How Do “We Buy Houses for Cash†Programs Work?
How Does a “We Buy Houses for Cash Program†Work?
The program involves a wholesaler and a rehabber – someone who just purchases a property with the purpose of fixing it up and selling it for a profit. Usually home sellers are targeted who are in distress and want to sell of their homes as quickly as possible. The wholesaler puts a property under contract and then sells the contract to a rehabber to profit from the assignment fee. The rehabber buys the property, renovates it, and either resells it to a prospective buyer for a profit or keeps it as a rental. A real estate agent may facilitate this transaction by linking the wholesaler and the rehabber.
Program Targets
“We Buy Houses for Cash†companies usually target owners who are in desperate need of selling their home. They may need to relocate for a job immediately, go through bankruptcy, a divorce or find that their homes are stagnant on the market. The “We Buy Houses for Cash†program is always after capitalizing on desperate sellers with a high sense of urgency. This is why using non-traditional ways seems to be the most attractive option to the home owners.
However, “We Buy Houses for Cash†companies are also after vacant homes, trashed homes or interested in owners who are currently evicting tenants.
No Commission
These companies claim to charge no commission even while working with actual real estate agents. However, this is a false promise since the real estate agent in question is a listing agent and represents both of you, the seller and the buyer (usually a company). This situation is called dual agency and mostly has disadvantages for you – the seller. Why’s that? The same agent can’t equally act in both parties’ interest, but as the agent does receive money from the “We Buy Houses for Cash†company, he is more likely to look after them primarily.
Why Should You Avoid This Program?
While “We Buy Houses for Cash†companies are legal, you should avoid their deals as they are designed to rip you off. Their main aim is to buy your property at a lower price and later sell it off at an unreasonably high rate for a massive profit return. Additionally, these companies do not hire tax assessors to determine a property’s taxable value and to undertake its market valuation. Instead, they let the owner state the fair market value. But as the owner is desperately trying to sell the house this is usually way below the actual worth.
Desperate to Sell Your Property?
Although “We Buy Houses for Cash†companies are sketchy, they are legal, and they usually employ well-trained brokers and realtors. The only problem is that you will never get the best deal from them. If you are desperate to sell your property, don’t fall into the trap of these companies as they are looking to fleece you thanks to your dire financial situation. If you need to sell your home due to urgent financial need, there are a variety of other options such as renting it out or offering leasing to own options instead of selling it at a throwaway price.