Have you ever driven past one of those "I buy houses" signs and wondered what the deal is? Some offer a quick closing or no questions asked… it sounds too good to be true. 
The other day I got an email from a lawyer I deal with regularly who was looking for some insight into some of the rules governing listing a property on the MLS.
It seems his clients (the sellers) made an agreement (privately) with a “house buying outfit.” The kind of outfit you see advertising on those little signs. Apparently the deal is crashing because the buyer hasn’t gotten their financing. (Who would’ve thought someone advertising that they buy houses for cash would need financing?)
In the meantime these buyer’s who are having trouble getting financing have listed the home for sale, and they don’t even own it. The sellers agreed to allow showings to potential renters and/or buyers before the possession date. Now, you have to think to yourself, if these buyers think they can turn around and sell the home immediately for a profit, without doing any improvements, did you really get a good price for your home?
Typically these outfits will not approach properties listed with a REALTOR. This is because a lot of the things they may want to include in their offer may seem reasonable to the average unrepresented seller, but will raise red flags to the people who are true professionals in real estate industry. In other words, they have a better chance of getting away with stuff with private sellers than if a REALTOR is involved.
Some of the things they may ask for that can cost a seller big time are:
- Extended condition dates, designed to string the seller along and weaken their negotiating position so they can reduce the offer price as the seller becomes more desperate
- Unusual financing conditions or terms, such as seller financing with balloon payments that may initially look attractive but upon further investigation are clearly not in the seller’s best interest
- Re-marketing privileges with long possessions (such as in the above case). They may even want to have a REALTOR list the property on MLS to expand the property’s marketability before taking possession. They recognize the benefit of the MLS for getting the most exposure and money for the property!
Further evidence that usually something that seems too good to be true….often is!
