Keep Getting Unsolicited Offers on Your Home? Here’s Why
You’re scrolling through your texts: Your friend asked you to meet for coffee, your sister sent a cute pic of her puppy, a complete stranger offered you cash for your house — wait, what? Your home isn’t for sale.
If you’re fielding phone calls, text messages, and postcards from people who want to buy your home — for cash, nonetheless — you’re not alone. Investors and buyers on the hunt for real estate deals employ these tactics to find off-market properties.
To give us background on why homeowners receive unsolicited offers and where they come from, we spoke with Daren Sautter, a top New Jersey real agent on the board of directors for the NEXUS Association of Realtors®. He advises that if homeowners want top dollar for their home, an unsolicited cash offer probably isn’t your best choice. But if convenience is more important to you, you may want to consider it.
Unsolicited offers come from many types of buyers
Property owners may receive unsolicited offers via mailers, text messages, and cold calls from a range of eager buyers like real estate investors seeking lucrative returns and homebuyers intent on a coveted neighborhood.
Wholesalers
Wholesalers source properties for real estate investors who want to avoid the effort of finding homes. Wholesalers do the legwork; they approach homeowners with unsolicited offers and negotiate a below-market sale price (i.e., a price lower than what buyers would pay for your home on the open market). The negotiated purchase price between the wholesaler and homeowner needs to be low enough for both the wholesaler and the investor buyer to profit. The buyer pays the wholesaler an agreed-upon percentage of the purchase price as a finder’s fee, usually 5% to 10%.
In many cases, the wholesaler doesn’t actually purchase or take the title of the home. After negotiating a purchase price with the homeowner, the wholesaler may immediately assign the contract, or the right to purchase the house, to an investor client.
Other times, a wholesaler purchases the property outright (instead of assigning the contract) and then immediately resells it to another investor.
“They’ll say [to a homeowner], ‘I’ll give you $300,000 for your house,’” explains Sautter. “[The wholesaler] already knows that it’s worth $350,000 to somebody else. So they buy from you for $300,000 and sell to somebody else for $350,000.”
Real estate investors
If you’re a fan of HGTV house flipping reality shows, you’ve probably seen real estate investors snapping up properties at auction. But a foreclosure auction isn’t the only source for finding houses to invest in. Investors also approach homeowners with unsolicited and solicited cash offers.
Investors generally either fix and flip homes or hold onto them as rental properties. Like wholesalers, they tend to offer less than market value for properties to profit from their purchases.
“[House flippers] lowball you in most cases because they’re gonna buy the property, fix it up, and sell it for profit,” says Sautter.
