dissatisfaction with Phoenix Home Buyers Club
I had a very poor experience with Phoenix Home Buyers Club (www.phxhbc.com), and I wish to share it with others.
Don't be fooled. Phoenix Homebuyers Club is *exactly* like the other homebuying companies out there. Despite their claims of being an honest and family-oriented company, they are simply representative of the less-than-forthright business that they are a part of.
To be clear, they did nothing illegal, but the entire process is set up for them to back out of the contract at the last minute, which they did to us, the day before we were supposed to close.
Theyoffered me a price for our home which was significantly below (arguably 20-25% below) market value. We understood this going into the process and my complaints are not with the offer. My complaints are with the rest of the process.
1. Pay close attention to the contract. Below are the exact quotes from the contract they originally sent to me, each of which is written to allow them the ability to back out whenever they choose.
"Buyer: Phoenix Home Buyers Club And / Or Assignee" - "And / Or Assignee" means they intend to pass on this contract to an investor. But if no investor is interested, they will back out of the contract. This happened to us. They sent investors to have a look at the house, and no one was interested, so they backed out.
"TITLE AND ESCROW COMPANY: This contract shall be used as escrow instructions. The Escrow Company that the buyer and seller have agreed to employ to carry out the terms of this contract shall be: Title Alliance of Phoenix, Danielle Mauzy, 4858 E Baseline Rd Ste104 Mesa, AZ 85206 or Phoenix Home Buyers Club’s choice." - "or Phoenix Home Buyers Club's choice" means they can change the title company on you at the last minute. You'll notice I kept the information of the title company they used in this review. I will also be leaving a negative review for Title Alliance of Phoenix because I believe them to be party to this process. She deliberately misled me about their history with Phoenix Home Buyers Club and facilitated their backing out of this contract at the last minute.
"DEPOSIT: Within three (3) business days, Buyer will place in escrow an earnest money deposit of $500.00 with Title Company which will be part of the cash paid to Seller when title transfers. This deposit will be returned to the Buyer if title does not transfer in accordance with this agreement and/or upon notice of non-approval of the property under the inspection provision." - They only offered to put $500 into escrow! It's common practice to but 1-2% of the sale price into escrow. $500 is less than .01% of the sale price. And even in Arizona which is not the most competitive housing market at the moment, most people put at least $1000 into escrow. This is a relatively moot point as all the other conditions in the contract pretty much ensure they will never surrender this anyway (see below).
"INSPECTIONS: Buyer’s Inspection Period shall be (30) days after Contract Acceptance." - This is unheard of in the real estate industry. Typically inspection periods are 10 days. But again this is written to allow them to back out whenever they want. Imagine signing the contract on February 1st and setting the closing date for March 1st. Of course, during that time, you will be packing up your house and preparing to move, but this clause along with the one above allow them to back out up until the day of closing and *still* get their earnest money back!
"ACCEPTANCE: This instrument will become a legally binding contract when accepted by the Seller and signed by both Buyer and Seller." - They never even sent me a copy of the contract signed by them! I was unable to verify this, but I wouldn't be surprised if Title Alliance never even took their earnest money into escrow in the first place.
"BUYER RIGHT OF 3 DAY EXTENSION: In the event buyer is not able to close, buyer is to notify seller, in writing of failure to close, as scheduled. Buyer will have 3 business days from issuance of this notice to close – should buyer not close, seller is able to cancel this
contract with earnest monies being forfeited to the seller." - And after all the above, they *still* give themselves this clause, which extends the closing date three business days! If they had intentions of following through with the purchase in the first place, they would have no reason for including such wording.
2. One can rightly argue that I signed this contract and if I didn't like it, I could have demanded it be changed. And that's true. In fact, some of the items above were changed at my request, but that's only because my step-father, who is a lawyer, explained to me the practices of companies like this. In fact, my wife and I were skeptical that the deal would ever go through in the first place because of the history of this business.
And this leads to my main complaint. Nothing above is illegal, but the process is clearly written to their benefit, not the Seller's. And furthermore, they gave me verbal assurances (as did Title Alliance of Phoenix indirectly) that were clearly designed to convince us of their intentions to complete the purchase.
My wife and I deliberated over their offer for two grueling days. And it wasn't easy as we were potentially leaving a tremendous amount of money "on the table" compared to what we could get on the traditional housing market. And so had they wanted to be honest and straightforward with us, he would have waited to make the official contract offer until he was sure they were interested in the house at the price offered.
I asked him if he wanted to come and see the house *before* making an offer, but he declined. He said it wasn't necessary. Now I know that is because the contract allowed them to back out later without any penalty to them anyway.
When I brought up some of my reservations about the contract he said (paraphrased), "We only make offers on houses that we intend to fulfill. If we can't find an investor, then we'll either flip it ourselves or rent it out." Obviously this was not true.
Unfortunately, this business is not designed to be in the Sellers' best interest. And that's OK. But for Phoenix Homebuyers Club claim to be different than the rest of their competitors is simply not true. If it were, they would have been honest and forthright about his company's intentions and only offered us a contract when they were sure they were going to fulfill it.