"[S]ome crappy 'cash for damaged homes' company is using a pic of MY damaged home in their ads! I DO NOT endorse any of those places! We have not sold and are rebuilding! Such a violation!" -- Homeowner, Nana Hutchinson Gregg
This screenshot shared with homeowner's express permission.
Homeowner, Nana Hutchinson Gregg, has had better mornings. As she scrolled through a local support group's Facebook page, she recognized her Rowlett, TX home being used in an advertisement by a North Texas real estate investor group on their Facebook Page to promote their offer to purchase tornado-damaged homes.
The advertisement credited a local news media group as the photo source. Ms. Gregg has petitioned the investor group's page owner for its removal from the ads, and community members are rallying to help stop what they feel is exploitation and predatory behavior that victims like Nana face in the wake of the misfortune they have already suffered. She, like many other area homeowners, has elected to rebuild her home. She doesn't appreciate that the image of her home is being portrayed as property belonging to any investment group.
What Could Be Worse Than Losing Your Home In a Natural Disaster?
DFW tornado victims are on high alert for looting as they gather the remnants of their households from toppled construction. Warnings are also being regularly shared regarding potentially unscrupulous vendors who are positioned to prey on unsuspecting homeowners who might contract with them for home repair and related services. While there are many very good people and companies who have pitched in to help and serve, not everyone can be trusted.
The suffering many folks endure while in transition with temporary housing and battling with insurance companies / claims adjusters can be overwhelming. The emotional strain is understandable, and this condition makes homeowners even more vulnerable to "solutions" that could potentially lead to more harm. Don't take the bait. Often these "solutions" will benefit the one who is "offering them" far more than they will benefit you as a seller.
WARNING FOR MORTGAGED HOMEOWNERS WHO HAVE SUFFERED CASUALTY LOSS
If you have been approached by an investor, particularly one who is offering to buy your home with cash, be wary. While it might seem like the answer to problems, accepting that cash offer could lead to a bigger disaster! It's just more complicated than that. Here's why:
Your LENDER and your INSURANCE COMPANY have a vested interest in your home. Sure, it's your home, but your entire loan must be still be satisfied (regardless of the home's value in the damaged condition), and you will be subject to your insurer's decisions regarding claim handling. You will likely need their permission and cooperation to sell.
In Texas, insurance proceeds are generally not transferrable. Many homeowners' policies have anti-assignment clauses that would prohibit assigning proceeds to a Buyer in regards to an approved loss claim. An investor or buyer who approcahes you stating "a contract between you will obligate your insurance company to pay them" is positioning themselves to obtain a contractual interest on your home, and put you in a potentially huge bind. In addition, most insurance checks will require the endorsement of both the legal homewoner/insured and the lender.
Turkey Talk - Send them packing! The moment a potential investor / buyer starts offering to solve your woes with any quick fix, start listening for these red flags:
Subject to existing financing -- they are "offering to buy" your home by taking the house through a contractually binding agreement that leaves you alone holding the bag for the mortgage the second you close while simultaenously losing real ownership rights to your home.
Quitclaim deed (often mispronounced as "Quick Claim") -- see above. This doesn't actually convey title, and doesn't contain any wording to "grant" ownership between parties. Because of this, reputable title companies won't insure title based on a quitclaim deed.
- All title companies are not equal in service. Remember the recent story regarding the home in Winnetka Heights (Oak Cliff)? Even if a buyer / investor is offering to handle a purchase "cleanly" through a title company they frequently use for their transactions, that doesn't guarantee the transaction will be handled as you expect. Caveat emptor. If selling your home to an investor sounds like a good idea to you, it would be a better idea to seek representation from an attorney who specializes in real estate or a trusted real estate broker / salesperson who can help protect your interests.
- "We use our own forms..."-- Watch out. Many investors are born at midnight in the warm glow of the TV screen, just seconds apart from buying a "get rich quick" kit that promises to make them millions in real estate. What they don't know + what you don't know = trouble.
- Subject to existing financing -- they are "offering to buy" your home by taking the house through a contractually binding agreement that leaves you alone holding the bag for the mortgage the second you close while simultaenously losing real ownership rights to your home.
While this short list is just a drop in the bucket, it hits on many of some of the major traps vulnerable sellers fall into, leading to financial and legal problems that dwarf the problems they thought they had.
To the good people in North Texas who were affected by the recent devestating tornado damage, we support you. Protect yourself from unscrupulous business practices! Remember that resources like the Better Business Bureau, Angie's List, and local agencies who govern licensed real estate practices (like TREC and TDI) can help you choose wisely. And if you encounter a predator, report them.
*Not inteded as legal advice. For informational purposes only. We claim no knowledge of the identity, business practices, or reputation of the person(s) or company(ies) generating offer solicitation posts, and have no affiliation with any investment groups who may be connected with social media image shared in this post. If you have questions or concerns about how this information might affect you, please seek the advice of a qualified attorney.