A close friend is asking me about the "We buy houses" franchise and if they're legit. He doesn't have much equity. The home needs repairs that would exceed any equity he does have. And he says the whole family is sick of the home.
Are there other, non-traditional buyers of homes that work fast?
We've both only ever dealt with traditional realtors. Who here has gone down alternative home selling avenues? Thanks
No direct experience, but my understanding is their offers are very low. I got a bunch of mailings from them after my wife passed away. First one was after filing paperwork for probate, before I even got the paperwork back from the court. Friggin vultures was the impression I got.
I also have not dealt with, but my impression is they prey on scenarios of people who need cash right now and can't afford the time (or don't want to... estate settlement, etc.) to go through traditional sales paths and the hassle/duration that may bring. It's not that they're not legit, I.e. their check won't bounce, but they are opportunistic.
Even needing repairs, I'd imagine if he can afford the time, your friend would get more dollars listing it as-is via traditional means.
If it's in a reasonably competitive market, a lot of home sales can still be cash offers, or waived inspections. He wouldn't need to fix it up first.
My 88 YO Father-in-law called a postcard he got - we found out the night before. Exactly as described.
The guy looks it over and goes to his car for 15 minutes. Comes back with an offer exactly $75,000 less than that days "estimate" on Zillow. It wasn't like Zillow was $375,000 and he offered $300,000. It was like Zillow estimated $383,000 and this guy offered $308,000.
Will deduct money if Buyer guy has to clean it out but Father-in-law can just walk away if he wants.
I've heard a lot of these contracts get resold before the closing date to another buyer so the original guy really only mails postcards and gets the first contract.
We made my father-in-law pass and he still is hacked at the wife and I.
Here's my impression of how it works around here...
You price a house at what it's worth in "done and complete" condition. That means you do not factor in deferred maintenance or needed repairs into the price.
Due to low inventory, the house then sells for this high price even though everyone knows, as an example that is needs a $15k roof.
Said another way, price the house at "done and complete" and let others tell you (offer you in their bid) how much less it should really sell for.
Around my area you have to sell your house for "all the money" because buying another house is going to cost you "all the money."
My uncle passed away and his house sat empty for a decade or more as my cousin and his siblings couldn't get it sorted between themselves. Finally push came to shove ....animals had gotten in, there was water damage in some parts and it needed "everything', including cleaned out. He contacted some estate sale types who came in and bought everything of any value - which wasn't a whole lot - and then he called three of these guys who advertise in our area.
All three gave bids for the house as is, didn't have to clean anything or remove anything. He took the best of the three and they brought over certified funds. Done.....for quite a bit more money than I ever thought it would bring....
A month later the house was on the market and sold for a significant amount of money. I could not believe how quickly they turned it around as it needed a complete gut, roof, paint kitchen and bath remodels etc......
These are all great thoughts. Thank you!
The we buy houses is a private equity scheme. PE is all about quick money. Either selling assets or a turnable/flippable product. If it doesn't sell immediately for stupid money, with minimal rehab, they'll rent it for stupid money. Just follow the cash flow.
Guy next door sold his house to one of them. He just wanted to sell it and move to something smaller. I would have considered buying the house at the price he sold it at to the we buy houses people. The flippers did have to put a new roof and other maintenance items, and sold it for over 100k more.
So the houses are sometimes flipped, but around here what I see a lot of is them getting turned into rentals. And every rental is keeping the inventory for homes to buy low pushing up prices and preventing the next generation from having a crack at the "American dream" of homeownership. (And the attendant generational wealth that "can" build)
Vultures. berkeley em.
I sold 2 houses to them. Twice.
I got one of those cards in the mail for a house I owned in Pensacola. Good rental neighborhood near the Navy base. Supposedly a nice young couple getting into real estate investment.
I owned 2 houses in the neighborhood at that time. I told them I wouldn't sell one without the other. I named my price (which was a good bargain for the 2), and they agreed. They did all the paperwork and put a deposit in escrow. By the time we got to closing they were unable to obtain financing for both houses, and didn't close the deal. They offered for me to keep the deposit. Easiest money I've ever made.
Rented the 2 houses for a couple more years, then had a similar deal approach me a 2nd time. I made the same deal for 2 houses. They closed the deal within 30 days.
Their approach seems 100% sketchy, but I had good experiences with them.
The only offers I ever received from companies like that were ridiculously lowball. They often prey on people who need to get cash fast and can't wait for the market and all the closing periods.
I was offered $32,000 on my Pittsburgh house when it was valued at $85k, and I constantly get offers on my current house that are about 60-70% of market value.
They're like a vehicle trade-in. You look up your trade-in value on KBB for $5000, then go to a dealer where they point out every perceived flaw and speck of dirt and offer you $1200.
Having said that, they're operating in a highly regulated industry, so aside from the potential for losing a crapload of money, I find it hard to believe they aren't legit.... as in, they operate within legal confines of real estate legislation... just like a dealer car trade-in.
The "local investors" finally quit calling me about 9 months ago about my current house.
"Would you be interested in selling your home?"
"Sure, but not at any price you're going to be willing to pay."
When I tell them I want about 50% above market to deal with buying another place they usually just hang up.
z31maniac said:The "local investors" finally quit calling me about 9 months ago about my current house.
"Would you be interested in selling your home?"
"Sure, but not at any price you're going to be willing to pay."
When I tell them I want about 50% above market to deal with buying another place they usually just hang up.
I get a lot of these calls , and I wonder if I am really talking to the people that want to put up the money (nope)
or a boiler room with a bunch of people trying to make a "sale" , then they tell the Boss and get a commission ,
Same goes for the roofers , house painters etc who call and try to talk you into getting a free "estimate",
Cold calling must work or there would not be as many people calling me every week !
So, private equity are the devil, investors are demons, salesman are horrible, no one should make money on flipping a house, and the entire state of all the world's troubles can be blamed on these guys?
You guys are pretty harsh sometimes. And most of you have no first hand experience.
I had a good experience with them. Twice. I have no problem with them making a profit for the work they do.
I've had an experience like Paul's. Dad had 3 rentals that were pretty beat. Market was about $350k each, IF they had about $30k worth of work done. They paid $310k each, settled in 15 days, as is. They said don't even clean them out. Best case scenario he puts out $90k to get back $120k, before costs, commissions, etc. No regrets.
My FIL sold a house like that recently. A family member passed away, leaving a house in incredibly poor shape. It needed everything, from the foundation to the roof. My BIL was interested, thinking that is was in such poor shape there was no way they could get very much for it. We figured out how much it would cost a DIYer to bring the house to livable condition, and it was a lot, not counting any labor. The first offers were well above that number, by a good $100k. My wife took over the selling of the house and did the "list it for close to it's worth repaired, let them talk you down" strategy mentioned above. They got an offer and sold pretty darn close to what a fixed house would go for- about twice what we thought it was worth in it's sad state. The investment company had it fixed up in about a month, and listed price that was a bit high for the house but impossibly low for what they paid + put into it. It didn't sell, they turned it into a rental. They didn't take a house off the market, they made an unliveable house livable again and fulfilled a renter's need.
I am part of a group of contractors that have bought a few of these houses for flips from the "we buy houses for cash" guys. We have a couple of contractors, a realtor, a hard money guy, an electrician, and me the plumber. They buy the house, then mark it up a bit and sell it to guys like us. They usually get their profit without doing anything. Sometimes they will clean up the property and haul away the garbage to increase the value, but that's about it. Sometimes they cherry pick who to sell the house to, or agree to be partners and hard money guys on a rehab. Takes money to make money. I'd like to get to the point where I'm the cash guy and make my profits without picking up the tools. Think of them as a pawn shop for houses. They will only buy your house if they can make a quick buck on it.
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