Real Estate Brokers is this legal in your STATE

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Real Estate Brokers is this legal in your STATE

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

http://theriangroup.com/your-home-guaranteed-sold-in-29-days-or-we-buy-it/

In our market in Portland Oregon there is usually one mega agent running this scheme

and I know its kind of an old play  ( at least to us old guys) But I am wondering if this is legal in your state.

Its like buying listings.. and or its very smart you either buy it wholesale or you get the listing.. he is expanding to CA..

Brokers Agents whats your thoughts and or maybe its something to copy.

I bet this agent spends at least 20 to 30k a month on Radio and other marketing.

 
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Dev HornPro Member
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
10y

I know multiple RE investor/agents offering a "guaranteed sale program".  Nothing wrong with that - it combines the benefits of the 2 main strategies (cash purchase vs. listing) and gives the seller options that a single strategy would not provide.  That's why people doing this might beat you in your market.

And OF COURSE they would buy the house for cash at a DISCOUNT.  Are any of you guys running a "non-profit real estate company"?  Of course not.  Investors don't pay retail for houses.  That's not hard to understand.

There is a challenge tho when a licensed investor tries to present these two strategies side by side.  If I say, I can give you $75K cash right now, or list if for $100K, people do tend to focus on the value being $100K even tho no one has yet offered that for their house.  I've seen several different approaches to this to try to separate the cash offer and listing, rather than combine the 2 in a guaranteed sale offer.  One approach is a non-licensed buyer goes out, meets the seller, and makes the cash offer.  If that doesn't meet the sellers needs, the buyer offers to have their agent come over to talk about listing.  The guys I know doing this see a very high rate of people choosing their brokerage based upon this warm handoff from buyer to agent.  I actually prefer this, this is what I do with my agent partner.

One way we combine the 2 strategies is, I'll tell the seller, "If you list with my agent, I'll keep my offer valid for the next xx days, and if you decide to accept it, she will cancel the listing agreement".  Since my offer pre-dates the listing agreement, there is really no issue anyway, but the sellers that are on the fence like to know they can come back to me for the cash offer.  So we get similar results to the "guaranteed sale program" without really offering as such.

All that said, I think it's a creative way to market real estate services, and it can be a competitive advantage for those that employ the guaranteed sale strategy.

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  • Christopher Brainard
    Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
    10y

    @Jay Hinrichs

    I've seen this offer from a couple brokers here in Las Vegas. I don't think it is illegal, but I would say it is misleading. What they aren't telling you is they will buy your home at a fraction of what it is worth. Anyone can guarantee to do that!

    -Christopher

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    There is an agent in my area who has a similar guarantee, so I assume that it is legal. They run a ton of radio spots as well. The guarantee is pretty ridiculous in our market, as it is not hard to get a contract in that time.  There are very few areas of my market where a month on market is even an acceptable amount of time to have a home listed.  In DC proper, I expect an appropriately priced property to be under contract in a week, and an aggressively priced property to be under contract in 2 weeks. In the desirable suburbs generally 7 days is added to each of those times. So in our market their guarantee of an offer in a 30 days is pretty ridiculous, as even the worst agent should be selling a property that quickly.  

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Christopher Brainard  In a hot market listings are better than buying the house unless you absolutely stole it.

    something is just not quite right I have to think other brokers make complaints to the board about this.. Maybe someone more in tune than me would know since I don't actively sell RE to the public as an agent only a principal..

    But maybe I should have one of his team members come out to my new construction I have 12 going and see what kind of offer he offers me   LOL

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  • Mark Creason
    Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
    10y

    I would almost think it is a net listing.  Not quite, but I would bet they come in at 80% of value.  Would this be a good marketing tool, as I would be upset if they told me my house was worth 80% of value.

    Mark

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mark Creason  Bait and switch comes to my mind.. it gets you in the door then when you tell them for sure if we have not sold it in 29 days for 300k we will cut you a check for 200k No problem  LOL... guess who signs the listing agreement and probably declines the sales guarnetee part.

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  • Mark Creason
    Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
    10y
    Originally posted by @Jay Hinrichs:

    @Mark Creason  Bait and switch comes to my mind.. it gets you in the door then when you tell them for sure if we have not sold it in 29 days for 300k we will cut you a check for 200k No problem  LOL... guess who signs the listing agreement and probably declines the sales guarnetee part.

    I would kick them out of my house.  Of course if they sold my house for 300k, I would be ticked as I owe more than that.

    Mark

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  • Adrien C.
    Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes
    10y

    there's an agent in the Chicagoland area who makes the same claim. I hear her advertisements on ESPN radio's Mike and Mike show 2-3 times a week. I'm sure those are pricy ad spaces. Maybe these folks are just super selective on the houses they choose to list... Or maybe something shady is going on. 

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Adrien C.  I think they are very high volume agents with big teams.

    if you click on this link and then look at the team you will see this realtor has 10 or more agents underneath him.

    Mark Ferguson in Denver has the same approach vis a vi team building..

    in essence one broker is running a company within a company.. and the commissions are shared between the team members with money all funneled up to the top dog.

    Very lucrative for the face of the team.. I am sure this is a million dollar a year to multi million a year income for the head guy Rain.

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  • Michael Allen
    Vancouver, WA · Member since 2014 · 14 posts · 13 votes
    10y

    I actually interviewed with that group right before I got my license. Their group actually does have a lot of creative marketing tactics and they do a fair amount of things that other agents who don't know how to implement will claim don't work. Unfortunately, I didn't get a chance to dig in and find out more about how the 29 and Sold guarantee works. It did sound like they would offer a lower price so that they'd have room, but I'm pretty sure there was more to it in the back end. There is an episode of the Super Agents Live podcast that covered someone doing this and how it worked. Maybe tweet Toby Salgado to find out or dig through his episodes. There isn't anything unethical about it that I can see so long as the broker makes a good faith attempt to sell the house for top dollar. If things fall through and the agent stands there with 70 or 80 cents on the dollar, that might be helping the client if it gets them to their goals. In this market though, there really is no reason any agent can't sell a house in 29 days if it's priced right. 

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @Adrien C.  I think they are very high volume agents with big teams.

    if you click on this link and then look at the team you will see this realtor has 10 or more agents underneath him.

    Mark Ferguson in Denver has the same approach vis a vi team building..

    in essence one broker is running a company within a company.. and the commissions are shared between the team members with money all funneled up to the top dog.

    Very lucrative for the face of the team.. I am sure this is a million dollar a year to multi million a year income for the head guy Rain.

     This tactic has been around a long time! There are agents in my area that do it as well. It is a low price if the agent has to buy it himself. Obviously it would not make sense for the agent to buy at market value. I have never hear of it being illegal in any way. The agent that does it here has a large team as well and does a ton of radio advertising too. I am wondering if they all bought into the same coaching program.  

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  • Jay HinrichsBusiness Member
    OP
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Michael Allen  Agreed Michael... I can see this in Detroit were houses sell for 1 dollar to 5 million.. and everything in between... I could see mid western realtors who ran this add listing pretty much every C class home that came up and ending up owning hundreds of them...

    I think the light bulb just went off for me.. ?

    James Wise  you following this.

    Michael,  out of curiosity which Vancouver company did you choose.. ? 

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mark Ferguson  could be.. or if they just happen to be travelling and hear it on the radio in some other market and think  HEY I will try that.

    You can speak better to this than I can since I have been out of the retail game for so many years... But sometimes I think when I pop on the wholesaling threads and people are talking about how much money they spend on direct mail etc.. if someone put that kind of money into marketing themselves as an agent.. there is no doubt they would get business and build a career.. where in Wholesaling its much tougher as there is more to it to make a successful deal  IE you MUST buy under market.. Were as a realtor can make a very nice commission AT market .. and their clients are much stickier ,, by that I mean they buy another home through the agent or refer people etc etc. 

    Any thoughts ?

    And yes I think I first heard the I will buy your home ad in the SF bay area in the late 70's early 80's.

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @Mark Ferguson  could be.. or if they just happen to be travelling and hear it on the radio in some other market and think  HEY I will try that.

    You can speak better to this than I can since I have been out of the retail game for so many years... But sometimes I think when I pop on the wholesaling threads and people are talking about how much money they spend on direct mail etc.. if someone put that kind of money into marketing themselves as an agent.. there is no doubt they would get business and build a career.. where in Wholesaling its much tougher as there is more to it to make a successful deal  IE you MUST buy under market.. Were as a realtor can make a very nice commission AT market .. and their clients are much stickier ,, by that I mean they buy another home through the agent or refer people etc etc. 

    Any thoughts ?

    And yes I think I first heard the I will buy your home ad in the SF bay area in the late 70's early 80's.

     But, it takes more work to become an agent! 

    haha, I don't do any wholesaling. I can see both sides of the argument. There are some wholesalers that make awesome money. But, I see more agents making awesome money than wholesalers. I think being an agent is more sustainable as you say too. 

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  • Scott Carder
    Investor · Owasso, OK · Member since 2013 · 166 posts · 90 votes
    10y

    There is a guy in the Tulsa market doing that. I like his commercial, not sure of the details.

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  • Adrien C.
    Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes
    10y

    Amy Kite with Keller William is her name- she appears to be a pretty big dog in the Chicago suburbs. Her website says that they will with buy, rent, or lease option the house if it doesn't sell. 

    And to address the point that if wholesalers took their marketing money and put it towards marketing as a realtor, they could make more money is kind of a mute point. I say this because 95% of new wholesalers have $5 in their checking account and no money for marketing let alone for a book of stamps to send out a few letters. Many don't even have money to put down $100 in earnest money. The wholesalers who have the money for marketing are running successful wholesaling companies but those are few and far between. Plus it takes time, education, and hard work to be a successful agent and that wouldn't fit the gurus "get rich quick with none of your own  money " programs.

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  • Jay HinrichsBusiness Member
    OP
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Adrien C. 

    I am just thinking in the mid west markets  ( and Chicago is not typical since your values generally are more coastal in nature)  one could probably just kill it with this form of advertising... as you know many of these areas retail sales move fairly slowly.

    I do find it Ironic.. here on BP you have all these people that just jump up and down about how not to spend a dime on any paid for mentoring or of course a TV Guru.. but they will go out and blow what cash they have and or run up credit cards trying to be a wholesaler  and at the end of the day they get less education than if they paid for a mentor and the burn out rate I suspect is over 95% .. and whatever cash they had is gone and now they are in credit card debt..   So same story is told about the paid for mentorships but in reality they get to the same place but here on BP they are encouraged to do just that.. blow their money go into debt.. learn all you need to learn on line ( which I think is pretty far fetched).

    I think the wholesalers that do well and I know some that do very well.. They would be successful at any business venture basically... at the end of the day this is about sales and not everyone can sell.. And non of them spend any money on sales training which is what they really should do..

    We all know we hear about the natural born salesmen.. that's the person who succeeds ..

    I found it comical the only pod cast from BP I listened to was Quarles  and I listened to maybe 15 minutes of it I get pretty bored with that stuff.. But I could tell this guy is a Professional salesmen..

    So when the comments came back half of them were BP members thinking the guy was too slick to car salesmen like.. when me I am thinking this guy is GREAT he is PRO... but I know good sales and most people don't.  now if you have money and jump into investing you don't really need sales skills but if your the no money no credit I am going to be a wholesaler if you have no sales skills I believe you have little to no chance other than the deal that falls off of the pumpkin truck

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  • Adrien C.
    Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes
    10y

    @Jay Hinrichs 

    100% agree that wholesaling is all sales and marketing. That's one of the main reasons I jumped into it. I built a successful insurance agency and this business is extremely similar- just a different product. It's still about finding needs, solving problems, and networking to bring the right people together. It just happens to merge my passion of real estate and sales/marketing together. Wholesaling is just one part of my business model. I'm working on my license now so I can have the ability to grow my business in other avenues when needed. It's fun but most newbies have the blinders on and don't want to know how much work it is to do it successfully. 

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  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    10y

    I know multiple RE investor/agents offering a "guaranteed sale program".  Nothing wrong with that - it combines the benefits of the 2 main strategies (cash purchase vs. listing) and gives the seller options that a single strategy would not provide.  That's why people doing this might beat you in your market.

    And OF COURSE they would buy the house for cash at a DISCOUNT.  Are any of you guys running a "non-profit real estate company"?  Of course not.  Investors don't pay retail for houses.  That's not hard to understand.

    There is a challenge tho when a licensed investor tries to present these two strategies side by side.  If I say, I can give you $75K cash right now, or list if for $100K, people do tend to focus on the value being $100K even tho no one has yet offered that for their house.  I've seen several different approaches to this to try to separate the cash offer and listing, rather than combine the 2 in a guaranteed sale offer.  One approach is a non-licensed buyer goes out, meets the seller, and makes the cash offer.  If that doesn't meet the sellers needs, the buyer offers to have their agent come over to talk about listing.  The guys I know doing this see a very high rate of people choosing their brokerage based upon this warm handoff from buyer to agent.  I actually prefer this, this is what I do with my agent partner.

    One way we combine the 2 strategies is, I'll tell the seller, "If you list with my agent, I'll keep my offer valid for the next xx days, and if you decide to accept it, she will cancel the listing agreement".  Since my offer pre-dates the listing agreement, there is really no issue anyway, but the sellers that are on the fence like to know they can come back to me for the cash offer.  So we get similar results to the "guaranteed sale program" without really offering as such.

    All that said, I think it's a creative way to market real estate services, and it can be a competitive advantage for those that employ the guaranteed sale strategy.

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  • Jay HinrichsBusiness Member
    OP
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Dev Horn  I think in OUR market  its purely to get listings.  listing are money these days.

    Sellers can always name or exclude a buyer from listing agreement..

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  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    10y

    Right and right, yes completely agree with you @Jay Hinrichs.

    I've had this discussion with multiple guys in multiple markets.  Most of our licensed investors are more focused on buying, rather than listing.  But I can certainly understand how up there in Portlandia I bet listings are pure gold right now.

    This was a good topic, Jay.  Very relevant.  We are talking about this a lot among our team these days...

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  • Jay HinrichsBusiness Member
    OP
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Dev Horn  yup a good listing agent in our market Is pretty much assured of a 200 to 500k a year income No sweat... but like anything they work hard for it.

    I am seeing average agents knocking down 200k... I have one buddy who has triplets and his wife works full time so he does a lot of kid duty and  he made I think 220k last year on commissions... LOL... but guess were he came from >

    Nordstrom's selling high end suit's the boy can sell  !!!!

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  • Dev HornPro Member
    Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
    10y

    Seriously?  Wow.  To be honest, no way I'd waste my time flipping & rehabbing if I could bank that kind of cheddar as an agent.  Jeez.  Time to move to Portlandia!

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    This is a rehash of the old Craig Proctor type marketing systems.

    When I first was licensed in 2004 Craig was selling marketing similar to this. A bunch of people started doing it in markets and then after the last downturn they stopped. It's nothing more than a hook to get brokers/agents in the door for a presentation. Once they go over this and this are the conditions then many do not want it.

    It's kind of like having a Ferrari at a car dealership for 90,000 when they go for 150,000. There is technically one there as advertised but when people get there and it is not there anymore they buy something else.

    This is "shock value" marketing to stand out and get noticed. The reality is if the broker/agent puts the exclusions in and the property is staged correctly and priced correctly the guarantee will not be used.

    There was a student of this system years ago that I remember was sued by a home owner. The issue was the home owner claimed false advertising because the broker/agent did not technically have the cash to buy the property if it didn't sell. So that state real estate commission charged false advertising and deception practices. I remember reading the article the instructor said to have the bank funds just in case to show and demonstrate the promise can be honored.  

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  • Rod Desinord
    Real Estate Agent · Pompano Beach, FL · Member since 2015 · 249 posts · 73 votes
    10y

    I love the part where the agent says "We both sit down and agree on a price" lol. I mean if a seller had a similar approach with a regular joe schmoe realtor the house would sell anyways, its the fact that people think their houses cost more than it does that makes it sit on the MLS for centuries

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  • Account Closed
    Professional · Columbus, OH · Member since 2015 · 119 posts · 37 votes
    10y

    I looked at a complaint against a broker in Dayton, Ohio a couple of years ago that was doing this. Unfortunately, his paperwork was all in order and there was nothing that could be done. The problem with this type of system is that the average homeowner is unsophisticated in the market value of their home AND real estate contracts. Now before you jump all over me and say most sellers think their home is worth more than what it really is, that is the issue. The homeowner agrees to list at a value higher than market value and then agrees to sell to the listing agent way under market value. When the home doesn't sell for the over priced value guess who gets to buy it for less than market value.

    Think about this, until recently (advent of crowd funding) there were restrictions on who could invest with someone raising money for a start up, you had to be considered a "sophisticated investor". But the biggest investment the majority of consumers will ever make is purchasing their residence. Shouldn't there be stricter regulations on real estate licensees to protect the same "unsophisticated" buyer(s)?

    @Jay Hinrichs

    @James Wise

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