You've probably seen the "We Buy Ugly Houses" billboards around Denver. They're done by a company called Home Vestors, which buys houses for below market rates, for cash, with quick closing times. It's a set-up that appeals to people who are so desperate to get out of a house quickly that they're willing to take less than what they could get if they took the time to list and sell the house on the open market. I've never had any contact with Home Vestors, so to the best of my knowledge they're perfectly honest and do a good job at what they do -- which is buying houses for a lot less than their owners could otherwise have sold them for.
I HAVE, however, had some experience with at least one independent businessperson (NOT affiliated with Home Vestors) working on the same basic business model. And I didn't find him to be quite so honest.
A woman called me because this "nice man" had, for the past three years, been coming to her home offering to buy it. Over time "offering" had become "pressuring." She was feeling like it was time to sell, and was thinking of taking him up on his offer because it would involve a lot less hassle than going through the whole listing process. It would have been VERY easy, what with him showing up at the house regularly with pen in hand, insisting that she sign. I asked her to show me the contract.
Holy cow! I don't know where to being with all of the subtle ways he was ripping her off. We can start with the price, which was WAY below what I knew the property was worth. Then there was the non-existent earnest money. And the clause where he had the right to immediately begin repairs to the house -- and she would be contractually obligated to pay him two dollars for every dollar he spent. And the other clause where if she changed her mind, he would sue her and she would have to pay for all of his attorney's costs.
It went on and on like that, but you get the idea.
I told her to run and run fast.
She asked me to list the property for her. I did -- at $70,000 more than he was offering her. And it went under contract in a single day.
That's a whole lot more money in her pocket for really a lot LESS hassle than she would have gone through continuing to deal with him.
The moral of the story? Beware of deals that look too good to be true. And never, ever sign anything real estate related without at least having it reviewed by an attorney or a real estate professional who has your best interest at heart.