Q: Almost daily we are inundated with phone calls and mail from companies wanting to buy my elderly father’s home. They claim they will buy the house in cash “as is,” with no closing costs and no listing. I’ve also seen television advertisements for these companies. At some point I will need to sell the house and I wonder if these companies are legitimate. The house would need some rehabilitation before it could be listed by a real estate agent. I’m wondering what the deal is!
A: Be wary of companies that aggressively solicit you and offer a quick sale. They’ll try to convince you that they’re your best option. Usually they’re not.
These companies typically target seniors and other homeowners with a lot of equity in their property, but who may be in financial distress or otherwise feel pressure to sell. They’re investors — their business model is buying low and selling high. They offer less than what the home is worth in exchange for a quick sale where the seller doesn’t have to worry about repairs or paying a broker to list the property.
“Their tactic is to make you feel that they’re the only ones who could help you with this,” said Stacey L. Tutt, senior staff attorney at the National Housing Law Project.
Some use deceptive methods or press sellers into making a decision before they can gather all of the facts. “Many of these investors add in a 6 or 7 percent fee that gets buried in the fine print, eliminating the only possible benefit of not listing the home with a Realtor,” said Sarah Bolling Mancini, managing director of advocacy at the National Consumer Law Center.
When you hire a broker, they have an incentive (and the tools) to sell your home at the highest possible price, in exchange for a negotiated commission. They can give you insight into the local market, like what comparable homes are selling for and how sales have been trending. They can also list your home on the multiple listing service, opening it up to a competitive bidding process.
If you do consider a deal with one of these investment companies, be sure to research it thoroughly, read reviews and check their rating from the Better Business Bureau to see if they’ve received complaints. Ultimately, they’re looking to turn a profit on your property.
“Homeowners are being bombarded by these solicitations because the investors doing it can make a ton of money this way,” Ms. Mancini said.
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