We buy your house for cash - whats the angle ?
New to Real Estate · Member since 2020 · 8 posts · 3 votes
Just got this in the mail, an advertisement from MontrealHouseBuyer.ca
They're offering cash to buy your house. I'm trying to understand what's the angle here.
Are they basically buying properties off of desperate people for -10, 20% under market value ? It's seems hard to believe that anyone will want to sell their home under market value, especially in times like this where it's a seller's market, and people are paying above the market value in most cases (At least here in my city: Montreal, Canada).
What am I missing here, what's the angle, what's the catch ?
In the states they'll typically look for a deeper discount than that. Much of the time the houses being purchased need considerable repairs, and the price has to have enough margin in it for those repairs to be done and for the person to make money. The typical seller is going to be in some kind of distress (preforeclosure, bad tenants, bankruptcy, something like that). Someone facing foreclosure will need quick cash, and that's where this person comes into play.
There are all kinds of reasons people have to sell privately for cash.
In the states they'll typically look for a deeper discount than that. Much of the time the houses being purchased need considerable repairs, and the price has to have enough margin in it for those repairs to be done and for the person to make money. The typical seller is going to be in some kind of distress (preforeclosure, bad tenants, bankruptcy, something like that). Someone facing foreclosure will need quick cash, and that's where this person comes into play.
There are all kinds of reasons people have to sell privately for cash.
I assume they're advertising to a certain area or postal code. I haven't received any mail from them.
The market is getting very tight with stocks plummeting post-COVID. I know promoters are getting creative because mailers aren't working so well given the owners are innundated.
It seems to me like a strategy designed for a long ago era: before online digital resources became widely available. Kind of like trying to find people who still rely on landlines as their principal phone. I would not be surprised to see this marketing strategy die within the next 5-10 years.
Just got this in the mail, an advertisement from MontrealHouseBuyer.ca
They're offering cash to buy your house. I'm trying to understand what's the angle here.
Are they basically buying properties off of desperate people for -10, 20% under market value ? It's seems hard to believe that anyone will want to sell their home under market value, especially in times like this where it's a seller's market, and people are paying above the market value in most cases (At least here in my city: Montreal, Canada).
What am I missing here, what's the angle, what's the catch ?
Some companies do this all the time with cars. It can be a strategy for money laundering.
I know them personally. They definitely have deals in their pipeline each month. I've actually gone through the process of buying one of their deals with partners. They have good deals and the guy working for them in Quebec is rock solid.
Just got this in the mail, an advertisement from MontrealHouseBuyer.ca
They're offering cash to buy your house. I'm trying to understand what's the angle here.
Are they basically buying properties off of desperate people for -10, 20% under market value ? It's seems hard to believe that anyone will want to sell their home under market value, especially in times like this where it's a seller's market, and people are paying above the market value in most cases (At least here in my city: Montreal, Canada).
What am I missing here, what's the angle, what's the catch ?
Hi Joe,
I own MontrealHouseBuyer.ca
A small percentage of people are actually better suited to sell to us than to sell on the MLS.
Most of the homes we buy end up with a combination of seller distress (no money for repairs, divorce, depression, etc) and property distress (cluttered, dirty, foundation cracks, roof leaks, or just very dated). Sometimes it's one or the other, and very rarely it's neither but the seller prefers the ease of transaction.
Some examples of sellers who have sold to us:
- Embarrassed sellers. They may be hoarders, or they don't know how to maintain a house and it has deteriorated around them, or it's just dirty. These sellers are embarrassed to have people walk through their house, to feel judged by people, and often don't have the money or time/ability to fix it up and get it back into presentable shape. They quietly sell to us.
- Sick family member. We've had sellers who are overwhelmed taking care of a sick or elderly family member, and also feel like they don't have the time or energy left to prepare their house for sale. They sell to us and move in with the family member they are taking care of.
- Inheritance. Someone inherits a house that is very dated or needs some work, doesn't want to deal with it or doesn't know how. They call us and sometimes they don't even want to empty the contents, so we'll deal with the junk removal.
- Animals. Someone may be embarrassed of how they live because they let their cats or dogs pee and poo all over the house. Or they have aggressive dogs and it makes it hard to show the house. Or one seller, she had a dozen cats and was afraid that if realtors would show her house, a cat might get out and get hit by a car.
- Adult children - we've had a few sellers sell to us because their 30+ year old kids won't move out of the house and they want a quick sale, then they'll downsize and force their adult child to find their own way.
- Sellers who need money upfront to sell - we've given $50k mortgages to sellers between the time of purchase and closing so that they could use that money to put as a deposit on their next home (since deposits are usually held by realtors or lawyers in trust for closing and the seller otherwise doesn't have a deposit for the next house). We've also paid first and last months rent and moving costs for sellers who wanted to move into a rental, but again couldn't access their equity without moving out and couldn't move out without money.
- Tenants. This has been more of an issue with evictions halted during the pandemic, but we've been seeing more and more small landlords who have problem tenants, can't get them out, and just want to get rid of the headache.
- And many more valid reasons.
There are lots of reasons why a seller chooses to sell to us. Some of the reasons above, they could have sold through a realtor, some of them they couldn't on the same terms. Either way, we deal with the small percentage of the population that are grateful to have us as an option. We're not looking to deceive anyone and we're not trying to convince people to sell to us who shouldn't.