Although most real estate agents aren't huge fans of iBuyers, many investors are: iBuyers make homes more of a liquid asset. There's no shortage of companies out there that buy homes in need of repair -- and fast. Sundae is another company that does this.
But Sundae is more than an iBuyer (if it is indeed one -- the company argues that point); Sundae also runs a marketplace that pairs sellers with investors. Find out what makes Sundae special and whether you should use it to buy distressed properties -- or to sell a property you need to unload fast.
What is Sundae?
Sundae, another San Francisco, California, startup, formed in August 2018 and launched its marketplace in January 2019. The founders are Josh Stech and Andrew Swain of hard-money lender LendingHome. Sundae currently operates in Los Angeles, the Inland Empire (Riverside-San Bernardino), San Diego, and Sacramento and has expansion plans.
Although Sundae buys off-market residential homes in as-is condition, most of the homes associated with Sundae are homes that owners of distressed properties list for sale on the Sundae marketplace to sell to cash buyers, typically investors who are looking to buy a flip or rental property.
The company raised an impressive $16.55 million in Series A funding, and then in less than six months raised an additional $36 million in Series B funding. Sundae uses this equity to both buy properties and to give $10,000 cash advances to homeowners who list on the Sundae marketplace.
Is Sundae an iBuyer?
In a word: yes. An iBuyer, which stands for ''instant buyer,'' is a company that makes offers on off-market properties, pays cash, and then sells the homes for profit. But Sundae, on its website, dances around the issue of being an iBuyer, saying it isn't one, well ''not really.''
Because the company buys homes iBuyers turn down and because the company first views homes before making an offer rather than using an algorithm, Sundae distinguishes itself from an iBuyer. But, in fact, it is one. Promoting oneself as being different (read better) from an iBuyer doesn't mean you aren't one.
Is Sundae more virtuous?
Sundae positions itself in the marketplace as being a virtuous company, one on a ''mission'' to help homeowners who've found themselves in a bad spot. Sundae wants the public to view it as being better than all those other real estate investors, the ones who ''continue to take advantage of sellers who don't have the time or resources to get their house market-ready.''
Maybe Sundae is a virtuous business, but once you start dissing one of your target markets, namely real estate investors, by assuming we're all vultures or sharks, the message comes across a tad disingenuous.
Should you use the marketplace?
Real estate investors who wish to buy in the areas where Sundae does business (see above) might want to check out the site. Sundae provides a platform where you can easily locate distressed properties.
You might enter a bidding war with other investors, and you'll pay a fee to Sundae if you buy. But Sundae claims to have conducted due diligence on the properties it lists. So just as you buy any investment property, if you use Sundae, have a top price you're willing to pay and don't go over it.
The Millionacres bottom line
Sundae is a new startup that's received some impressive funding from QED Investors, Founders Fund, Susa Ventures, Navitas Capital, Prudence Holdings, and General Global Capital. When you're looking to buy distressed properties, you might want to check Sundae out. If a deal makes sense, it makes sense.