If you’ve ever received a phone call or mail from a company asking to buy your home for an all-cash sum, you’re not alone.
It’s a common occurrence for homeowners in a hot real estate market, especially for those who live in Charlotte.
And chances are you were contacted by what is known as an iBuyer.
An iBuyer, or “instant buyer,” is a company that uses data to find homes in any given market that could prove to be profitable if “flipped” or sold. One example of such a company is Opendoor, a prominent iBuyer.
In most cases, these companies might make an all-cash offer in an amount that is lower than the home’s worth so they can turn a profit once it’s sold.
Realtors generally advise against giving into iBuyers, citing that the offer made by investors could be below market value. However, Opendoor’s perspective on the practice is relatively positive.
“iBuyers represent a dramatic shift in the way people are buying and selling homes, offering in many cases, a simpler, more convenient alternative to a traditional home sale,” the company stated on its website.
Matt Stone is a broker and managing partner at Matt Stone Real Estate in Charlotte.
“Unless a seller has an immediate need for quick cash, and some folks genuinely do, these investors are generally not the best option,” Stone told The Charlotte Observer.
“Sellers are generally going to capture the highest price and best terms by going on the open market,” Stone said.
iBuying companies such as Opendoor, Zillow Offers, and Offerpad are still thriving. iBuyers purchased more than 70,400 homes last year, according to a report from Zillow.
A joint investigation by The Charlotte Observer and News & Observer recently reported that about 20 corporate landlords own at least 40,000 single-family homes in North Carolina. That figure also includes 25,000 homes just in the Charlotte area.
iBuying, and the practice of flipping the home for a larger profit, are two of the driving forces behind the rising costs of home-ownership, Business Insider reported. However, Zillow Offers and Opendoor are among two companies that have been reprimanded for their practices in the North Carolina real estate market.
Zillow Offers shut down operations last November. And earlier this year, the North Carolina Real Estate Commission took disciplinary action against Opendoor for multiple instances of negligence and false advertising.
The penalty involved an 18-month suspension of the brokerage’s firm license, according to the Commission’s April bulletin report.
According to a statement sent to the Observer from Opendoor, the suspension was stayed and the company’s brokerage license remains active.
“NCREC worked with Opendoor to remedy the disciplinary actions with additional education. The education offered by the Commission was completed in a timely manner, resulting in Opendoor Brokerage’s license remaining active,” Opendoor said in the statement.
Despite the prevalence of iBuyers in the North Carolina market, Stone told the Observer that homeowners and sellers should expect to see a decrease in how often they are contacted in the coming months.
“Sellers should start receiving a lot less direct mail and robocalls from investors now that the market has cooled down a bit,” he said.
This story was originally published July 12, 2022 3:05 PM.