This might be the biggest legal scam ever allowed in real estate…
It’s a somewhat new development…
But it’s happening at a rapid pace…with thousands upon thousands of homes falling for this scam again and again.
I don’t know how it’s legal, but it is.
And I’m writing this to warn you NOT to fall for this scam. To not be ripped off…or have the wool pulled over your eyes.
Because as a home owner, you’re smart.
You know there are multiple options when it comes to selling your house in North Atlanta Georgia.
#1. Sell with a realtor. (obvious).
#2. Sell to a local home buying company like Rocking Porch Homes or any of the other ones you might receive letters from.
But you probably know of a third option…
It’s called the iBuyers. These large companies strut around touting themselves as the “easiest way to sell your house at retail prices without a realtor.”
Sounds amazing right?
No realtors. No commissions. Top value…This is a great opportunity.
Here’s where the scam trap starts…
Let me rewind a second…
What is an iBuyer?
An iBuyer is a large company that buys homes and turns around and flips them for profit on the market.
You know these companies —> OpenDoor, Zillow, Knock, OfferPad, Mark Spain…there are a few of them now.
They all are using this scam to the turn of hundreds of millions of dollars in property purchases in 2020.
Don’t become one of them.
That leads to the scam.
Here’s what most home sellers don’t understand. It’s okay not to…most Americans only buy and sell 2-3 houses in their entire lifetime.
My grandparents have been living in the same house my great-grandfather has lived in since 1955.
My parents have lived in the same house in Forsyth County for about 25 years.
For most home sellers…and it’s okay to feel this way…real estate is complicated. There are lawyers, title companies, appraisers, inspectors, realtors, banks, contractors, contracts…the list goes on and on.
(hint: realtors want you to think real estate is hard to justify their job…but I digress)…
So all these different professions don’t work for free, right? Their costs are somewhere on your closing statement when you buy or sell a house.
A buyer of your house may pay for the inspection…but you ultimately pay for the repairs they find. Same with getting screwed by contractors…that should be thrown in there as well.
Here’s the scam…
These iBuyers (the giant companies) prey on your inexperience selling a home to make you think you’re receiving a ‘retail’ offer when it’s really not.
Let me give you an example.
And this is from someone I know who sold through an iBuyer.
Their house, when they held it, would probably list for $220,000 if they listed with a realtor. They owed around $140,000 from what he told me.
Now, the easy math is to think you’re banking $80,000…that’s a nice chunk of change.
But you won’t.
- Realtor = $13,200
- Closing costs for buyer = maybe $3,000
- Repairs requested from buyer = $3,000
- Cleaning house for open houses = $300
- Pictures (if realtor doesn’t do it) = $250
- Misc selling costs (transfer tax, lawyer) = $2,000
That’s $21,750 that my friend would’ve had to potentially pay just to sell his house. So instead of $80,000 at closing, it’s more like $59,000.
That’s a good chunk…you could pay off credit card debt, your car and much more with that extra $21,000…
But you do get the most money listing with a realtor.
My friend wanted to sell quick. So he called one of the iBuyers…
They offered him $210,000.
Instead of $80,000…it’s now $70,000. No repairs. No cleaning house. No pictures. No realtor commissions.
You’d think he’d actually come out ahead, right? He’s $10,000 less than a realtor list price, but save $21,000…he’s up $11,000!
What a deal?
Not so fast.
What the iBuyers WILL NOT be upfront about — (sure it’s in the small print…get out your microscope) — is you’re still paying those fees…you’re paying them all AND THEN SOME.
- They charge around 8-12% in commissions (more than the 6% realtor)
- They charge your standard closing costs
The scam is they then “slip” in high numbers for repairs.
…and this wording is in their contract…
They’re able to :
- Pull out of a deal at any point
- REQUEST any repairs they want done even up to the day of closing
In my friend’s case, the iBuyer had taken about $8,000 in repairs out of their ‘walkaway money.’
He didn’t like that, but he was living with it.
Then…as they were packing their bags…they had the pod to stuff their stuff in…
My friend gets a phonecall.
It’s the iBuyer agent.
“We have a problem.”
“What?” , my friend answers nervously.
“We actually need to replace your entire HVAC system. It’s going to cost about $10,000. That’ll need to come out of the sale as a credit or else we can’t buy your house.”
Rewind a second.
Did you catch some important words in there.
- They want to take out the repairs “as a credit”…that’s because they want you to think you’re still getting $210,000 for the house…but really they’re crediting the bottom of your closing statement so $10,000 floats from your end, to theirs.
- They threaten to pull out of the deal
This is 2 days before closing. Clothes and toys are packed.
Yet, they put you in a hostage situation where you have no choice but to accept the beating they give.
What a bunch of bull!
In the end, he “sold” his house for $210,000…but really, with all the ‘hidden credits for the iBuyer’, he sold his house for $175,000. He walked away with $35,000.
Now, the iBuyers, (LIKE I DO), are providing a fast selling service. You must pay to quickly liquidate your house.
Nothing is ‘free’ in real estate no matter what someone tells you.
As a homebuyer myself, I don’t play these sneaky games with you.
This ‘game’ the iBuyers play is a blatant bait and switch…and really is a scam for home sellers who don’t understand that just because someone says “we are buying your house for $210,000” , it doesn’t mean you’re walking away with that.
Rocking Porch Homes takes a much, much different approach.
- I tell you upfront what you’re walking away with in cash. No guessing. No bait and switch.
- I tell you all the repairs I need to make upfront so there aren’t any surprises. If something major comes up during inspection that we didn’t discuss, then we will chat more. But really inspections are for us to make sure the house is structurally sound.
- We are not a big company. You aren’t 1 of 1,000 homes they’re buying this month. With us, you may be 1 of 2…maybe even 1 of 1. You get full attention and service.
If you’re upset about this scam being run…I feel you. Tell others about it.
If you’re in a place where you need to sell fast, fill in your address here and I’ll be sure to give you a call ASAP.