Are you tempted to sell your own home? Do you know how to spot a wholesale buyer? Well, you are not alone since the trend was echoed by 55% of Marin County home owners who expressed interest in selling their own home without a real estate agent.
But how will you be able to tell if your offer is not from a Wholesaler and you are dealing with a real buyer?
What is a Wholesaler you ask? Well, the astronomical rise in price of homes has give rise to a new breed of middlemen called Wholesalers. The sole purpose of these buyers is to place properties under contract and then sell the contract to another buyers for a fee. These kind of buyers have no plans to close the escrow on your house and accepting an offer from them will only cause you grief and delay.
So, to avoid falling into a wholesaler’s trap, we have developed some clues for you which includes :
1) Escrow Close: If the cash offer requires 30-45 days to close escrow, then you have a wholesaler on your hand since no real cash buyer would need 45 days to close specially if the offer does not require any inspections. So, if you have to counter them, counter them with a 10 day close.
2) Source Funds: Source of funds used by these Wholesalers is typically form an LLC that they have obtained for a fee. You would be smart to contact the bank listed on the proof of funds and confirm the availability of funds.
3) Deposit Amount: You should expect a minimum 3% of their offer price as earnest money deposit. Wholesalers however, typically offer $1,000-$3,000 since this it the only funds they are willing to risk for holding your home hostage fora few weeks. If you have to counter give them 3 days to increase their deposit to 10% and watch them walk.
4) Offer Price: Cash offers form Wholesalers could be about 5-10% below your list price. These wholesalers only need enough room to make $5-$10k for flipping the contract to another buyer. So, their offer price has very little to do with a market analysis that they might have done.
Conclusion: A real estate transaction contains complex legal terms and contingencies. But the mere size of these transactions is now attracting Wholesalers who can only complicate and delay your home sale. According to National Association of Realtors, 28% of the homes sold by their owners were under-price which means as owners you are the ideal targets for these Wholesalers who will try their best to hide their real intentions and tie up your home for a quick flip.
Feel free to Contact Us if you need help with your Silicon Valley home sale.