We Buy House

Asked by Ron Brooks, Harrisonburg, VA Fri Feb 1, 2008

What can one expect in selling house to one of those "We Buy Houses" companies. Some appear to disreputable.

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11
Don Tepper, Agent, Burke, VA
Sun Apr 20, 2008
A few comments on Jeff's response:

He says: "Ask them: If they can assign your contract to another party without your aggreement? (Agree to buy your house at x then they sell to someone else for x plus$..that's their profit)"

Virtually all will have in their contracts an assignability clause. Such as, in my case, "Solutions 3D LLC and/or assigns." Nothing wrong with that. Some of the "We Buy Houses" people are wholesalers. They'll get a property under contract at 60% of ARV (after repair value) and assign it to a wholesaler for more. Jeff's right: That's their profit. Could be as little as a few thousand dollars. One successful wholesaler I work with in Washington, D.C., averages about $24,000 per transaction. I'm sure Jeff isn't arguing against profits. He's just more familiar with profits coming from a Realtor's fee, and that's OK, too. Other "We Buy Houses" people include that if they need it, though they do intend on purchasing and rehabbing. So, yes, a "We Buy Houses" person will have an assignability clause in the contract.

Jeff said: "Ask if they have the right to market the property for sale prior to closing with you? (Basically, they're trying to flip your house before they close on it)." Again, that's pretty standard in most "We Buy Houses" contracts. Nothing wrong with that, either. The "We Buy Houses" people may be using "hard money" to finance the purchase. One of my hard money lenders charges 5 points and 12% interest for the first 3 months, then 14% interest the next 3 months. You can bet I want to sell that home as quickly as possible. And if that means marketing it before I close, that's right.

The point, though, is that--as I said below--"We Buy Houses" people offer a quick solution to people needing a quick sale. If a seller needs to sell quickly--in a matter of days--what concern is it to him or her if an investor will make a profit on the transaction?

And I agree with Jeff 100% when he says: "The best way to get top dollar is to offer it to the most buyers...so try putting it on the market first with a full service, full time real estate professional. If that doesn't work out...then give them a try. It's always an option."

Hope that helps.
0 votes
Jeff Mays, Agent, Richmond, VA
Sun Apr 20, 2008
If you sell your house to a company trying to buy it quickly:
Ask them:
If they can assign your contract to another party without your aggreement? (Agree to buy your house at x then they sell to someone else for x plus$..that's their profit)
Ask if they have the right to market the property for sale prior to closing with you? (Basically, they're trying to flip your house before they close on it)

The best way to get top dollar is to offer it to the most buyers...so try putting it on the market first with a full service, full time real estate professional. If that doesn't work out...then give them a try. It's always an option.

There are some very legit companies that buy properties...just make sure you know all the facts.
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Don Tepper, Agent, Burke, VA
Sat Mar 8, 2008
Most of the answers below are reasonably accurate, if somewhat biased. The "We Buy Homes" companies will pay you as little as they can. Their maximum offer will generally be 65%-70% of what a comparable home would be listed for by a Realtor. They target motivated sellers: People who want to sell right away, when price is less of a concern than just getting rid of the property.

What you can expect is a quick offer--same day or next day, usually. And they generally/usually can and will follow through and purchase your house in as-is condition in 7-14 days (assuming no terrible title problems).
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Mohamed Mekh…, , Richmond, VA
Sat Mar 8, 2008
A lot of those companies target people in financial distress by promising sellers that they will offer them fair prices. They buying from you with wholesaler price. Research them on BBB.
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Pat Mulligan,…, Agent, Chesapeake, VA
Sat Feb 2, 2008
I thought Frank's post started with the word "Run", not Ron- my mistake, but not a bad idea! LOL!

My experience as a REALTOR selling lower end and "as-is" proerties-- I have always been able to net my seller between 20-40K more through listing it than the "we buy houses" guys offered them. I have personally seen this over a dozen times.

I also have done business with a "we buy houses" guy, who is a very nice man- but my clients BUY from him, not sell. He is a wholesaler-so, if he is selling these houses for wholesale prices to investors, what do you think he is paying to acquire them? Obviously, he is paying low enough to make a profit. He's a nice guy, but not THAT nice. :o)
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Frank Bigans…, Agent, Newport News, VA
Sat Feb 2, 2008
Ron,

Those types of companies are only good for someone who is in complete dire straights. You will not receive top dollar, as those companies are "investor-owned" companies and investors never pay close to market value.

I can only assume that you’re in one of those late 1800’s Barton homes that has never yet been updated or remodeled? If this is true, and you’re thinking about selling, then do as many things as possible to make the house pleasing to the eye.

One doesn’t need to spend a lot to make that happen either; a fresh coat of paint, new bathroom faucets and light fixtures, replace broken door knobs, paint kitchen cabinets inside and out if needed, and paint the front door and make the exterior entrance way pleasing.

As we say in this biz, give it curb appeal! Sweat equity goes a long way! But selling to an investor of any type should be your very last resort (I know, I work for a brokerage firm who works with legitimate investors 90% of the time).

Frank Biganski, Realtor ABR
0 votes
Jim Walker, Agent, Carmichael, CA
Fri Feb 1, 2008
Expect to be offered about half of what your house is worth. They might want you to transfer the property for no cash - just their signature for a loan from you.
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Irena, , Newton, MA
Fri Feb 1, 2008
A lot of those companies target people in financial distress by promising you that they will offer you fair price and save you from bankruptcy or foreclosure. But do not expect to walk away with a good settlement since they want to resell for profit.

A lot of those “we buy houses” people have also just sat in on one of those foreclosure seminars that tell you to do that as one way to get the business rolling.
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Keith Sorem, Agent, Glendale, CA
Fri Feb 1, 2008
Ron,
Firms like this make their money by buying properties at 10-20% under market value. That way even if they do nothing to the property they can still turn it around and sell it for a small profit.

The question is not really about their business model. The question is why would you not try to sell your property at retail. Definitely interview some Realtors and find out your options. Unless you are in a crisis there are always options, some of which may not have occured to you.

We are gearing up for spring market, so time is of the essence. With the recent Fed rate cute I would be working hard on developing my options NOW. Good luck.
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Patti Pereyra, , Chicago, IL
Fri Feb 1, 2008
30-40% under market value is what you can expect.

If you're willing to do that, you'd be better off targeting private investors that might be willing to pay 10-20% under market instead.

Or, simply drop the price 10-20% under market value and see what kind of activity you get.
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Bill Eckler, Agent, Venice, FL
Fri Feb 1, 2008
Don't expect to get top dollar.....do expect the shaft!!!
0 votes
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