Beware of “We Buy Homes for Cash” letters

Dear David,

I got a letter in the mail from someone offering to buy my house for cash. It sounds like a convenient way to sell, should I consider it? – EASY WAY OUT

DEAR EASY: This sounds like a note from a wholesale or off-market investor, the same kind who posts “We Buy Homes for Cash” signs on the side of the road. In blunt terms, these investors typically seek out the elderly, the debt-ridden, the uninformed, or sellers who have homes in poor condition. By promising to buy their homes right now, as-is, without agents, inspectors or lawyers, the investor is hoping to lure these sellers away from professional real estate services, so they can snag the house for significantly less than it would bring on the MLS system.

In the time it takes an off-market deal to close, a wholesale investor will often flip the house for closer to its market value, and in the process, make a significant profit with minimal risk. If this were to happen, a homeowner could end up selling to a third party, and the wholesaler who wrote them the offer would never even appear on title.

When something sounds too easy, there’s usually a catch. A homeowner in dire straits may not realize that a quick sale is entirely possible on the open market, especially in a high-demand region like ours. By not exposing their home to the market, a seller can potentially leave hundreds of thousands of dollars’ worth of hard-earned equity on the table. This is a remarkably high price to pay for the sake of convenience.

If you or a loved one is considering what might be a wholesale offer, I urge you to ask one of the over 90 thousand Realtors in Ontario for their opinion of what your home might be worth — either in its current condition, with improvements, or somewhere in between.

Any home will sell if the price is right, and often, minor improvements can generate significantly higher offers. If you are eager to sell but not capable of taking on a project, it’s easy to contract out a wide variety of services, such as decluttering, cleaning, landscaping and junk removal. When preparing to list a home, I always look for the “sweet spot” in terms of what my client may or may not be able to handle, the timing they require, and what can be done to earn them the best return on their investment. I never ask anyone to spend a dollar unless it earns them more than a dollar in return.

No matter what your situation or the state of your home, giving away your equity is never the solution. If you’re considering a wholesale offer, I can almost guarantee you’ll do better on the open market in a short period of time, with a handful of buyers instead of just one.

PRO TIP: Despite the lovely note in your mailbox, a wholesale buyer is not your friend. Listing your home on the open market may seem a bit inconvenient, but in the end, the time you invest puts more money in your pocket. When you think about how long it takes the average person to save $100 thousand, there’s no good reason to give your money away. #AskDavid #Advice

We Buy