I know you’ve seen those signs. We see them often while we’re driving, when we’re walking. You know, those signs that say, “We Buy Houses”. I remember thinking as a youngster; those people must be investors, or someone who have the ability to buy a lot of homes. What I soon learned is that those ads are scams. And the people who place those ads are called wholesalers. I will introduce you to, 7 scams that wholesalers run and the real scam behind “We Buy Houses” signs in Baltimore.
Scam #1 – We Buy Houses
Wholesalers do not buy houses. Want proof? Ask them to provide proof of funds or a preapproval letter. I can bet you they won’t be able, or willing to provide it.
Scam #2 – We can offer you money.
Wholesalers do not actually offer money. They are simply offering a reassignment contract with an offer price, and a marketing agreement. If they can’t reassign the contract to an actual buyer who has proof of funds they will not offer to buy your home with their own cash money. Real estate wholesalers are somewhat of con salesmen, not honest investors.
Scam #3 – Lowball Offer
Any offer that a wholesaler presents to you will be a lowball offer. They will never truly tell you the value of your home. It’s not in their interest to tell you the truth. Providing truthful information to the property owner about the true market value of any given property prevents the wholesaler from maximizing their profit. So, it’s not that wholesalers want to be liars and scam artists; they have to be liars and scam artists to be able to turn a profit.
Scam #4 – Zero Commission, Zero Closing Cost
No commission, no closing cost. These are pretty big lies in my book. But, I guess if I was under cutting my clients by $10,000 on each transaction, I could also claim zero commission and no closing cost. After the original sales contract is signed the wholesaler increases the sales price and begins marketing the home. The final sales price subtracted by the offer price is the commission amount the wholesaler has stolen, I mean scammed, shucks, I mean earned. 9 times out of 10 the commission the wholesaler earns will be higher than if a realtor was hired and the seller paid the commission and closing cost.
Scam #5 – We can sell your house fast!
We can sell your house quick. Any house can be sold quickly as long as the circumstances are perfect. By perfect, I mean cash funds, no inspections, clean title, and an agreement between the buyer and seller to close quickly. Any real estate agent, wholesaler, grandmother, or Jack Russell can get a home to settlement within 2 to 3 weeks with those circumstances. Wholesalers aren’t special they just lie enormously in there marketing.
Scam #6 – We can sell your house faster than realtors.
Wholesalers don’t have any special tools to market properties. They belong to Facebook groups, Meet-up groups and Zillow. After you market one or two homes you can have quite a big email list. The list usually consists of investors and real estate agents. The property is generally marketed towards this group of exclusive and usually small list of buyers first. And if no buyer is found, it is then put on the open (public) market. Nonetheless, wholesalers market properties the same way that real estate agents market properties. The biggest difference is Realtors, have the help of 25,000 other realtors plus the power of the Internet to help find buyers, and wholesalers just have their handy, dandy email list.
Scam #7: The contract is guaranteed.
The initial sales contract in malarkey! The original contract with the agreed upon sales price between the property owner and wholesaler is meaningless. The greatest significance the contract bears is in its marketing agreement. Secondly, it guarantees the property owner the amount that is offered on the contract. However, keep in mind the wholesaler can renegotiate the contract and propose a lower offer price at any time. They can also request to extend the marketing period if they are unsuccessful with finding a buyer. Consequently, your contract is nothing more than a marketing agreement between you and the wholesaler that allows the wholesaler to sell the home to the highest bidder.
If you would like to know the true value of your property, call us today for a free evaluation. We will also provide you with a estimation of your closing cost so you understand just how much money you are leaving on the table if you decide to use wholesalers in Baltimore to sell your home.