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38 Comments on We'll Buy Your House Today! No Commissions!!!! Not a Great Idea
I think those signs are all over the country, but not as much as they used to be. Maybe some of the lowballers got stung?
These "buy your house guys" are an interesting group. One offered my seller (prior to the listing) literally pennies on the dollar. He even sent an official looking form stating that property values had tanked in her neighborhood due to all the child molesters and gang activity.
This in a subdivision of well kept homes zoned for the best schools in town. This "investor" was walking the fine line of providing real estate advice without a license.
It's easy to understand how a frustrated seller might think that is a good option, and they can certainly save on commissions since all their advertising is on poles
I talked to a gentleman a few months ago who called after he signed an agreement for one of these companies to buy his house. They bought it for $140,000 in a neighborhood where even a short sale with water damage in the basement sold for over 100K more. THe house was outdated but not a disaster. The investor company came in bought it, did the repairs and sold it for just under 300K. The reason he was selling? Needed money to help pay for medical expenses for his ill spouse.
There are a lot of these type of guys my market. They tend to offer at least 20 to 30% below what the real market value is. The catch is always that they offer all-cash which seems appealing to many sellers because there's nothing to hassle with loans and appraisals.
These buyers go on fishing expeditions all the time and they win because every once in a while they find a sucker willing to take them up on their offer.
Pat: That's too sad when these guys go after seniors in need. But for sellers who just want to save the commission,...seller beware.
Well said, Pat. There's no incentive for flippers other than to buy low so that they can fix and flip at a profit. There's nothing wrong with that, but sellers should realize that having to sell quick, as is, can cost them big in the long run.
I think we have all had listings like that at one time. I went through the exact same thing with a woman who lived in a nice gated community. She dropped the price after the house had been on the market for about seven months and apologizied to me for not lowering it sooner. After the house finally closed she was very grateful and asked me to forgive her for being so difficult!
She also contacted one of those "we'll sell your house and pay you top dollar..." companies and found out the hard way that if it sounds too good to be true it usually is!
One of their main arguments when talking to FSBO's is home much they are going to save in commissions!
these guys get you mixed up in all types of things. I had a client go to one of these before BEHIND MY BACK while we were under and EXCLUSIVE listing agreement. I told her you're still responsible for the full commission and i have absolutely nothing to do with that agreement you signed with so and so. they ended up getting over on her really good. they couldn't get along with each other. she accepted an earnest deposit from them and then spent it. it was a mess. i let her get herself out of it then sold her home....
a grann house with deferred maintenance and still sold for $900,000 range. WOW
That's a great story. Of course, they'll buy the house, for pennies on the dollar. They don't care about the seller getting less, they're appealing to the homeowner saving money by cutting out commissions.
If it is too good to be true then there is always a catch somewhere.
I haven't seen these signs/advertisements in my area, however now that I'm looking I'll probably see them all over the place.
If something sounds too good to be true, it is.
I was an investor for 10 years before I became a broker and still am an investor too. The two hats go together just fine. Yes, many investors are basically sharks but the majority are the solution to a problem and they are in it to make a profit just as you are in it to make a commission.
What I would recommend is you let your prospect or client have one come in if your seller is really leaning that way. Why, simple, they have saved me lots of time and money. I just make sure they know to have you there to protect them before they sign any thing. Well you or a lawyer, and the lawyer won't be there for free, so the seller says OK I'll have you there.
Inform the seller just to introduce you as Jim or Jane, a friend. When the shark goes for an excessive profit that is the time I tell the seller I will buy it for that price and in fact I will buy it X amount more but I think there is a buyer out there who will pay Y amount within the next 30 days if you will sell it for that amount. That amount is a good listed price for a fast sale less commission. The I buy houses guy/girl will likely start to fad into the woodwork at this time Because the profit has vanished and your seller is starting to see if they want maximum dollars and the quick sale that they are hoping for means they need to list it right and listen to your advice, there is no free lunch and there is always a commission paid whether it is listed as such or shows up as a discount on the selling price.
Many of this type of seller believes they are going to be offered a slightly lower retail price with no commission included. Hope springs eternal. And in some cases the investor was a better solution, though not very often.
Pat - It's unfortunate that some sellers think "saving" the commission will net them more by letting an investment company purchase the home.
It's a lot cheaper to pull out a rotten tooth yourself, but most people do not do it. There is a big possibility of it costing more money in the long run. Instead they go to a dentist and pay him to do it. Pretty much the same thing!
Pat-Sometimes sellers see the cash offer as money in hand and they fail to appreciate the long-term goal of netting as much as they can even with their paying a commission. Too bad.
Patricia - congratulations! Well written post ...
Some of sellers have a hard time differentiating what's more important to them - savings on commission or the net profit! But it's a human nature to be attracted to 'too good to be true'.It's just easier, right?
With smiles,
Bo
OH, there is one of 'those' signs up at a busy intersection near my home. I can't TELL you how many times I've wanted to jump out of my car and snag that sign up to save some poor soul from making the biggest mistake of their lives! Of course, I would never do that but, gosh, I feel so sorry for those who fall for this tactic.
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