iBuyers moving into Oceanside home market

“This house is in escrow and it never even had a sign or an open house.”

Mary Ellen Reese has lived in the same South Oceanside home for 37 years. She was taken aback when a similar two-story house four doors down not only sold without any traditional marketing, but that it went for $200,000 to $300,000 more than what she thought it was worth.

The 3/bed-3/bath, 1648-square foot home that just sold was listed on May 5. According to the broker, a buyer was secured in about a week.

A year and a half ago a comparable home in the same tract sold for $670,000. The MLS (Multiple Listing Service) said the home that was just sold was listed at $980,000. Tamara Strom, who handled this new sale, declined to disclose the agreed-upon price until escrow is complete, but says that the buyer actually agreed to pay more than the asking price.

“It’s not unusual these days that after two or three days you might get 10 or 15 offers,” says Strom.

Neighbor Reese is not complaining about the skyrocketing value of homes in “South O”. But she wondered if the super-quick, non-traditional sale in her neighborhood might be connected to a disturbing trend she read about in the May 21 edition of the Wall Street Journal: investment powerhouses like Cerberus Capital Management (worth $53 billion) uses so-called “iBuyers” like Opendoor.com to scoop up houses before they even reach the open market.

Cerberus and similar funds bought up 200 homes nationwide in the first quarter of this year avoiding the traditional real estate broker, betting that demand for homes and rentals will continue to outstrip the supply for the foreseeable future. Reese wondered if it was venture capital cash that bought the nearby house.

“It was a buyer from Tucson who wants to live there,” says agent Strom. She says that most of her buyers coming into Oceanside are from cities like, “…San Francisco, Foster City, Palo Alto…they want to be where the weather is better, where there is less stress, more open space, and where the people are friendlier. Where they can walk to the beach.”

But the flippers are out there. Opendoor.com or other companies like Redfin or Zillow are known for paying, say, 10 percent under market price so they can flip them for a profit in a few months.

One local who did want to be identified wants to sell his second home in Oceanside’s Eastside neighborhood. The appeal of getting a cash payout without any intermediaries urged him to contact opnedoor.com. He was given a payout amount of $681,000. After a five percent fee opendoor.com collects, the local would walk with approximately $646,000. He says he is considering the quick, no-fuss cash offer.

Could local real estate agents be cut out of the loop entirely?

Agent Strom says she has no worry about losing potential clients to venture capital monoliths. She says that if Browning or anyone else takes a cash offer from an opendoor.com, they are missing out on a market where competing buyers keep upping the offer.

And besides, she says, it’s the agents who are there to make sure that all the paperwork is in order and that their clients are not getting “ripped off.”

Fellow real estate agent Chris Abad agrees that buyers remain intensely competitive to score an Oceanside single family homes. He recalls one recent sale on Cornish Drive in Oceanside’s Fire Mountain neighborhood that started with a $575,000 asking price. “It ended up going for $675,000, all cash.”

Marc Paskin of La Jolla built a real estate portfolio over 30 years by amassing hundreds of rental properties throughout the southwest. He just joined a group of four or five other buyers interested in flipping homes who advertise on TV. On June 1 he started a run of 30-second TV spots on Channels 8 and 10 that open with the line “You might remember me from the TV show Secret Millionaire, and I want to buy your house.” Paskin tells you that if you let him buy your home for cash, “You don’t have to worry about open houses and you don’t have to worry about strangers going through your house.”

Actually, open house showcases have not even been allowed until recently due to Covid. South Oceanside agent Abad says that open houses and yard signs are increasingly not even needed in this current hot market.

“Everything is online now,” says Abad. “Signs are old school. They aren’t really needed for marketing properties now. They are there to market the agent more than the buyers selling the house.” He says that some sellers are so confident that in some cases it’s only the all-cash offer that wins out in the end.

But when will it end? When will the insatiable desire for homes in coastal North County taper off? Is there a bubble in our future?

Agent Abad says he sees no bubble bursts. But he does see a less intense market than five or six months ago.

“Back around New Year’s you would list it on Thursday, you’d get offers over the weekend, and by Monday you would make a decision. Now you see listings staying on the market longer than a week. There is one [South Oceanside listing] that’s been on the market since May 19, and another that’s been listed since April 29. That hasn’t happened for like six months or so.”