Have you ever wondered about those “WE BUY HOUSES – FAST CASH” signs you see stapled to telephone poles and sprouting out of the ground all over Memphis?
They come in all types. They can be handwritten, printed with the phone number in marker, professionally produced and even have cartoon characters on them. These signs are at every intersection and highway exit in just about every city in the country. But who is putting them out and what do they really have to offer?
The main purpose of those signs is to reach people that, for one reason or another, want to sell their house and get paid for it quickly. These people are referred to as “motivated sellers.” A seller’s motivation can be the result of many things. For example:
- They could be going through a divorce.
- The seller could be moving to another city or a job.
- They may have inherited a property they do not want to deal with
- Perhaps they have been renting it and are tired of being a landlord
- Maybe the house can be in need of costly repairs and they just don’t want to deal with it.
If for any reason they want to sell fast and get the cash, they might not want to deal with the traditional listings, agents and showing the property. Then they call a number off of one of these signs to see what other options are available. The seller can usually be guaranteed a buyout within a few days and get money from the property within a week or two.
In general there are three different types of real estate buyers behind these signs.
When a wholesaler receives a call from a motivated seller they will evaluate the property and negotiate a contract to buy the home with an “assignment” clause that allows them to transfer that deal and price to someone else at an even higher price. The wholesaler will make profit from the difference between the prices.
This gives the wholesaler the option to purchase the property at a pre-agreed upon price. The wholesaler can then spend time to find someone else to assign the contract. If they can’t find someone to buy that property at a price higher than what they negotiated, they can cancel and back out of the deal because they have no money at risk and they lose nothing.
There is absolutely nothing wrong with this deal as long as it’s a win-win situation between the seller, the wholesaler and the ultimate buyer.
The Individual Investor
The individual investor places signs and markets to buy properties directly from homeowners, saving them time, commission, and the trouble of listing and showing their property.
The home owner can sell for a little less because they have the convenience of not having to list the house or paying a 5%-6% commission to a real estate agent.
The investor can save on the cost by making the sale as timely and efficient as possible.
Usually a company can offer a quick cash only close and they are, by far, the most efficient of the people behind the signs.
These companies can give a hard offer, often within 24-48 hours. The offer is usually cash and non contingent and they will ultimately close in as little as 1-2 weeks.
After they buy the property they have the resources to renovate the home and put the property back on the market to sell and then move on to the next one. These companies work like a well-oiled machine. They are extremely efficient in making offers, closing, renovating and selling.
The mass marketing efforts of all three of these types of buyers show that there is big demand for non-traditional methods for selling properties. For some people, a quick sale for cash outweighs going a traditional route of listing and showing, even though it might make them a bit more money.
But as always, do your homework. Find out just who it is behind those yellow signs and what they have to offer. If you have a property you would like to sell or know of someone contact us here.