Got an offer on my house but....

8 Replies

Ok. So I have had my house up on the market a little over 70 days and I have only received one other offer from an investment group for well under the asking price. It's been taking so long and I really got tired of all the appointments for people to come in to look at my home and just pass it up. My agent couldn't do nothing more to help so I started taking matters in my own hands a little. 

I get a letter in the mail from a company called H.U.B Home and Realty Solutions saying they will buy my house in any condition, they will make an offer within 24hrs, and leave me with some money left in my pocket. So I decided to give them a call. Get on the phone with a guy and he says he wants to come see the property so I say ok. After checking it out he claims to like the house and that it needs some work. The next day he offers to purchase the house at the asking price of $205,000 all cash. The asking price is under the market value in my area. I was surprised but I knew there was a catch. He says that I have to take the listing off the MLS because he has an extensive list of buyers ready to go but if they see the listing on the MLS they will low ball me. That made sense but I knew that also meant I have to fire my agent. That was something I already wanted to do.

So I did what he asked. But now I'm extremely nervous because he offered me $205,000 but he(or his company) doesn't intend on purchasing it. He is marketing it to his extensive list of buyers while I get the offer contract reviewed by a lawyer. But I'm truly trying to figure out what was the purpose of his offer of he isn't the one making the purchase? Has anyone ever heard of this tactic? Is it legit?

Yes, it is called wholesaling.

Do a search on BP and you will find approximately 18,473,665,734,221 posts on it...

IF you are selling enough under the market value that it will look like a good deal for an investor for MORE than you are asking then they could find an investor to pay you what you asked and will close quick with cash and won't care about the work.

Now since it WAS on MLS for a long time unfortunately it is likely they don't have an extensive list of REAL buyers that will actually consider it a deal. Unless you JUST dropped the price substantially when they offered on it (Maybe like $30-40K) these guys are most likely idiots that don't know what they are doing and are wasting your time.

Ask them for a large nonrefundable deposit and see if they are still serious.

What kinds of contingencies do they have?  If they offered cash obviously not financing.  Is there a long vague inspection clause?  Any other BS things like contingent upon "Partner review" or something again very vague that can pretty much get them out of it for any reason?

I'm actually in the minority here in saying it is possible to wholesale stuff that was on the MLS. However in your case (unless as I said you had just made a massive price drop) these guys are probably just wasting your time. While you can make MLS properties work it isn't at full asking price for any place that has been on the market more than maybe 3 days.

You said that price is well under market, but it does need some work.  Just making stuff up...  Let's say market is $240K if you put $10K of work into it.  The guy should have offered you more in the $150s if they wanted to sell it to an investor buyer and be able to make a spread on it.

Seriously get a good sized non refundable deposit...

A non refundable deposit? Why would an investor give me that? I could request it, but if he asks why, what would I tell him? Just because? And yes, I significantly dropped the price of the home $25,000 to try to hurry and get it sold. I put a lot of work into it and it shows well. It just doesn't have a finished basement and I think maybe that's what's keeping people from making an offer. 

And I know about wholesaling, but don't you have to purchase the property to sell it to another investor? He seems to be skipping the purchase and passing it straight to another investor without ever purchasing the property. I'm not sure, but thats what it seems like. And if that's the case, how good is his offer if none of his buyers are willing to spend the money? Why make an offer if ur not gonna be the one making the purchase?

It sounds like this guy is wasting your time. You should read up more on wholesaling and you will see what is going on. If he can't find a buyer he will use his contingencies to pull out of the deal just like @Shaun Reilly said. You can ask for a large deposit and I am about 99% sure that he will back out at that point. Your probably best off to put it back on the mls at the lowered price that you just went down to and maybe pick a different, better agent to list it.

Also, if you think the unfinished basement is the issue, you might want to consider finishing it. You might be able to get your price back up to your original point and it shouldn't cost 25k to finish it, even if you hire a contractor to do the work (unless you have water/foundation issues).

Most wholesalers don't ever purchase the property.  They just sell the contract to someone and assign their rights in it to that other investor.  Some people do double close regularly but in general you hear wholesalers close only if a) they have to since the contract is not assignable, mostly REOs and Short Sales or b) they did such a good job that the fee they will be making is especially large and they don't want any issues with the buyer or seller getting POed if they see how much money they made.

If they put the contract on it because they in fact think it is a good deal that they can easily sell then putting up a deposit should not be a deal breaker for them.  If they are just throwing sh*t against the wall hoping something sticks they won't do it nor will they if they purposely over offered hoping to go back and get you to take less after a couple weeks and you will just be like "f*ck it I just want to sell" and will take a bigger hit.

The more you tell us the more I am convinced these guys are not going to perform on this contract as it stands right now.  If it shows well and you have done a lot of work already and the only major flaw if that the basement isn't finished there is not much of a value add for an investor.  Actually sounds like my little example isn't far off.  If they need to put like $10K into it to get the value up $25-30K that is a pure money loser for an investor after transaction costs and holding costs.

However for you it could make sense.  Like George said I would highly consider doing that if this doesn't pan out.  If you can spend way less than the added value you anticipate it would be well worth it.  Really even if it is a dollar for dollar play but it gets all those showings to result in a few offers it is probably worth it.

You are totally wasting your time with this guy. He has no money and has no intention of buying the property himself. He had you take it off MLS because he's going to advertise it for $220k, so he doesn't want his "buyers" to see it for sale at $205k. Do you really think he can sell it tom his "buyers", who are just a bunch of yahoos who answered some craigslist ad, when the hundreds of actual buyers who saw it in the MLS didn't bite at a lower price? Look in craigslist and you will see your house being offered or sale, which will tell how real this guys buyers are. Get out of this contract as soon as you can, get it back on mls, and lower the price. The house was not priced under market if you got no offer offers in 2 months, period.

Originally posted by @Wayne Brooks :

You are totally wasting your time with this guy. He has no money and has no intention of buying the property himself. He had you take it off MLS because he's going to advertise it for $220k, so he doesn't want his "buyers" to see it for sale at $205k. Do you really think he can sell it tom his "buyers", who are just a bunch of yahoos who answered some craigslist ad, when the hundreds of actual buyers who saw it in the MLS didn't bite at a lower price? Look in craigslist and you will see your house being offered or sale, which will tell how real this guys buyers are. Get out of this contract as soon as you can, get it back on mls, and lower the price. The house was not priced under market if you got no offer offers in 2 months, period.

Or tell him that you will accept his offer and take it off the MLS. But only for a cash offer with NO contingencies. No inspection contingency, no financing contingency, no partner approval contingency, NOTHING. And a non-refundable deposit of 2% of the purchase price.

In all likelihood, that will get rid of the bottom-feeder.

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