As the market has exploded so to has the increase in iBuyer models and wholesaler investment buyers. These companies are now taking note of Zillow’s failures and shrinking their offers to ensure large profits.
This week a client received a letter from Open Door, another instant offer company operating similar to Zillow. The offer estimated that their all cash offer would be between $264-294k. The home is worth around $550,000 in Platte County.
While it’s laughable to most to receive such a lambasted offer remember these companies are only looking for the 1% who may not know any better.
Many times a year we are called too late to help someone who has fallen victim to the tactics of a wholesaler or instant offer buyer.
Last year we were too late to help an elderly Liberty woman who signed an agreement to sell her home for $89k because she was told it needed too many repairs. Justin valued it at $155k “as/is.”
Illinois recently outlawed the practice however Missouri legislature has yet to take any action on this growing epidemic.
Few understand the pitfalls of selling your home directly to an investor wholesaler.
If you have received an offer that you may be considering accepting some good rules to follow would be…
- have buyer provide proof of funds or preapproval and verify with the lending institution that the funds are available.
- look for wording in contract such as “right to reassign.” This is tell tale verbiage that allows the buyer to actually sell the right to buy your property to another buyer who’ve never dealt with. As this person is not a broker and take no responsibility for disclosure, you can be found liable for lack of disclosure even if you believed you were selling a property “as/is.”
- Look for clauses that allow the buyer to cancel. This often tells us that the buyer has no intention of purchasing, only reselling the contract. If they can’t find a buyer for the contract, you may be loading the truck to find out the deal is off.
- do not rely on the buyer’s estimate of value or an online valuation. Contact an appraiser or a real estate professional with significant experience in your market. Get a second opinion. It’s
– Remember the buyer has an incentive to make the most profit they can. Licensed real estate professionals have fiduciary responsibility to the seller. While there are costs associated with selling a home it is almost always in the sellers best interest to sell their home in a traditional retail way vs selling discounted to a wholesaler. We sell homes in all conditions.
If in doubt, please reach out. Our opinions are free and we’re always here to help.
