Boston Real Estate for Sale

Are some real estate investors taking a haircut?

Boston Condos for Sale and Apartments for Rent


Are some real estate investors taking a haircut?

Rising mortgage rates forced so-called Boston real estate investors into weaker positions, stuck with excess inventory after customers backed out of home purchases.

The companies acquire homes on behalf of buyers who can’t afford to make their purchases, then sell the homes to the desired buyers with a fee attached. The Wall Street Journal reported last year’s market slowdown left some of the biggest names in the sector with hundreds of homes they are unable to sell.

A Flawed Business Model

The business model worked during the pandemic-crazed housing market, as sellers quickly moved to sell homes, sometimes to all-cash power buyers. As mortgage rates ended 2022 more than double their levels from a year ago, however, the end-goal buyer couldn’t always close the deal on their purchase.

Orchard Technologies, which helps customers buy a new home and agrees to buy their old home if the owners can’t sell within four months, has a similar issue. The company has 200 homes in its inventory that it has been unable to sell. Orchard’s CEO told the outlet the company has had to buy homes three times as frequently in the past six months.

Power buyers have responded to changing rates by adjusting their business models in hopes of avoiding big losses when the primary objective falls apart. Ribbon paused its cash-buyer program last year. Another firm in the sector, HomeLight, changed how its main offering worked to lower the amount of homes the company would buy.

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