Not all potential homebuyers plan to live there after the deal.
These days, institutional buyers have been buying homes as investment properties to rent or flip. They may be corporations, shared equity ventures, rent-to-own programs, real estate owned/short-sale buyers, or instant buyers.
But whatever form they take, they love Texas. In 2021, institutional buyers accounted for 28% of Texas home sales, according to an NAR Research Group report from May, Impact of Institutional Buyers on Home Sales and Single-Family Rentals. That’s the highest percentage in the nation and more than double the 13% national average.
Institutional buyers made up even more of the buyer pool in some of Texas’s larger counties last year. They’re in big metros like Dallas-Fort Worth, Houston, and Austin; suburbs; and even smaller markets.
You, as a real estate professional, can benefit from knowing how to work with these unique buyers. Read about what you need to know to thrive in this environment.
When ever a property is bought as a flip that means it probably sold for less than fair market value.
Yes, typically 30%-40% less than fair market value.
Sometimes significantly less than that.
Institutional buyers might be driving their investments into a ditch. Overbearing decision makers could be miscalculating what the future brings from owing a myriad of houses across our nation. I think the institutional buyers are planning too rule and control residential markets for profit over families wanting too live in established neighborhoods. I think the government eventually will step in with rent control including high interest rates. Remember the CARTER ADMINISTRATION, interest rates around 20% or more. I remember investors back then were committing suicide and jumping off high rise buildings. Their investments didn’t make it. They lost everthing. I… Read more »
I was in the real estate market then, and I thought it was a disgrace that the American dream was being discharged with high interest rates. I think the current thing is happening today, with institutional buyers. I believe that all of America is suffering from the big box theories. My heart goes out to the middle class who’s trying to own a piece of the American dream,Miss the days of real estate when you’re helping people with their first home, or helping people who were scaling down to their last home. Somethings never change and nothing stays the same.
It’s a double edge sword. The market is only reflecting what demand is asking for. But you have a group of people who make a good living having to compete with investors. So it makes it hard for a family to find affordable housing that is new. We really did this to ourselves by not investing in our people in the 80’s and 90’s with carpentry, architecture, and housing inovation. We were a college education driven society now you have population who is loaded with debt and it’s difficult too afford to buy a home. Now it’s at a point… Read more »
Institutional investors are driving up the cost of housing for the lower and middle classes. The realtor associations are not doing a thing to address affordable housing.
I get these calls and texts every day wanting off market properties.
Am I the only one that thinks this article is 4-5 months too late? Most of these companies have ceased their purchases. OpenDoor, First Home Key, OfferPad have pretty much stopped with the offers, or lowered them to comedic amounts that nobody would consider presenting with a straight face. For the last half of 2021 and the first half of 2022 they were throwing around money with no regard. Destroying opportunities for local buyers to obtain a “home” as they turned the inventory into “investment instruments”. Now, the rental over-supply in some areas is beginning to sting as homes sit… Read more »