new home.

 

  1. Water Damage

In addition to foundational damage, it is very important for potential buyers to determine whether a house has sustained significant water damage. Issues related to water damage can severely affect both future repair costs on a home and the well-being of the house’s structure itself. To put it mildly, no one wants to be forced to move out of a house that they’ve just purchased! Before you finish your first inspection on a house, be sure to examine ceilings and floors for permanent stains or other signs of flooding.

 

  1. Mold Issues

When given the chance to examine a house, potential buyers should definitely be on the lookout for issues related to the growth of mold. Red or black spots around sinks, toilets, tubs, or tiling can be signs that a house is suffering from serious mold issues; indeed, dealing with these problems can be expensive and time-consuming. More importantly, issues related to mold can also affect the health of you and your family.

 

While it may be tempting to sign off on a house that seems like a dream home, savvy homebuyers should always take a critical approach to invest in real estate. Adding huge repair costs to a mortgage can often strain a person’s financial resources to the limit. Certainly, that’s no way to start a new chapter in your life.

What Makes a “Good” Location in Real Estate

What Makes a “Good” Location in Real Estate

Everyone agrees that a good location can make or break an investment property. While that is true, a locality place means different things to different people. The crucial considerations are accessibility, personal needs, amenities, and appearance. When shopping for some land, here is what you should consider.

 

1.Population growth

Places with a high population growth tend to attract a higher price and value because of their great potential. People prefer living in areas where they can find lucrative job opportunities, enjoy good weather, favorable local politics, and natural attractions. When doing market analysis, these are some of the factors that come to play, so a location that lacks these aspects may not be an excellent place to invest.

 

2.Lot Position

You need to consider the exact position of the land or house. If the home you want to purchase is close to a highway, you might get it for a low price, but you may face challenges when selling it. However, a commercial building that is close to a busy place is an excellent investment. A home with a great lake view is likely to be more valuable and might sell for a high price later.

 

3.Neighborhood

The neighbors you wish to live around are hugely a matter of personal liking. However, most great neighborhoods share some standard features like amenities, accessibility, and appearance. The environment might also determine the minimum size of land to build a house because some estates have restrictions. If you value accessibility, settle for a place that is along main transit routes and has two or more points of entry.

 

4.Centrality

Whether you prefer living in a city or town, the centrality will influence how much you pay for the home. Lands are a limited commodity that is rare in cities like San Francisco that are fully developed and don’t have extra space for expansion. Houses in such places will be pricier and even hard to find.

 

5.Development

Although the current amenities have a significant role to play in determining the value of land, futures ones have a lot to say too. Plans for new hospitals, schools, public transport, and other civic infrastructure can influence the value of the property significantly. Commercial development may also improve the price.

The Benefits of Investing in New Construction

The Benefits of Investing in New Construction

The real estate business is one of the most profitable investments that an individual can choose to undertake. The two options available when investing in real estate is either a resale or new construction. A resale describes a house built sometime back and had a tenant, or the owner was living in it. On the other hand, new construction represents a house where the current buyer is the first occupant.

 

A resale is purchased directly from the owner, while the new construction is from the individual who developed it. Compared to a resale purchase, investing in a new construction comes with several benefits, as listed below.

 

Discounts

 

Investing in new construction, especially during the early phases attracts great discounts than waiting for complete construction. The real estate builders and owners easily offer these discounts as it helps them in financing the unfinished construction and gives them leverage during the development.

 

Low Deposits

 

One of the main advantages of investing in the new construction is the low deposits that the builder needs to seal an agreement. A deposit of up to 10% of the purchase price is enough to secure the developer’s new property. The advantage of settling for the new construction is that the deposits are negotiable, allowing the buyers or investors to minimize as much as possible the amounts they spend on the property beforehand.

 

Low Maintenance and Repair

 

New constructions come with amenities that are new with no damages to them. This factor eliminates any immediate repairs and maintenance costs that the buyer would have incurred if it was a resale. This investment’s greatest benefit is that the buyer gets a warranty from the builder to cover all systems’ costs, including plumbing, for up to 2 years.

 

Property Appreciation

 

For buyers who are looking for properties to resell, the new constructions provide the advantage of faster appreciation than the resale. The general growth around the new property and closeness to essential amenities increases the value of the property.

 

Advanced Technologies

 

The construction world is quickly changing, and the user preferences and tastes lean towards new technologies that the resale cannot provide. New constructions are designed and built with the latest technologies in heat insulation, air conditioning systems, environmentally friendly materials, and low maintenance technologies. This factor means that you get much better deals, better value, and satisfaction with the new constructions.