If you're a homeowner, you’ve likely received many calls, postcards, or
letters asking if you’re interested in selling. While these unsolicited offers
may be annoying, they serve a purpose rarely in your best interests. Here's who is behind these constant
inquiries:
A Hot Real Estate Market
With high demand and low inventory, some Realtors may reach out on behalf
of serious buyers. I’ve been known to target a neighborhood by focusing on a
small area based on my buyers' wants. These
earnest efforts are readily apparent. I will tell homeowners the specifics of
what my buyer is looking for, and the price will be fair for both the buyer and
the seller. However, most inquiries come from "Wholesalers"—investors
who contact thousands of homeowners hoping a few will sell their property at a
discount, and often the property owner won’t even know who is buying their
home. Unlike Realtors for sellers, these buyers don’t have a fiduciary duty to
look out for your best interests.
Investors, Not Realtors, Are Looking
for Deals
Wholesalers, real estate investors, and house flippers use mass mailings,
cold calls, and door-to-door outreach to find off-market properties. Many
get-rich-quick seminars encourage this approach, often using celebrity
endorsements who have only sold their name and likeness for licensing purposes.
They might tell you they are looking for a family home (aren’t they all?) but they
only provide a broad description, such as the number of beds and baths, of what
they are looking for. They get this information about your home online. These “cash”
buyers often aren’t and can fail to procure funding at the last minute.
3. Your Home and Personal Data Are
Easily Accessible
Public records reveal when you bought your home, what you paid, and
whether you have equity. Wholesalers use this data—and even predictive
algorithms—to target homeowners, often employing low-cost overseas call centers
(ever heard roosters crowing in the background?) to reach you for mere pennies
per phone call. It’s a numbers game. One appointment after 100 calls isn’t a
bad average.
4. You Might Fit a Target Profile
If you’ve owned your home for decades, have no mortgage, have had code
changes on your block, or live in an area with rising property values, you may
be a prime target. Have your children recently graduated from high school or
college, are you recently divorced, or have you experienced the recent death of
a spouse? Have you been searching online for property in a different state? These
are all indications that you may want to sell your property, according to the
algorithms that often track your behavior. The “buyers” contacting you will promise
an easy, no-commission, no-fee cash sale, but this isn’t the whole truth.
5. Wholesalers Profit by Flipping
Contracts
Wholesalers don’t intend to own your home—they secure a contract at a low
price and then sell it to another investor for a much higher price. While you
are signing your sales contract, the end buyer is signing at the same time -- sometimes
in the next room. The contract passes ownership from the person you
thought was buying your home to the actual purchaser of the home. Look for the language
on the “Buyer” line of the contract “Or As Assigns.” This is the legal
mechanism that is used for this common type of purchase. These so-called buyers
often make far more than a Realtor's commission and any fees on the spread between
what you are being paid for your home and what they are charging the end buyer.
It’s not uncommon for that to be $200,000 or more. This is how they can pay for
all those phone calls and letters to find the next seller.
What is the Best Practice When
Considering My Options?
If you're not interested, you can tell them to remove you from their list
(good luck with that). You can ensure you are on the do-not-call list, but that
doesn’t do any good unless you are willing to track calls.
If you're curious, research before engaging. Listing your home on the
market (via the MLS) can be flexible—without requiring repairs, open houses, or
inconvenience—while ensuring you get the best price. You can limit the showings and place
perimeters around who goes inside. Listing your property places it in front of
not only investors (who also search the Multiple Listing Service) but also
markets it to people who might want to put some elbow grease into fixing up a
home; for some, this is all they can afford. They might be more likely to repair
the house you grew up in, rather than tearing it down for the latest fad in
homebuilding. Don’t sign or agree to an NDA for their offer; there is no reason
to, these are only meant to restrict your knowledge. You should check out other avenues and see what another price opinion would
be. Don’t be dazzled by the notion of a cash sale, when the wired funds are
deposited in your bank account which is the same as cash, even if the money originated
as a loan. Most of the flippers use a private loan called Hard Money.
If you receive an offer and want a second opinion, I’m happy to provide
insight and ensure you know your rights. You will be given THIS, proving that I
will act as your fiduciary and look out for your interests, not those of the
end buyer, and you will be represented ethically. You can still offer owner financing to save on
your tax bill, delay a closing, or make sure you get a quick sale. Every home
sale is unique, and I'm here to help you navigate your options in a way that
works best for you, putting more money in your bank account, not relying on
high-pressure Wholesalers. You know where to find me!
