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