Home Selling in Charlotte>Question Details

Crystal, Both Buyer and Seller in 28083

What do you think of these We Buy Houses quick sale companies?

Asked by Crystal, 28083 Mon Jan 21, 2008

Even though I know I won't get what I'm asking for, at least I'll still have my credit. Right? I'm getting desperate. We're relocating and MUST unload this house. It's been on the market for 70 days. Thanks in advance.

Help the community by answering this question:

Answers

27
Don Tepper’s answer
OK. Here's the real story on the "We Buy Houses" people. (I'm surprised at the volume of guess and speculation that sometimes crops up on these questions.) I know the owners of several of these firms personally. (Greg with http://www.WeBuyHouses.com and Will, one of the founders of Express Homebuyers, among others.)

The legitimate ones--are there are many legitimate ones--work like this: They buy houses at deep discounts. The basic formula is: After Repair Value times 70% minus Repair Costs equals Maximum Allowable Offer. (Or ARV*0.7=MAO) This means they'll determine what the house should sell for in good condition. Then they'll take 70% of that. Then they'll subtract repair costs. That's the maximum they'll offer. And they'll generally start out lower. In areas with really soft or declining prices, they may use a multiplier of 65%, rather than 70%.

For example: A house in a neighborhood that, in good condition, would sell quickly for $500,000. (That is, good comps are probably in the range of $501,000-$510,000.) And let's say the house needs $30,000 in repairs and upgrades--new roof, new carpet, kitchen and bath updates, etc. Plus a bit of landscaping. You begin at $500,000. Take 70% of that, or $350,000. Then subtract the $30,000 repair costs. The maximum they'll offer is $320,000.

And they'll begin lower. How much lower? Among the questions you'll be asked on the phone is: "How much do you owe on the house?" "If I could make you an all-cash offer and close in 10 days, what's the least you'd accept?" And that's followed with "And is that the best you can do?" If you owe more than $320,000, to use our example above, they'll have to try a different strategy. If you answer with anything less than $320,000 to the other two questions, and you owe under $320,000, that's what their offer will be. So if you say, "I owe $285,000, and I just want to get rid of it," they'll begin at $285,000.

Are they legitimate? Can they close in 10 days, or whatever they promise? Yes. I'm a real estate investor and while I don't specialize in this area, I have funding (hard money) lined up that'll let me do exactly that. (I'm not soliciting your business, just explaining how it works.) If I, or anyone else preapproved with a hard money lender, finds a property that meets the criteria outlined above, we can borrow the money. It's horrendously expensive--around 5 points and 16% APR--but the loan is made on the value of the property, not the borrower's creditworthiness. The larger companies have other lines of credit set up, and they have private lenders who'll lend the money for less.

Obviously, for this strategy to work, the seller must have substantial equity in the property. Crystal, if you do, then they'll buy your house for cash quickly. If not, they may propose several other options. If you absolutely, positively need to sell and you have little or no equity, they may propose a short sale. They make an offer on your house--it's still low, in fact lower than the amount of money you owe on it. In that case, your lender needs to approve the sale because the lender is "coming up short." Using the example above, let's say the you owe $500,000. There'd be no money to pay the Realtor's commission, to make the repairs, to pay other sales expenses, etc. There isn't as clear cut a formula for what someone can or should offer you on a short sale. It depends, in part, on the comps. It depends on what a BPO (a broker's price opinion, an estimate of your home's value by a real estate agent) came in at, needed repairs, and the lender. Also, unlike the "We Buy Houses for Cash" all cash route, short sales can take months.

Or they or other investors may propose a "Subject 2." If there's some equity in your house, and if the rental income can cover the mortgage payments, they may ask you to deed the house to them while leaving the mortgage in your own name. That's risky for you; you're trusting that they'll make up any past payments and continue paying the mortgage. But that's one way to "walk away," maybe even with some cash in your pocket.

To briefly address some of other comments: Terrence is right: 70 days on market isn't really that long. Make sure your house is priced as low as possible, and shows as well as possible. Cleaned, staged, etc. And make sure your agent is aggressively marketing it.

I gave Glenn a TD (I don't usually do that, and I seldom explain why when I do), but he just got the whole process totally wrong. He's right, though: Real estate investors are in the business to make a profit. Nothing wrong with that. Most Realtors I know are also in the business to make a profit.

Jonathan's right: You could owe your agent a commission, even if you sell the house on your own. As he suggests, most agents will work with you. But be careful.

Keep in mind the effects various decisions could have on your credit rating. Selling to an investor: No problem. Short sale, big problem. Subject-to: Depends.

Good luck.
2 votes Thank Flag Link Mon Jan 21, 2008
Don, is there a time limit, once the investment company "buys" my house, for them to sell it? I put the "buys" in quotation marks because technically, they don't buy the home, the loan is still in my name. It has been nearly 10 years since the investment group took over the payments, but my VA guarantee is tied up in this house. I can't buy another house using my VA loan until this one is sold.
Flag Thu Nov 28, 2013
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
BEST ANSWER
I know several people that buy homes this way. They look at the house and see what they believe they can sell it for in current condition within 30 days (that is normally much less than the current owner thinks it is worth). They then subtract how much the cost to hold it for a little more than thirty days, subtract double closing costs, and subtract something for profit. They will often close within 20 days.

One man told me he was checking into the hospital and the nurse started asking him about how he bought homes. She said, "you mean that you will buy my home without even looking at it?" He said, "I will be stealing it from you at such a low price I don't even care what condition it is in!"

He says before the week was up he had bought her house and in another week he had sold it for a huge profit!

They are in this business to make money so I beleive that if you lowered your price to what they think it would sell for within thirty days, you would be able to sell it and put their thousands of dollars of profit in your pocket instead of theirs.
1 vote Thank Flag Link Mon Jan 21, 2008
While this is an old question I wanted to give my answer to the world. I am Co-Founder and CEO of Express Homebuyers. We have bought 1,300+ homes in DC, MD and VA since 2003. We buy to hold as rentals and we buy to fix up and resell. As I tell sellers everyday if you have the time, energy and resources to wait and sell the traditional way you will usually get more for your home. If you don't have the time and resources companies that buy houses may work great for you. We have hundreds and hundreds of satisfied sellers who needed to sell quickly for one reason or another. We have saved hundreds of homeowners from foreclosure at the last second - getting them cash so that they could start over. Had they gone through foreclosure they would have lost everything. The following is a page on our site that explains the different ways to sell a house.
http://www.expresshomebuyers.com/companies-that-buy-houses/
3 votes Thank Flag Link Wed Jul 3, 2013
They will not buy your house! They will jerk you around for weeks waste your time and then tell you at the last second they are no longer interested! This company is a joke!
Flag Tue Mar 25, 2014
Mr. Chandler -- are you able, or willing, to give advice on companies in Indiana who are buying properties fast and legitimately? I've research your company and was pretty enthusiastic until I realized you were not purchasing properties in my state. I have rental properties that I am needing to liquidate due to property taxes. Considering a traditional listing, but these properties must go 'as is' and I don't have a lot of time. I would appreciate your referral to someone I can trust. Thank you.
Flag Fri Nov 22, 2013
Don't do it...where is your home in Charlotte? MLS #? How is it being marketed?
0 votes Thank Flag Link Tue Dec 2, 2014
I think the speed of the sell will depend on how the market is as well as how your home is priced at. I think that the best way to get rid of your house quick is to lower the price of the home than what you think it is worth. http://ericbuyshousescash.com/looking-sell-home-buy-houses-r…
0 votes Thank Flag Link Tue Dec 2, 2014
I think they could work depending on what you are looking for. If you want a quick sell then I would definitely look into contacting one of these "we buy houses" companies. They are really good at getting houses out of people's hands. It's a good plan if you are trying to get ready to move fast. http://www.cashclosing.com/
Flag Mon Jan 26, 2015
If they have provided you with a solid offer & it is something that enables you to sell your home & move on then they can be a very good resource. Ensure that their contract is a solid contract, because there are often contingencies which allow them to easily get out of the contract & you are right back where you started.
0 votes Thank Flag Link Wed Nov 26, 2014
What you have to realize is that only 1% of people in this market niche can benefit from a cash or quick sale. I buy houses in Denver and turn away most people that call me. I'm here to help people who are in tough situation not the average home seller. As a seller you have to choose between selling fast for less money or letting the property sit and eventually selling for more.
0 votes Thank Flag Link Tue Oct 14, 2014
It a fast and easy way to sell your house if you need to sell. Here is a good download on teh pros and cons:

http://www.shebuyshousescash.com/report-download-call-kim-21…
0 votes Thank Flag Link Wed May 21, 2014
Hey I have a VA house in Georgia but getting a divorce my spouse cant get the house in her name for a loan . So I need to sale this house quickly. Please help me!
0 votes Thank Flag Link Thu Mar 27, 2014
I'm not sure if you contacted anyone or if you are working with an agent yet. If you have not signed with an agent yet you should. Having a broker with great negotiating skills is a must. Please feel free to call me to help you sell your home quickly. My last two listings both sold with multiple offers and within 1-2 days. Call me if you are interested in finding out more about my marketing plan if you are not already listed with another broker.

Thank you again for this opportunity to serve you, I realize you have a choice of Real Estate Brokers, so I truly appreciate your business.

Your dedicated Real Estate Broker,

Janice Maynard
Broker/REALTOR, Serving NC and SC
Keller Williams Ballantyne
704-641-0626 Cell/Text
http://www.unioncountyhomes4sale.com
0 votes Thank Flag Link Thu Feb 27, 2014
Many legitimate companies are listed with the Better Business Bureau- and you can check on the FTC website to make sure they aren't listed as having scammed anyone.

I wrote a blog post for a friend's company. I think it's pretty helpful and has some links people can check out to do some research on their own as well. I'm sure by now the original asker has reconciled this situation, but I bet others are searching the same question and finding the answers helpful, so thanks everyone for keeping this up to date!
0 votes Thank Flag Link Tue Feb 4, 2014
I spoke with a homeowner once who was selling his mother's home. He needed to net enough to pay off the mortgage and pay for his mother's care. When I did the math, I realized that his asking price was short $2000 of what he said he needed. I pointed out the error to him and we agreed on a purchase price that was $2000 higher than what he was ready to accept. When I buy a house, I always work for the win-win. I love it when homeowners tell me what they want because then I can try to give it to them. I talk more about this same issue on my blog at http://ibuybadhouses.wordpress.com/.
0 votes Thank Flag Link Wed Nov 6, 2013
Where are you dredging up FIVE YEAR old questions?
0 votes Thank Flag Link Mon Jul 1, 2013
I strongly believe that most of these "We Buy Houses" companies are legitamate investment companies that buy and hold, buy and rehab and sell, or buy and wholesale these properties to other investors.
0 votes Thank Flag Link Mon Jul 1, 2013
Hello Crystal,

You may or may not be able to sell through some other company, other than your listing broker (check your listing agreement).

We Buy Houses are companies that buy at 50 to 60% of the market value.

You can reduce your house in price to make it very appealing to thousands of buyers - through your local area MLS. The exposure through realtors is HUGE, comparing to just some investor company.

However, you need to talk to your agent about marketing your property better, to give it more exposure through the internet. Ask the agent what you need to improve in the house (stage it f.e.).
Or, maybe your agent is not doing his job - something to check on also.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Fri May 4, 2012
Everything is relative to your situation. If you have been on the market 70 days You are probably overpriced. But if you are forced to ask that price because of what you owe then you are most likely upside down and you are going to need to do a short-sale. Now what is beneficial of contacting a "We Buy Houses" Quick Sale company, is that these people are not going to pull your leg and tell you what you want to hear. Because they are investors and move quickly they will assess you situation and either make you an offer, or a solution within 48 hours. The staff over at get cash for my house some of the most knowledgeable in the industry and will give you options, not just a here is a cash offer and if that doesn't work I cant help you.

Now if you are not upside down and you need to sale your home for whatever reason, then using this service can be very helpful in you getting that quick sale that you are looking for on your home. It's FREE to get an offer so there is no risk or obligation in seeing your options. And if you are able to negotiate a win-win situation then you could sell your home in 7-10 days!

http://www.getcashformyhouse.com/
0 votes Thank Flag Link Thu Apr 26, 2012
Personally I think there are better options. If you look at the scenario given by Mr. Tepper you will see that yes, they will deeply discount your home so that they can make a profit. This is very understandable from their point of view. However, from a seller's point of view there can be other options. For example, a home in my neighborhood had been listed with a Realtor and was over priced at about $210k for the condition and the time (the market was just starting to turn). When that listing agreement expired the homeowner tried another Realtor who also had it too high $189k. AFter that expired I went to the homeowner who told me he was going with WeBuyHouses. The home was worth about $165k. They were offering him under $100k. My take was, why not list it at $150k and get a quick sale. Unfortunately at that point he had no time left. So we found him a buyer who offered him around $135k, fixed it up and sold it for $185k. It was a win/win for both parties. My advice would be to manage your time properly. If you list with a Realtor make sure the price is below all your competition. Then you can sell for more than you would to a deeply discounted investor. There are plenty of options that you can take advantage of before having to drop the price that much.
0 votes Thank Flag Link Sun Nov 1, 2009
when ever you sell your house to a company that buys houses fast, you will get the immediate results, if you have plenty of options to sell your house fast then you should go those routes first. if you can't find the buyers you need in a timely manner then getting a cash investor to buy your house is the best option. in fact some companies have a list of buyers for their houses and can send you a buyer and you just pay them a fee. there are a lot of ways to handle this question but have you sold your house yet?
0 votes Thank Flag Link Sat Nov 15, 2008
Hi Crystal,
My name is Jeffrey Richman and I am the WeBuyHouses.com guy for Mecklenburg and Union Counties. I don't know Don Tepper, but my former partner Greg Gardner does and we have been doing business together for many years.

Unlike what Terrance McDonald says, we are not all "Bottom Feeders". There are some of us who are truly after a win-win scenario. If the homeowner and the investor are happy, that's a winning situation.

Price is not the only reason a property doesn't sell. What about the fact that the banks are not as liberal with their money making it easy to get loans? If people can't qualify to buy, then sellers can't sell.

There are many ways for investors to "buy" your house, the important thing is "are you comfortable doing business with them? If you are not, then don't. You have nothing to lose by checking out your options.

I welcome you to call me at 704-243-5844 or go to my website at http://www.ImmediateHomeSolutions.com and see if we or another investor can assist you.
0 votes Thank Flag Link Fri Feb 29, 2008
At this point, you must think like an investor. Is your house priced right? Also, is your house listed with a Realtor? If not, you could be missing a large market of potential buyers. If you decide to go with a "we buy houses" company, be sure to get all agreements in writing.
0 votes Thank Flag Link Mon Feb 11, 2008
Dear Crystal,

I can understand your frustrations having been in the same position as you 2 years ago. First of all 70 days on the market is not a long time in the current market, so you have not been selling for long. There are 3 reasons a house sells, price, location and condition. You need to ask yourself "is my house in a good location?", "is my house in good move-in condition?" then you can answer the third question "is my house priced to sell?". You may answer "no" to more than one of these questions and then you can better determine what the price should be. If your home is listed with a real estate company, then your realtor should have done a market analysis for you and told you what your house is worth and what the average days on the market are in your area. I would consider interviewing realtors - make sure you choose a reputable company and a realtor who knows your market. I would recommend pricing your home as competitively as you can & try to cover all your costs - you will make up for your losses at the other end, when you purchase a home. Good luck
Web Reference: http://www.TeresaQuinan.com
0 votes Thank Flag Link Tue Jan 22, 2008
Hi Crystal,

Is your home listed with a Realtor now? If it is listed you should make sure your priced correctly and aggressively; what the condition of home - is there anything that needs to be done to ensure better showings and lastly what type of feedback are you getting from the showings? Maybe you want to give some incentives i.e. Home Warranty, Credit at closing for closing costs, repairs etc. or just adjust the listing price.

If you go the We Buy Houses route you won't get anywhere near what you could sell it in the open market. If you do go that route make sure you get an Attorney (Your Own) before you sign or agree to anything. Be careful!

Good luck!
Web Reference: http://www.QuinnRe.com
0 votes Thank Flag Link Mon Jan 21, 2008
There is a saying that I subscribe to: "If it sounds too good to be true.......It probably is!"

The second saying I believe in is a real estate one, " There is only one reason a home does not sell............PRICE!!!

Desperate times require for desperate measures....As hard as it is, selling at a loss may be your only way out...Isn't that what these companies are doing anyway and exploiting your situation..Good luck
0 votes Thank Flag Link Mon Jan 21, 2008
Crystal these companies are bascially bottom feeders, but if they would pay enough to cover your note, it may be a possibility. Can't hurt to check them out and see what they offer..
But don't freak out yet- on the market 70 days is about half the average here- and those 70 days would have been since the first of November or so, and December and January- it its been slooooooow. But the new year has started and I've already seen a large spike in inbound business.

What you need to do NOW is get your price right on your house... if you don't think "you'll get what you are asking" then I have a suggestion, DO NOT ASK IT, lower your price today. A high price will keep buyers from looking at it, or alternatively put it in a higher price bracket where the people who do look, will compare it to much nicer house... wasting your time entirely.
0 votes Thank Flag Link Mon Jan 21, 2008
Forgot to add one thing. If your home is currently listed, you may end up owing your agent a commission if you sell your home to one of those guys. While myself and others wouldn't do such a thing, some truly desperate to make a buck could force the issue, since the standard NC listing agreement does say that if you or your agent procures the buyer, you still must pay them. Its a stupid clause but its meant to protect the agent from a buyer going behind the sign to make a deal directly with the seller.

Most sellers skip over that clause in the contract but its in there on the bottom of page 1 and the top of page 2.
0 votes Thank Flag Link Mon Jan 21, 2008
It maybe an option for you. If you've got equity, you'll have to weigh whether or not its worth giving up all that you've earned from one of these companies. If you have no equity and can prove a hardship, a short sale maybe a better option for you. Ultimately, homes are selling all around town and your home not selling may be one or a combination of factors: price, presentation, promotion or the professional (or lack there of) you hired...and the solution to your problem maybe resolving one or more of those issues. Since the new year, buyers are out and about and making deals!
0 votes Thank Flag Link Mon Jan 21, 2008
They will buy them but no where near the going market rate on your home. I would try a drastic price reduction in the mean time while you are shopping around and trying to find one. Also check references and have a real estate attorney that you trust do the closing.

Good Luck!
0 votes Thank Flag Link Mon Jan 21, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer