In Episode 61 of the Wandering But Not Lost Podcast, co-hosts Matt Emerson and Jan O’Brien talk about how iBuyers are becoming more and more a part of the process and how to better understand how they work and how you can use them to your benefit. Matt continues to wander the California Central Coast with a stop at the ultimate model home tour – Hearst Castle.
WBNL 52: Understanding & Leveraging iBuyers
- Zillow Instant Offers
- Open Door
- Redfin Now
- We Buy Ugly Houses
- Keller Williams – later in 2019
- Realogy – select Coldwell Banker Agents
- New Wholesalers
- Deep pockets – well-funded – lots of capital
Benefits to Seller
- Fast, No Hassle Transactions (CONVENIENCE)
- Cash Deal – No worry about escrow falling out/buyers not qualifying/changing their mind
- Choose your closing date
- May get moving credit
- May be able to stay in the home for a while
- Not always a low-ball offer
SELLER SCENARIOS – MAY BE GOOD FIT:
- Contingency on new home sale
- Out of state – Seller inherited home
- Seller ill – not convenient to show home
- Divorce sales
- Any situation where the seller needs a quick sale and is okay with selling under market value
Downside for Seller
- Under market offers – leaving money on the table
- 7-12% fee charged by iBuyer
- Seller still has normal closing costs
How Does It Work?
- iBuyer Company uses automated home valuation model & other technology to generate cash offer price
- Don’t make offers on all properties – iBuyers want livable properties and typically don’t buy distressed homes
- High volume lets iBuyers make less money on each home
- Zillow – Inspection – then two offers one with required repairs
Opendoor and the iBuyer Business Model by Mike Delprete
Opendoor Business model
- Opendoor buys houses and owns them, acting as a middleman (as opposed to a matchmaker) in residential real estate transactions
- Opendoor won’t buy every house — qualifying properties include single-family homes built after 1960 with a value between $125,000 and $500,000
- Opendoor makes money in two ways: from the service fees it charges, and from any difference between what it buys houses for and what it sells them for
- Opendoor works with real estate agents, offering to pay full buyer commissions, as well as seller commissions if a sale comes from an agent
- Nov 2018 – Phoenix 5% of the market was iBuyers (OpenDoor 3%)
Be the Trusted Advisor – Consultant!
- Understand the process for each of the primary iBuyer Companies
- Most will pay a fee to you of 1-2% if you initiate the offer request on behalf of your client
- Add iBuyer Option as a possibility in your Listing Presentation
- The KEY is advising your seller and presenting all the possibilities for a sale base don their GOALS …. Not YOURS!
- The other KEY – using NET SHEETS For the scenarios!
iBuyer Agent Pages
Wandering Zen: La Cuesta Encantada
“Never turn down a job because you think it’s too small, you don’t know where it can lead.” That was an understatement of monumental proportions by architect Julia Morgan if, in fact, she was speaking about William Randolph Hearst’s request to help him build on his family’s campsite in the Central Coast of California. The Hearst Castle story has many chapters, however, each touch one of the two people that brought it to reality, William Randolph Hearst and Julia Morgan.
The Hearst family ranch encompassed over 250,000 acres of pristine coastline, grassland, and foothills. William Randolph Hearst, the businessman, politician, and developer of the nation’s largest newspaper chain and media company, Hearst Communications, inherited the ranch after his mother’s passing in 1919.
His mother was a huge influence in young William’s life and they spent many months traveling abroad together, collecting art, and architectural items. In the 1920s and ’30s, it was approximated that the Hearst collection accounted for 25 percent of the world’s art market. Much of it is on display today throughout the world. The buildings in San Simeon were designed to showcase his magnificent collection and the main house along with the guest houses seem as much a museum as spectacular living spaces.
Hearst’s initial request to Julia Morgan was actually a complaint about how he was tired of camping out in the open at ‘Camp Hill’ on the ranch. He noted that he was interested in building a “little something”.
Julia Morgan was the first woman to study architecture at the prestigious Ecole des Beaux-Arts in Paris and the first woman to work as a professional architect in California. During her 45-year career, she designed more than 700 homes, churches, office buildings, hospitals, stores, and educational buildings.
Her architectural style was on the eclectic side, which was a huge asset on this particular project because plans were often made on the fly and changed frequently. The iconic Neptune pool that is one of the most photographed areas of the property is actually the third iteration, each grander than the last. She was notable for her meticulous craftsmanship and creation of inspirational interior spaces. She also had a quality that any billionaire appreciated, sticking closely to the budget.
La Casa Grande, the Mediterranean inspired main house is the centerpiece of the property. The building was meant to be reminiscent of a Spanish cathedral with its ornate twin towers, carved teak, and colorful tilework. The 3 guest houses are named for their orientation on the property, Casa Del Sol, Casa Del Monte, and Casa Del Mar, with magnificent views of the hills, the sun, and the sea. The ceilings throughout all of the buildings were collected from around the world. Most didn’t fit the rooms they were going into so skilled craftsmen duplicated patterns and created seamless new pieces to make the ceiling appears as an original. Hearst and Morgan also added their own touches to these ornate ceilings by adding family crests, and monograms here and there. You can visit dozens of times and never see every detail, there are far too many to find.
In all, the team labored for almost 28 years on this incredible estate. During that time the 127 acres was filled with beautifully manicured gardens, terraces, pools, and even a private zoo. The main house is 68,500 square feet with 38 bedrooms, 42 baths, 30 fireplaces, and 14 sitting rooms. The ‘tiny’ guest houses come is as follows:
- Casa Del Mar – 5,350 square feet, 8 bedrooms, 6 baths
- Casa Del Monte – 2,550 square feet, 4 bedrooms, 4 baths
- Casa Del Sol – 3,620 square feet, 8 bedrooms, 8 baths
La Casa Grande also boasts a medieval dining hall, billiard room, and movie theatre, not to mention space for the staff to prep for Mr. Hearst and his guests.
It was a remarkable collaboration. Hearst and Morgan created something that you truly have to see to believe. Is was designed to be grand and they certainly hit the mark, however, there are subtle touches everywhere as well. They truly created La Cuesta Encantada.
Touring Hearst Castle
The California State Parks has owned and operated Hearst Castle since 1954 and in 1958 the Hearst San Simeon State Historical Monument was established, and that year the estate was opened to public tours. They have been incredible stewards of this masterpiece and are always creating new ways to experience the estate. The current tour options are listed below, but always check their website before your trip just in case something new has been added.
If you are a first time visitor, the Grand Rooms Tour is probably the tour for you. It provides the best overview of the property and you will definitely feel the grandeur of the estate. All of the tours are incredible, however, the evening and holiday tours will actually whisk you back in time and allow you to experience just what it must have felt like to be one of Heart’s invited guest.
All of the tours include the bus ride up the hill, where you may spot zebra from Hearst’s zoo grazing on the coastal grasses. Once at the hilltop, you are invited to roam the gardens of the estate at your leisure and take in the manicured beds, intricate tile work, beautiful statuary, and out of this world views of California’s golden hills and the vast Pacific Ocean to the west.
You’ll meet your tour guide at your tours designated starting location and then you’ll be off on your adventure. Afterward, you will be able to spend as much time as you like back in the gardens before you head down the hill for the day.
When You Come Off of the Hill…
There are numerous options for lodging in the area, San Simeon and Cambria (about 15 miles south) boast oceanfront motels along the Pacific Coast Highway. If you looking for something a bit different, try the Cambria Pines Lodge which is located in the hills above Cambria. There are several room options, including larger stand-alone bungalows, that are very nice and well maintained. There is also a footpath that takes you down the hill through the forest to downtown where you can explore the galleries, shops, and restaurants. It provides a little reflection and wandering time for you!
Don’t miss taking the short drive through San Simeon where you can really get a feel for where all of the artifacts, antiques, and supplies were delivered by boat at the San Simeon Pier and if time permits, stop by Sebastian’s General Store, built in 1852 for a wine tasting and delicious food.
A short 3.6-miles north on PCH will take you to the elephant seal rookery. This is a must-see on your trip. We’re fans so visit our Elephant Seals of Central California post for more info.