Sell My House Fast, We Buy Houses In Any Condition For Cash
“Sell My House Fast” and “We Buy Houses”. Have you ever wondered what these terms mean? Surely you’ve driven around neighborhoods plastered with these signs. If you’re a home owner, you probably receive several postcards and direct mailers enticing you to receive a “fast and fair cash offer”. Or perhaps you’ve seen Facebook and Google Ads following you around saying “we buy ugly houses”.
“Sell My House Fast” and “We Buy Houses” are taglines used by real estate wholesalers.
When you see these phrases on bandit signs, direct mail, social media and search ads, you should know that most of the time the marketers who posted it are not actually buying your house.
But what do you mean they’re not buying my house, why are they implying they buy houses for cash?
The wholesale real estate business model is to put you under contract as the buyer of your property, and then they turn around and sell the contract to an actual buyer who takes over and closes at your agreed-upon terms.
Let’s look at an example of a wholesale transaction
Let’s say you own a rental property in poor condition and John from Dependable Homebuyers of America sends you a postcard saying that he’s buying properties in the area and he’d like to make you a cash offer and close in as little as 7 days.
You reach out to John and meet him at your property. He offers you $100,000 cash, AS IS, no contingencies and says he will close in 30 days, ideally sooner. You know that the property is probably worth closer to $125,000 AS IS, but selling to John seems really straightforward so you sign his purchase contract.
John then goes to his “buyer’s list” of fix and flip and rental property investors to see who wants to buy the property. Sarah from Main Street Rentals offers to buy the property for $120,000 so John sends Sarah his Assignment Agreement — a legal contract to assign his role as the Buyer to Sarah in exchange for a $25,000 Assignment Fee which Sarah will pay to John at closing.
Closing day arrives and you’re surprised to see that John is not the buyer, instead the buyer is Sarah from Main Street Rentals. You might even see the $25,000 Assignment Fee on the HUD or ALTA settlement statement.
How do you feel about that example?
- Is it fair or ethical that John made $25,000 “flipping the contract” to Sarah?
- Is it fair or ethical that you had no idea John wasn’t really a “cash buyer”?
Other examples may have a sloppier transaction flow.
Maybe John has difficulties bringing in someone willing to buy the property for $100,000 and you wait around unsure of when you are going to close the transaction.
There’s a lot of debate around real estate wholesaling. We believe ethical wholesaling hinges on one simple thing: transparency. Be honest with the seller, let them know how you operate and how much you charge buyers as an assignment fee.
Assignable Contracts
The transaction flow explained above is known as an Assignable Contract. The role of Buyer in the contract was assigned by John (Assignor) to Sarah (Assignee).
Assignable contracts are incredibly efficient mediums to execute real estate transactions. Typically, neither party is represented by an agent, the contract is already in place, and in many cases the title work is already in process by the time the contract is assigned.
Wholesaling vs. OfferMarketing
OfferMarket is a ZERO commission real estate marketplace and free listing website for wholesale and For Sale By Owner listings.
With our Get Offers service, we use a simple assignable contract with the following terms:
- Seller is fully aware that we intend to assign the contract
- The winning Buyer pays a fixed Assignment Fee of $5,000
- If the winning offer is above the Seller’s target Purchase Price, the Purchase Price in the contract is amended to provide all of the upside to the Seller
- Seller can cancel the contract at any time
- Seller can reject any offer for any reason
- Seller receives professional real estate photography including 3D Matterport home tour at no cost
- Seller receives buyer screening, managed showings, managed documents, closing coordination at no cost
Selling Your House For Sale By Owner
If you’re looking to sell your house without an agent, you will probably receive a lot of inquiries from wholesalers. Hopefully, with this article, you will now be better prepared to navigate the off-market ecosystem.
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