Hello all:
Please email this information to anyone you think might have received a (yellow?) letter to purchase their property, or is thinking about selling their property. They will be grateful.
Over the past couple of months, I have seen the following happen several times. I am not going to name names, or addresses, but here is what took place.
Home owners (or small investment property owners) receive what is called in the(ir) industry, a yellow letter. It is basically a cold/blind letter to buy your property for all cash and no conditions at a certain price. They will claim to give you a "fair" price (whatever that is in their eyes), and be able to close in a minimum amount of days, no questions asked.
These people are middle men, or whole-sellers, or maybe even contractors. Their only goal is to buy your property for well below market value, because they need to make a quick and easy profit. These people have no fiduciary duty to anyone, which basically means they can tell you anything they want in order to get the property under contract.
Once they have your property under 'contract', they sell the contract to another buyer and they make a lot of money, or they sell it to a contractor, who then repairs it and sell it at higher value, after repair value.
Here is an example:
A Yellow letter buyer has a seller sign a purchase contract to buy the owners house for $300,000. This buyer then turned around and found a contractor or handy man/owner (within 30 days, usually the length of the contract term) who was willing to take over the "contract", but for about $405,000.
This whole-seller (or middle man), made over $100,000 dollars in 30 days. I do not know what this middle man told the seller, or even told the buyer, as their is no legal obligation to tell the truth about this property (condition) or anything related to the property (that would have to be disclosed under fiduciary duty).
This $100,000 is money that was taken away from the seller, who could have listed the house with a Realtor, market the property, and get market value. Who knows why the seller worked with that middle man, maybe because they do not trust Realtors, or was told not to trust Realtors, and save the commission?. Hopefully they (sellers) understand how much that costs them. The buyer did not "save" any money, but was still "stuck" with teh contract terms that were taken over, which means that buyer might be on the hook for all kinds of liens, and cloud on title, etc.
So, inform your friends and colleagues about this practice as the seller will almost always get much less than market value, and the buyer has no recourse.
Let me know I can help with your property.
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