Is there any law that prohibits we buy houses signs?

30 Replies

Guys, I was wondering if there was any law that would prohibit me from putting up a big sign in many of my job site construction fences that say "we buy houses", But only intend to put houses under contract to assign contract to another buyer.

My concern is that if I can't line up another buyer and I have to get my deposit back and terminate the contract, can I get sued for false advertisement or something like that?

I would appreciate some input. Thanks !

Check the local ordinances in your city.  Almost all prohibit these signs.  Most have a blanket prohibition for signs.  Then have a series of exceptions for certain kinds of signs or a process for getting a sign permitted.  I have looked at a number of these ordinances and they are quite consistent.  I've yet to find one that allows any sort of "we buy houses" signs like they are commonly used.

They do commonly allow you to put up a sign at your job site advertising that specific property.  Only.

In this thread I show what to look for and some specifics for the sign code in my city.

IMHO if you put a house under contract you should buy it.  If you can't find a buyer you should buy it yourself.  If you don't plan to do this you should, again IMHO, be VERY up front with the prospective seller that you have no intention of actually buying the house.  Only that you will try to find a buyer.

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Originally posted by @Jon Holdman:

  If you don't plan to do this you should, again IMHO, be VERY up front with the prospective seller that you have no intention of actually buying the house.  Only that you will try to find a buyer.

So if your licensed  list the property right?

If not, this sounds a lot like practicing as a RE broker without a license.

@James Wise  

  beat me to it... frustrating for the industry ... With all these folks running around acting as brokers with no means but just an idea.. what ever happened to apprentice ship IE get your license and learn the trade...

Anyone can sue you for anything but so long as you have a contract that covers your reasons for not closing and says you will recieve your deposit back then you should. Most people try to put down very little money to not worry about that.

I don't see why you can't put up signs if they're on your own fences.

As Jon said, check local town Sign Ordinances.  I think the 'standard' for many cities that even allow them is they can be up after 5pm on Friday and have to be taken down before Monday morning.

As far as false advertising .. that's a stretch.  And as James said .. why do you feel entitled to your deposit back for backing out?  If you have real cash buyers lined up and you do the numbers properly, then you should have no problem putting a small deposit on the line to make a lot of money.

Originally posted by @Chris K.:

I don't see why you can't put up signs if they're on your own fences.

 Because there are laws on most city's books that prohibit them.  There seems to be a common misconception that cities cannot make laws that control what you can do on private property.  They most certainly can and do.  Look at the thread I linked above.  I've certainly not reviewed every municipal code all across the US.   But I have reviewed 8-10 of them and EVERY ONE EXPLICITLY PROHIBITS this sort of advertising.

Phil Z, I've actually NEVER seen anything about putting them up at a certain time and taking them down, other than signs that point to a store or an open house that can be up while the store or open house is open.

Originally posted by @Jon Holdman:
Originally posted by @Chris K.:

I don't see why you can't put up signs if they're on your own fences.

 Because there are laws on most city's books that prohibit them.  There seems to be a common misconception that cities cannot make laws that control what you can do on private property.  They most certainly can and do.  Look at the thread I linked above.  I've certainly not reviewed every municipal code all across the US.   But I have reviewed 8-10 of them and EVERY ONE EXPLICITLY PROHIBITS this sort of advertising.

 Just because something is a law or rule it shouldn't stop me from wanting to understand "why" the rule/law is in place. 

Originally posted by @Phil Z.:

As Jon said, check local town Sign Ordinances.  I think the 'standard' for many cities that even allow them is they can be up after 5pm on Friday and have to be taken down before Monday morning.

As far as false advertising .. that's a stretch.  And as James said .. why do you feel entitled to your deposit back for backing out?  If you have real cash buyers lined up and you do the numbers properly, then you should have no problem putting a small deposit on the line to make a lot of money.

 It's not that they allow the signs over the weekend.

It is that the enforcement people don't work on the weekend.

When you see that advice, it is not advice on how to comply with the law, it is advice on how to get away with breaking the law.

Originally posted by @Chris K.:
Originally posted by @Jon Holdman:
Originally posted by @Chris K.:

I don't see why you can't put up signs if they're on your own fences.

 Because there are laws on most city's books that prohibit them.  There seems to be a common misconception that cities cannot make laws that control what you can do on private property.  They most certainly can and do.  Look at the thread I linked above.  I've certainly not reviewed every municipal code all across the US.   But I have reviewed 8-10 of them and EVERY ONE EXPLICITLY PROHIBITS this sort of advertising.

 Just because something is a law or rule it shouldn't stop me from wanting to understand "why" the rule/law is in place. 

 The same reason all regulations are in place; to stop or limit a socially undesirable activity.

I have taken to grabbing signs when I see them, and tossing them in one of my dumpsters. I seem to be having a localized impact, as I have noticed some new signs going up about 10 feet off the ground on power poles.

These signs look trashy and degrade the neighborhood.

@Chris K.  

Just because something is a law or rule it shouldn't stop me from wanting to understand "why" the rule/law is in place.

Simple.  Because the elected officials in the city or county created a law that bans them.  Almost certainly for something along the lines of what @Richard C.  mentions.

Figuring out how to avoid getting caught doesn't change the fact you're engaging in criminal activity to promote your business.  We all despise CEOs of big companies that get caught breaking laws.  Yet its OK for individual investors to do the same?  I don't think so.

Originally posted by @Chris K.:

Anyone can sue you for anything but so long as you have a contract that covers your reasons for not closing and says you will recieve your deposit back then you should. Most people try to put down very little money to not worry about that.

Of course the angry seller could always Google search his name and discover his stated intention to not actually buy the property. 

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Gotcha. That's probably why we're in so much trouble now cause so many people just lay down and accept things "just because the government said so" without questioning why....

Ha, well Pete Fortunado once said in a seminar "I reserve the right to ignore any law I don't agree with "

I'm kinda more in line with that thinking than anything else. Plenty of laws on the books we all ignore. I mean, do you really never go over 65 on the highway? There is definitely a question of enforcement after reading the letter of the law with this stuff. Plus, there are tons of laws that are on the books because some organization greased some politician to stifle competition that just plain piss me off.

I don't think you'd get in any trouble putting a "we buy" sign on your own fence. You certainly don't face litigation for not buying because of how you advertise. That kinda thing is gonna be governed by your contract.

The problem the city has is all the roadside signs on public land. Some areas are worse than others, I used to work in an area where they'd track you down and fine you. Like leave a message acting like a seller or buyer and meet you to give you the to ticket. $100 first time, $1000 second. Some places just throw your sign away, some don't enforce at all, so you need to know your area.

I'm with some of the other comments, though. This is not tie up a house with no ability to buy it and if it doesn't sell no harm, no foul. That's downright dirty to your seller. They're probably in distress to be calling you, so you playing games with their finances like that can do some real damage if you don't perform under the terms of your contract.

Btw, I have to agree that wholesaling is simply brokering without a license the way it's being taught in some places...lots of people with no education trying to flip with no money, no experience, no knowledge out there muddying the waters.

We all gotta start somewhere I guess, but man they've distorted what wholesaling is to sell books and courses IMO.

Originally posted by @Jon Holdman:

Check the local ordinances in your city.  Almost all prohibit these signs.  Most have a blanket prohibition for signs.  Then have a series of exceptions

 And no doubt those exceptions include political signs.  But that is not a topic for biggerpockets.  :)

@Account Closed   they do typically have exceptions for political signs.  There are often time limits and requirements to pick up signs immediately after the election.  There are also typically exceptions for "for rent" and "for sale" signs that are placed on the property being advertised.  And exceptions for the free-standing "open house <arrow>" type signs in certain locations.  So its not as if real estate is treated badly w.r.t. these exceptions.  Quite the opposite, it often has many of the exceptions in the laws.

If you don't like the law WORK TO CHANGE IT.  That's why we have legislative bodies from city councils all the way up to the Congress of the US.  Laws are not fixed.  They're simply an agreed upon set of rules for some area.  If you don't like the rules, work to change them.  They can be changed.  Ignoring laws makes you a criminal.  Engaging in criminal acts as part of your business makes everyone in that business look bad and often results in yet more regulation of our business.  Real estate investors have a bad reputation to begin with.  Engaging in criminal behavior only makes things worse.

@Jon Holdman  

I agree with you 100%.  I have not engaged in any form of marketing up to this point, and it is unlikely that any marketing I do in the future would include bandit signs.  I agree with @Richard C.  that they are an eyesore.  Which is why I brought up the political signs, because at least in my area they are the worst offenders.  There was a story a few years ago about how most weren't removing them per the guidelines.  The story seemed to make a difference because they didn't linger as long.

Originally posted by @David R.:

@Jon Holdman  

I agree with you 100%.  I have not engaged in any form of marketing up to this point, and it is unlikely that any marketing I do in the future would include bandit signs.  I agree with @Richard C. that they are an eyesore.  Which is why I brought up the political signs, because at least in my area they are the worst offenders.  There was a story a few years ago about how most weren't removing them per the guidelines.  The story seemed to make a difference because they didn't linger as long.

 You think political signs are the worst offenders in your area?  I live in NEW HAMPSHIRE!  You have no idea...

It really isn't hard, though, to draw a distinction between commercial signs that might be up for months, and political signs that are not only up for less time, but are exactly the sort of thing the First Amendment is meant to protect.

Originally posted by @Jon Holdman:

@Chris K.  

We all despise CEOs of big companies that get caught breaking laws.  Yet its OK for individual investors to do the same?  I don't think so.

But probably getting WAY off into the weeds... but yes.. in some cases... It's called civil disobedience. I can give many examples. Im sure most are familiar with the most famous ones.

I'll take a shot at answering the part of your question that was ignored once the anti-bandit sign rants began. ;-) 

As a wholesaler, your purchase contract includes an inspection period clause.  We reserve the right to come back to the seller and say, "Once I got my contractors in here, we discovered this is going to take a lot more than we expected, so I need to either lower or terminate my offer...".  This goes hand in hand with finding your ultimate buyer - if you shop the deal around and find that your buyers don't like it at that price, that's when you go back and say "our inspection revealed more issues than we were aware of", etc.

Last - you don't give the seller the earnest money.  You only give that to the title company.  So if you cancel the deal based upon inspection, you just get your $ back from the title company.

Originally posted by @Dev Horn:

I'll take a shot at answering the part of your question that was ignored once the anti-bandit sign rants began. ;-) 

As a wholesaler, your purchase contract includes an inspection period clause.  We reserve the right to come back to the seller and say, "Once I got my contractors in here, we discovered this is going to take a lot more than we expected, so I need to either lower or terminate my offer...".  This goes hand in hand with finding your ultimate buyer - if you shop the deal around and find that your buyers don't like it at that price, that's when you go back and say "our inspection revealed more issues than we were aware of", etc.

Last - you don't give the seller the earnest money.  You only give that to the title company.  So if you cancel the deal based upon inspection, you just get your $ back from the title company.

 So you lie.  Great business model.