But if you plan to sell your own home you will need to avoid real estate wholesalers. A Wholesaler is a fake buyer who only want to tie your property long enough to flip it to another buyer.
These real estate wholesalers have no plans to close the escrow on your house and are only in it for a quick fee. So, the challenge facing the For Sale by Owners is to spot the fake offers from the real ones. But how will you be able to tell a real buyer from a Wholesaler? Well, here are some tell tell signs that you might dealing with a wholesaler:
Close of Escrow: Most of these wholesalers will bring you a cash offer, but they will want to close the escrow within 30-45 days which is odd. After all no cash buyer needs that much time to close a cash deal. Even if their offer is contingent on an inspection, they should be able to close in 2 weeks or less if they are a real cash buyer. So, avoid these kind of offers or counter them to close in 2 weeks and watch then run.
Poof of funds (POF): POF for majority of the offers from real estate wholesalers are from an LLC that they often obtain for a fee. So, make sure you complete a through due diligence on the bank and the LLC to make sure there are enough funds to close your offer and 10 others these folks are chasing.
Assignment Option: In terms of the purchase agreement from a wholesaler, you might spot options language to give these buyers the right to assign this contract to another buyer. So, watch for additional terms in the California purchase agreement and reject these kind of terms if you want to proceed with these buyers.
Deposit Funds: You should expect 3% of purchase price as your minimum deposit to consider an offer. However, wholesalers will typically offer $1,000 since that’s the only funds they want to risk in case they are forced to perform.
In short, if you are selling your home by yourself, there are plenty of serious challenges you face and you don’t need the additional burden of dealing with real estate wholesalers. And keep in mind that according to National Association of Realtors, 28% of the homes sold by their owners were under-price which means as owners you might be starting your negotiations at a huge discount.
Contact Us if you need help with your Silicon Valley home sale.