You probably have seen the signs, plastered on telephone poles and ubiquitous at street corners, just the thing to read when you’re waiting for a red light.
“We’ll Buy Your Home for Cash,” asserts one. “We Buy Ugly Houses,” promises another. Though the language may differ slightly, the messages are variants on the same theme. In effect, the advertisers promise to buy your home — in just about any condition — in a very short amount of time.
If you are like many other people, you may question the viability of a company that resorts to using light poles to drum up business. Then again, the promise of a quick sale, especially in today’s market, can seem appealing.
“We can be a real advantage to folks who don’t want to wait or don’t have the money or time to spend on repairs,” said Brad Chandler, CEO of Express Homebuyers, a locally based company that has bought and sold more than 900 homes since it opened in 2002.
In some ways, homeowners are facing situations more complicated and challenging than ever before. You can’t just list a home and expect it to sell. Now, home sellers need websites complete with professional photographs, must explore new strategies for selling and marketing, and have to deal with hidden costs.
Meanwhile, companies that promise to “buy your home fast” crowd the Web with flashy graphics and sometimes flashier promises, and it can be tough to tell the legitimate ventures from the scammers.
The fact is, not all of these quick-buy companies are the same. Some can be fly-by-night businesses that end up bilking the homeowner in a variety of ways. Others, such as Mr. Chandler’s Express Homebuyers, are legitimate businesses that often are members of the Better Business Bureau.
“We’re kind of the CarMax of real estate,” Mr. Chandler said. “The price we quote is what you’ll pay. And you won’t have to deal with contractors, junk haulers, etc.”
The process usually starts with a phone call. The fast-buy representative will ask a series of questions regarding the home’s age, condition, windows, number of bedrooms and sell date, the same kinds of things a real estate agent might ask during a preliminary meeting. The company representative will give the homeowner a selling price based on this information.
A short time later, a representative of the company will arrive at the home and evaluate the property.
“Every situation is different,” said Mr. Chandler, who points out that a number of costs are associated with traditional sales methods, including the real estate agent’s commission, that subtract from the final selling price of the home. “What we’ll pay for the home is dependent upon condition, location and the amount of work we’ll have to do.”
Critics say fast-buy companies often find issues that will lower the price they are willing to pay for the home. Scammers count on homeowners to sign the contract based on a phone conversation rather than what is written on paper.
Once the representative views the property and makes any adjustments to the original offer, the company will close on the house and the homeowner will receive a check. Any outstanding mortgage is paid off at closing.
Fans of the quick-buy method like that they don’t have to haggle or spend months of waiting before lowering the price to sell the house.
“We’re investors,” Mr. Chandler said. “We’ve got the money on hand to buy your house outright.”
Once the sale is complete and the former homeowner has moved out, the company will spend some cash of its own for repairs and renovations. A few months later, the home likely will be on the market again with a considerably higher listing price than what the seller received.
“We’ll spend anywhere from $40,000 to $150,000 in renovations,” Mr. Chandler said. “And we’ve found that our houses have often sold faster than other comparable houses in the neighborhood.”
The companies also may update appliances and kitchen cabinets. Express Homebuyers, for example, is known for its use of granite counters and stainless steel appliances. They also will use neutral paint colors for generic appeal. For higher-end homes, they might bring in interior designers.
“On a home that we paid $750,000 to $800,000, we may put in $150,000 worth of work,” Mr. Chandler said. “We’ll sell that home for over $1 million.”
One frequent question raised by homeowners considering this kind of sale is whether they will get fair market value. Probably not, although some companies assert that, after all is said and done, they do come close.
“By the time you subtract commission, cost of repairs, your time, etc., we might not be all that different,” Mr. Chandler said.
A homeowner usually will receive 60 percent to 80 percent of market value, which can be fair a trade-off for some.
Homeowners who use these businesses often don’t want to deal with the time and effort, including updates and repairs, to prepare a property for sale. Some have inherited property and don’t want to be saddled with the taxes and maintenance costs. Sometimes, homeowners find themselves in financial straits and just want to unload what they view as a burden.
Who benefits from this type of arrangement? Obviously, the quick-buy companies do; otherwise, they wouldn’t be in the business. Such companies generally are made up of a consortium of real estate investors. In fact, many of the “sell your house fast” websites offer information geared toward future investors.
Companies such as Express Homebuyers can provide a $2,500 cash advance to help the seller with moving or other expenses.
These quick-sale arrangements, however, can have drawbacks, real estate professionals say.
“There’s always a business that pops up in response to any economic situation,” said Elizabeth Blakeslee, associate broker with Coldwell Banker’s Georgetown office and a former regional vice president for the National Association of Realtors. “They’re quick fixes, and they don’t always work.”
Many real estate professionals note that these companies may not necessarily know the neighborhood. Indeed, many of the more popular websites, including webuyuglyhouses.com and fasthomesale.com, which offer to buy houses in any part of the country, have corporate offices far away from the region although they often mention “local affiliates” or “local investors.”
“If you talk with a Realtor, you can get information about the true value of the house relative to sales in the area,” Ms. Blakeslee said. “That’s not something that these companies tend to do.”
Many professionals also say that a Realtor often can get a higher purchase price.
“With a little bit of fluffing, you might be able to sell for a better price,” Ms. Blakeslee said. “There are a number of things you can do, like decluttering … that aren’t very expensive but can make a bit impact on potential buyers.”
They also are especially concerned, they say, for homeowners facing foreclosure.
“It can be a mortgage disaster,” Ms. Blakeslee said. “If you go the traditional route, you can talk to a Realtor, and often the situation can be better handled by a traditional sale.
“Often, you can get mortgage relief,” Ms. Blakeslee said. “You really should try other routes before you give away your home. At least talk to a competent real estate professional who works in your area.”
She also urges sellers to read contracts carefully before signing to ensure that they won’t have to continue mortgage payments after they have signed away their homes.
The relationship between Realtors and quick-buy companies are not necessarily adversarial.
“We’ve got a large following of Realtors,” said Mr. Chandler, whose company sells its homes through Keller Williams. “We’re actually the No. 1 Keller Williams team in the country.”
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