Latest News & Blog

Everything You Need to Know About iBuyers and the "Instant Cash Offer"

Neneh Biffinger, Invalesco Advisor

By Neneh Biffinger - May 14, 2021

Technology is changing the way we do almost everything, and real estate transactions are no exception. In fact, a new crop of tech companies wants to revolutionize the way we sell and buy homes. iBuyer startups like Opendoor, Offerpad, and Properly are rapidly expanding into new territories, and now established players, like Zillow, are starting to get in on the action. Also known as Direct Buyers, these companies use computer algorithms to provide sellers with a quick cash offer to buy their home.

While the actual market share of iBuyers remains small, their big advertising budgets have helped create a noticeable buzz in the industry. This has left many of our clients curious about them and how they work. In this article, we explain their business model, weigh the pros and cons of working with an iBuyer, and share strategies you can use to protect yourself, if you choose to explore this new option to buy or sell a property.
While each company operates a little differently, the basic premise is the same. A seller (or seller’s agent) completes a brief online form that asks questions about the size, features, and condition of the property. Some also request digital photos of the home. The iBuyer will use this information to determine whether or not the home fits within their “buy box,” or set of criteria that matches their investment model. They are generally looking for houses they can easily value and “flip.” In most cases, their ideal property is a moderately priced, single-family home located in a neighborhood with many similar houses. The property shouldn’t require any major renovations before listing.1 These qualities make it easier to assess value (lots of comparable sales data) and help to reduce risk and minimize carrying costs.

Once the iBuyer has used their algorithm to determine the amount they are willing to pay, they will email an offer to the seller, usually within a few days. The offer should also disclose the company’s service fee, which is typically between 7% and 12% of the purchase price.If the seller accepts, an in-person visit and inspection are scheduled. The iBuyer will ask for a reduction in price to cover any defects they find during the process. Once the sale closes, they will make the necessary updates and repairs and then resell the home on the open market.
Of course, the biggest benefit of selling your home to an iBuyer is convenience. For some homeowners, the stress and disruption of preparing and listing their home can feel overwhelming. And what busy family with kids and pets wouldn’t want to skip the hassle of keeping their house “show ready” for potential buyers Additionally, many sellers like the predictability of a cash buyer and the flexibility to choose their closing date. 

However, this added convenience does come at a cost. An iBuyer is an investor looking to make a profit. So, their purchase offer is usually below true market value. When you tack on service fees of up to 12% and deductions for updates and repairs, studies show that sellers who work with iBuyers net a lower amount than those that list the traditional way.3

In fact, a MarketWatch investigation found that transactions involving iBuyers net the seller 11% less than if they would have sold their home with an agent on the open market.2

Buying a home from an iBuyer is a lot like buying a home from any investor. The pros are that it’s usually clean, neutral, and moderately updated. You’ll often find fresh paint and modern finishes. And because it’s uninhabited (no one is living there), you don’t have to work around a seller’s schedule to see the home. However, there are some pitfalls to avoid when working with iBuyers. Speed is of the essence, so sometimes the renovations are rushed and the quality can suffer. Also, their investment margins don’t leave much room for negotiating a price reduction or additional repairs. That leaves buyers —who have already invested hundreds of dollars in an inspection—little recourse if any issues are uncovered.4

That’s one of the reasons we always recommend viewing properties with an agent. During your visit, a real estate professional can point out any “red flags” at the home, provide background information about the neighborhood, and help you assess its true market value. That way, you don’t invest time and money in a high-risk or overpriced property. Safety is also a concern. Some companies allow buyers to access their homes via a smartphone app. While it may seem convenient, it provides an easy way for squatters and others to enter the home illegally.

Luckily, since most iBuyers (and traditional sellers) pay a buyer agent’s success fee, you can benefit from the guidance and expertise of a real estate professional … at no cost to you!

While it may seem like the “quick and easy” way to go, working with an iBuyer can present some unique challenges. For example, they are notorious for presenting a strong initial purchase offer and then whittling it down with a long list of costly updates and repairs once they complete their inspection.2 And unlike a traditional buyer who is incentivized to make a deal work, iBuyers can easily walk away if you don’t meet their demands.

Just like you wouldn’t go to court without a lawyer, you shouldn’t enter into a real estate transaction without an advocate to represent you. Having a professional agent on your side can be especially important when negotiating with an iBuyer. Remember, they employ sophisticated representatives and a team of lawyers who are focused on maximizing their profits, not yours. You need someone in your corner who has the skills and knowledge to ensure you get a fair deal and who understands the terms of their contracts, so you don’t encounter any unpleasant surprises along the way.

Overall, we think the emergence of new technology that helps to streamline the real estate process is exciting. And if we believe a client can benefit from working with an iBuyer, we present it as an option. But there is—inevitably—a cost to the convenience. After all, most iBuyers eventually list the properties they acquire on the open market, which is still the best place to find a buyer if you want to maximize the sales price of your home.

  1. The Dallas Morning News –
  2. MarketWatch –
  3. Forbes –
  4. US News & World Report –
  5. Inman –

REal Investing: ADUs

By Sherri Stinson - April 9, 2021

Accessory Dwelling Units (ADUs) have become a hot topic for investors in the Denver-metro looking to leverage the income potential of their next single-family home purchase. However, not all residential lots are created equal. This month, Invalesco Advisor Sherri Stinson talks about ADUs and what to look for when searching for your next real estate deal.

What is an ADU?
Accessory Dwelling Unit or ADU is the not-so-quaint term for a small, independent carriage house built on the same lot as a larger, single-family home. They are also referred to as casitas, granny-flats, or mother-in-law suites. These small side-kick homes have boomed in popularity over the past few years for several reasons, first being the need for more affordable housing options in Denver. Blueprint Denver, the citywide outline for land use and transportation plans, recommends “diversifying housing choice through expansion of accessory dwelling units throughout all residential areas”. The Denver zoning code currently allows for one ADU per lot in 25% of the city, with certain neighborhoods like Platt Park and Berkely receiving an ADU zoning overlay. ADUs add to the available housing inventory without affecting the overall character of each individual neighborhood, thus making them a more desirable housing solution than larger multi-family buildings.

ADU popularity has further increased with the adaptation of short-term vacation rentals through online booking sites like Airbnb and Vrbo. Denver currently permits homeowners to offer such rentals only as part of their primary residence; therefore, ADUs provide an ideal detached but inclusive income opportunity. The onset of the COVID-19 pandemic also sent ADU demand sky-high as homebuyers sought out separate yet functional spaces within their own homes. Accessory Dwelling Units scratch all three of these itches in one compact solution. Allowing lots to be zoned for ADUs is a creative solution for builders, investors and homeowners in the Denver-metro area.

Is your lot right for an ADU?
There are three factors to consider when determining if your property is right for an ADU addition, and they can all be referenced by digging into the Denver Zoning Code (exciting stuff, I know).
  1. The zone lot requirements – which zoning codes allow ADUs and what are the requirements.
  2. The lot size – lot size requirements for ADUs differ based on the zoning lot requirements.
  3. The lot coverage – how big you can build in comparison to the original house.

If you want to do the work yourself, look at the Denver ADU Zoning Map to determine the zone code for your lot. Then, use the zone descriptions to determine whether your zoning code allows an ADU to be built. Once you know that your property is a suitable ADU site, you then need to dig into lot coverage and determine what portion of your lot can be occupied by an ADU in relation to the primary residence.
Here is a breakdown of some of the Denver zoning codes that allow for ADUs along with the minimum lot requirements. For a comprehensive zoning list, please refer to the Denver Zoning Code or a licensed architect.

What if I’m not zoned for an ADU?
Denver City Council allows variances for lots not currently zoned for an ADU on a case-by-case bases. Residents can apply for a rezoning after paying a $1,000 filing fee. According to Blueprint Denver, which outlines the long term goals for each of Denver’s 26 zoning districts, “these rezonings should be small in area in order to minimize impacts to the surrounding residential area”.

How to get started:
You can reach out to Denver’s Residential Plan Review staff to review your property and determine if it is a good candidate for an ADU, and/or hire a licensed architect to conduct a feasibility study on the lot to be rezoned. The Denver Department of Development Services has also created a helpful project guide for detached dwelling units to help you streamline the permitting process. A seasoned realtor with knowledge of ADU zoning can also help you look for properties that meet the city’s requirements for ADUs as part of your initial home search.


Benefits of Using a Property Manager

Q&A with CJ Wells

By Jeff Cornelius - March 15, 2021

For this month's blog, we spent some time with Invalesco's property management expert CJ Wells. In our Q&A, we discuss the benefits of working with a property manager to manage an investment property and some things to keep in mind if you decide to use one. If you have questions for CJ after reading the blog, you can reach her via email at 

How did you get into property management?
CJ: I grew up in southern California touring properties with my parents. This is how I spent many summer weekends. Since then, I’ve accumulated 10 years of experience investing and managing my own rentals. Today, I provide services as a Property Manager to my clients so they are free to do other lifestyle activities and maybe add to their portfolio. 

What is it about property management that you’re most passionate about?
CJ: I enjoy managing this asset class that provides steady passive income to my clients. In addition to acting as their property manager maximizing revenue, I am also their professional property advisor and can help grow their portfolio, if that’s what they want. I really love working with people, so the ability to work directly with my clients and tenants is very rewarding.

What are the Top 3 things a good Property Manager offers the property owner?

CJ: Care, convenience, and peace of mind. Care for our client’s tenants, who are their “customers.” Convenience by using technology to standardize management of our client’s properties. And, peace of mind by knowing they have someone constantly looking after their property and tenants, allowing them to spend that time doing other things.

What questions should an owner ask a prospective Property Manager before hiring them?

CJ: How do you maximize my property’s income and value? How do you stay on top of and control costs? Why do you manage properties? 

As a Property Manger, how do you handle the fiduciary responsibility you have to owner, along with the caretaking responsibility you have to the tenants?

CJ: As a Landlord and investor myself, I am very serious about collecting, reporting, and prudently managing the revenue and expenses from my clients’ properties. Part of that responsibility though, is also making sure any tenant issues are handling professionally, promptly, and with a human touch. Happy tenants make for long-term tenants, a well-cared-for, and ultimately, more valuable property.

How is technology changing the relationship between building owner, property manager and the tenants? Do most tenants still mail checks, or is that all automated?
CJ: No paper. We use software tools to find, on-board, care for, and retain high-value tenants. Technology tools enable us to digitally find and vet tenants, all the way through to move in. Desktops, tablets, Smartphones, and the specific property management apps in our office make it possible to plan and take care of logistical and organizational issues. This ensures consistent occupancy. Moreover, the technology enables us to easily scale the care and management of a client’s growing portfolio of properties. Regarding the forms of tenant payments, tenants pay via their payment portal. 

When should an investor use a Property Manger vs. managing their properties themselves?

CJ: I would say if a real estate investor is looking for more time, freedom or properties to own, that’s the time to consider a property manager. A good property manager will free up valuable time actively managing properties so the investor can look for more properties, or simply do other things. The freedom a property manager offers is also a huge incentive. A lot of my clients like to travel and having a property manager in place to deal with tenants or building issues as they happen, gives them the freedom to travel and do other things without worrying they are neglecting their tenants and investments.

What are some things you do, or tools you use, to increase the efficiency of what you do?

CJ: I nurture long-term client relationships and work with clients as an advisor to get the most out of their assets. This means I use my extensive local knowledge to skillfully anticipate market fluctuations of rental rates and the capital growth of client’s properties. By caring for my client’s tenants and properties I help them achieve their real estate goals. Regarding business efficiency, I love the many tech tools that help me provide a paperless office and organize owner and tenant information in the cloud. This includes providing payment portals for tenants, cell phone tracking apps for maintenance people, and database storage and backup of each properties information. And with all software tools, I schedule and invest in on-going training and development of my skills. 

What else should owners think about when hiring a Property Manager?

CJ: I think the biggest thing for investors to think about is the value of their time and freedom from worry. How much is that worth to them? By working with a good property manager, a lot of investors are able to grow their portfolios, income and wealth faster, and to a larger degree, than if they were trying to manage tenants along with their other day-to-day business and personal obligations.


Lumber Prices Hit Record Highs

By Jeff Cornelius - February 26, 2021

On February 22, 2021, lumber hit a record $1,021 per thousand board-feet on the futures markets. To put this in perspective, just a month earlier it sold at $668 on January 19th and $500 in November of 2020. The lowest price for lumber on the futures market in 2020 came on April 1 at $259 - the market still reeling from the shock of COVID. Prices would never be that low again in 2020 as housing demand surged.

So, why are lumber prices hitting record highs? Prices typically increase in the Spring in anticipation of the summer building season, but those in the industry are facing increases much higher, and much sooner than they’re used to. These increases are simply the effect of a supply and demand imbalance. Driven by supply slow-down at the early stages of the pandemic, and followed by a huge increase in demand which not many people saw coming, the US and Canadian lumber mills have been playing catch-up ever since. This has kept the supply/demand equilibrium consistently tilted in favor of higher prices.

What has the effect been on consumers? So far, most new home buyers have been able to absorb the higher cost of lumber because interest rates have been so low. But, the house still costs more, $24,000 more on average, according to the National Association of Homebuilders. The NAHB is so concerned about the negative effect on the housing market, it’s been lobbying the Biden administration to remove the 15% tariff on Canadian lumber and renegotiate import limits to allow more Canadian lumber across the border.

So, what does this mean for builders? If you’re doing new construction of any kind, and especially if you are a production builder, you should be putting your orders in early to lock in the lowest possible pricing and ensure delivery. Stay engaged with your suppliers and monitor the market as it changes. It’s not just framing that’s affected; prices for siding are increasing, too. Those builders who keep their relationships strong will benefit over those who only call or email when they need to place an order. If you stay in touch with your supplier, you’ll be the first to know when prices are starting to soften, too.

What does this mean for new home consumers? As of this writing in February of 2021, If you’re in the market for a newly built home, you’ll be doing yourself a favor by getting under contract as soon as you can. With lumber prices high, and housing prices projected to increase in 2021 due to high demand anyway, you’ll likely already have a little equity in your home by the time you move in.

What does this mean for remodelers and do-it-yourselfers? That deck you’ve been planning is going to cost more this year than you may have budgeted for. Call around for the best prices on the lumber you’re looking for and make sure your supplier has enough of what you want in stock before renting that truck or trailer and driving over.

These record-setting prices won’t last forever, but they are going to have a negative effect on the housing market for the foreseeable future.

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Rent to Own Options

By Jeff Cornelius - January 22, 2021

Happy New Year and welcome to Invalesco’s first blog of 2021! The Denver metro residential real estate market was on fire for most of 2020, setting records for home prices (high) and days on market (low). 2021 promises more of the same and despite low interest rates, some people are finding it increasingly difficult to buy a home through conventional financing options. 

We thought it was a great time to check in with Invalesco’s Rent to Own expert, Katrina Karchner. Below is a summary of a conversation we recently had to learn more about residential Rent to Own options. Enjoy!

Q: Who is a good candidate for Rent to Own programs?
KK: The self-employed who don’t have W2 wages, anyone working to improve their credit or trying to save for a down payment to purchase their own home are great candidates. In Denver right now, it can seem nearly impossible to save for a down payment or wait for 2 years' worth of tax returns for a self-employed person as you watch housing prices go higher and higher. Rent to Own options can help you secure a home now while improving your credit or putting in the necessary time for proof of income and then own the home as soon as you are ready.

Q: How do Rent to Own programs work?
KK: Rent to Own programs work very much like a traditional rental. First, you apply to find out how much you qualify for based on your current income, credit score, etc. Your qualified realtor would then show you homes that are currently for sale, as if you were going to buy immediately. Once you've chosen your home an offer is made to secure the home by your Rent to Own financial partner. You put down a deposit, usually 2 months’ rent, and then you can move into your home, normally about 45 days after your application is approved. Once you are able to qualify for a mortgage on the home, you are free to purchase that home at any time during your lease, which can go up to five years. Some programs even set aside a portion of your rent payment each month to help with saving for a down payment. 

Q: What financial requirements do you need to qualify?
KK: Some of the qualifications are a minimum credit score of 550, $55,000+ per year in income, no open bankruptcies and a clean rental history.

Q: Can you buy any kind of home?
KK: Generally speaking, yes. You may buy brand new homes or any resale home less than 100 years old. Most Rent to Own programs require the home be move-in ready; no fixer-uppers. The partners want the residents to feel comfortable on day 1 and not need to replace carpet, appliances, and major home systems. Some programs allow purchases up to $615,000 in the Denver metro.

Q: Can you buy investment properties like duplexes and triplexes?
KK: No. This is for single-family, owner-occupied homes. Some condominiums also qualify. 

Q: Do you end up paying more for the home than you normally would? 
KK: You will pay more over the life of the loan to be part of a Rent to Own program versus buying directly. Some programs charge as little as 1% of the original purchase price of the home. In a market like Denver, if you wait for a year or more to save money for a down payment or repair your credit, you may find home prices having increased by 10% or more. In this case, you would be better off using a Rent to Own program now that locks in the purchase price, current low interest rates, paying the minimum 1% fee and assuming the mortgage when you are ready in a year or two- up to five years.  

Q: How long does it take to close on a home? 
KK: A minimum of 45 days.

Q: What if you don’t buy the home after the rental period?
KK: Based on the terms of your individual lease, you would get your deposit back and forfeit the right to purchase the home. You are not locked in if you choose not to buy later.

Q: What should someone look for in a Rent to Own program?
KK: You should look for a program with a high close rate on home purchases. That indicates you are choosing a financial partner whose priority is helping people become homeowners and they have numerous successful closes to back that up . Connecting with an agent that works with and has knowledge of various programs will allow you to have access to many paths to successful home ownership. These agents will be a trusted partner from helping you choose the best program to apply for to helping you find and secure the right home for your family.

Q: Anything else we should know about Rent 2 Own?
KK: Renting to Own your home is a great opportunity to take advantage of the current low interest rates, lock in a home price and work to make improvements to your credit, savings,  income history, etc. All while living in your dream home, growing home equity and giving your family the stability of their very own home. It's a fantastic option for a lot of people.