Barbara Lane didn't think her modest two-bedroom house in Margate, Fla., was that ugly — at least on the outside.
"It had a great backyard and beautiful trees," said Lane, 79, a retired great-grandmother who now lives in Boynton Beach, Fla. "It just needed some work."
After Lane got laid off in 2016, her small pension and savings weren't enough to keep up with the rising cost of living and cover her monthly bills. She decided to sell her home, pay off the remaining mortgage and downsize by moving to a condo.
But real estate brokers told her the property couldn't be listed unless she invested $20,000 in repairs to fix the leaky roof, broken air conditioner, caved-in patio ceiling and old windows.
"I was looking for another place to live but my credit wasn't good and I had no income," she said. "I got into a panic. I had to do something or I would be homeless."
Then she came across an ad for We Buy Ugly Houses, the biggest and oldest player in the growing industry of iBuyers, short for instant home buyers.
We Buy Ugly Houses and other companies in the space — including Knock, Opendoor and Offerpad — allow property owners to sell their homes quickly without the hassle of open houses or advertising on the Multiple Listing Service (MLS) by offering to buy homes for cash — though at less than market value. Even the real estate online giant Zillow has entered the home-flipping game. The average profit on a house flip is about $60,000, or 48%, according to RealtyTrac.
According to the iBuyer site Ownerly, the Miami-Fort Lauderdale area clocked in at No. 1 in a list of the top 15 iBuyer markets in 2020, with Houston and Atlanta coming in second and third place. Tampa, Orlando and Jacksonville were the other Florida cities that made the list.
The area's popularity explains why you see so many signs on the side of the road offering to pay cash for your home. Other common methods of advertising are robo-calls, robo-texts, and even fliers left on your windshield. The companies target homes in neighborhoods where property values are going up. But caution is essential when dealing with buyers who have reached out to you unasked.
A niche market