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iBuyer disruption; Pandora’s box; Snapdocs & Freddie Mac 💬

By October 7, 2021 No Comments

A (Sacramento) snapshot of iBuyer disruption

Rise&Shred is keeping its eye on the growing and disruptive business model of iBuyers. 

Most recently, Opendoor started trying to outgrow its competition in the iBuying wars, amassing billions in new borrowing capacity to purchase more homes. 

The company recently arranged an amended mezzanine debt facility with a $3 billion limit, Bloomberg reported, that combined with other transactions, has increased its borrowing capacity to $9 billion.

That’s some serious purchasing power. 

But how disruptive are iBuyers at the local market level? 

We’ve never been able to say, until now.

According to Ryan Lundquist of the Sacramento Appraisal Blog, the iBuyer model has been on a buying spree in many parts of the country — but especially in his. 

“They are purchasing to flip and here is a breakdown of their activity in the Sacramento region based on Tax Records (Realist),” he said. 

Here’s what he found:

  • Opendoor, Zillow, and Redfin own 690 units in the region.

  • Opendoor and Zillow each own about 330 properties.

  • The average price of acquisition was $555,000.

  • The median price of acquisition was $545,000.

  • Besides a few outliers they are NOT targeting the luxury price point.

  • iBuyers represent 6.4% of all listings and pendings right now.

  • The iBuyer model does not represent 93.6% of the active market.

  • Acquisitions are spread throughout with half of purchases below the regional median price and half above.

But how invasive in the iBuyer business model? Lundquist is not all that worried, it seems.

“Often the narrative is that investors are dominating the market and buying everything. For instance, there were sensational tales a few months back about Blackrock purchasing way above market value, but I have yet to see any data to back up those claims (I’m open ears if someone has something),” he writes. 

“Anyway, there is no mistaking growing interest from tech companies and Wall Street within residential real estate and we need to watch what they do. But we also need to keep sensational narratives in check,” Lundquist added.

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What the Pandora Papers reveal about real estate holdings

If 2021 has an international burn book, it’s the Pandora Papers, a two-year-long investigative exposé conducted by more than 600 journalists worldwide.

Unlike some other famed documents revealing the corruption encouraged by the world’s most prominent power players, this specific collection of 12 million confidential files centers on the financial secrets—luxury property machinations—of global political leaders. 

Everyone from Pakistani Prime Minister Imran Khan to former British Prime Minister Tony Blair appear in the report. 

Indeed, the Pandora Papers extend far beyond these public officials and heads of state; the Papers span their entire inner circle.

Luckily for us, Architectural Digest examined the Pandora Papers from a real estate perspective and it’s soooo interesting how our bread and butter is simply icing on the cake for the uber-rich.

For example, Jordanian King Abdullah II had bought a whopping 14 homes, all of which are worth more than $100 million, in both the U.K. and U.S., through entities organized and operated by another organization. 

Four of his homes are highly coveted multimillion-dollar clifftop bungalows in Malibu, California. SWANKTASTIC!!!

But this only scratches the surface, as AD admits that the amount of under-the-radar real estate is unprecedented, and there’s no telling how deep the hooks go.

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Freddie Mac will work with Snapdocs to help lenders implement digital mortgages

Snapdocs now has the blessing of Freddie Mac to “empower lenders to more readily adopt eMortgages,” according to this statement.

According to the statement, Lenders have struggled with eMortgage adoption due to the unique technical components required to store and manage eNotes, the variability in counterparties’ digital closing acceptance policies and the complexity of implementing and managing the process changes eMortgages require. 

The program was specifically designed to solve these challenges by providing lenders with the tools and support needed to effectively implement the use of eMortgages.

“In today’s competitive landscape, our lender clients are focused on innovative and efficient technologies that can extend value and reduce time and costs while improving customer experience,” said Sam Oliver, vice president, product delivery for Freddie Mac Single-Family. 

“We are excited about our partnership with Snapdocs and we look forward to working with them and our clients to continue the industry’s journey towards a true digital mortgage.”

Snapdocs eMortgage Quickstart Program provides the following products and services:

  • Technology necessary to generate, store, manage, and transfer eMortgages that is agnostic to lenders’ existing point-of-sale systems (POS), loan origination systems (LOS), or doc prep providers;

  • A robust eMortgage implementation framework combined with expert professional services to enable lenders to not only implement but operationalize and scale their use of eMortgages;

  • Streamlined implementation processes between counterparties to reduce complexity and facilitate eMortgage approval and onboarding processes

  • An e-Eligibility engine to help lenders determine precisely how digital each closing can be;

  • A forum to discuss the latest eMortgage developments and share best practices with other program participants.

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