If you’re thinking of selling your house, you’ve probably started to notice little signs posted all over the place that say things like “We Buy Houses!” and “Cash For Your House!” Once you start to notice them, you’ll realize they’re everywhere. If you’ve been listening to the radio in the Willamette Valley, you may have heard commercials for companies that promise to buy your house without having to list it with an agent. Who are these companies, and how do you know if can you trust them?
How Do I Know if I Can Trust a “We Buy Houses in Salem” Company?
Every “We Buy Houses” company is going to have their own way of doing things, but I’m going to break down the four main types, listed from worst to best (in my opinion).
Scammers
Some people offering to buy houses are just plain criminals. They will seek out desperate and vulnerable people and try to take their house away or scam them for money.
What are some clues you watch for to avoid being scammed?
- “Kitchen table closings” – If a property buyer tries to get you to sign the deed (ownership) of your house over to them at your house, rather than a professional title company… be leery. Most reputable house buying services will perform the actual closing of the sale at a neutral 3rd party place… like a title company. This ensures everything is done right and on the up and up.
- Pressuring you into a fast closing – If a house buyer tries to pressure you into selling your house and says that you have to make the decision today, be leery. Most reputable house buying services will make you and offer and that offer will be on the table for at least 2-7 days (minimum) for you to make a decision. The reason reputable house buying services like ours at Willamette Home Buyers do place deadlines on our offers is because the market changes and values can change week to week depending on other sales in the area, also… we buy multiple houses a month and when we make you an offer we’re assuring you that the cash to purchase your house is ready and we’ll reserve that cash for several days so if you do want to sell your house, we can close on your schedule. If you feel the offer isn’t a fit for you, then we’ll assign those funds to help another seller with their home sale.
- “Mortgate Relief”… for a price. If you’re in danger of losing your house to foreclosure, you might be looking online for help. Legitimate programs to help you avoid foreclosure are administered by government agencies, or by the specific lender that holds your mortgage. They will not charge you money to modify your loan or help with payments. Anyone that does try to charge you to help avoid foreclosure is scamming you. At Willamette Home Buyers we’ve compiled a number of links on our avoiding foreclosure page that you might find useful. We can also come discuss your options with you, but we will never ask for money in exchange for assistance.
- Eager to buy your house sight unseen – not every legitimate house buyer will come visit you and your house in person, but in order to make an offer they have to have a pretty good idea of what condition it’s in. Maybe they’ll ask you to send them pictures. Maybe they’ll send over an inspector. But if they are giving you an offer before they know anything about your house, be very careful. These are often scammer from overseas. They may “accidentally” send you a check for more than the price you agreed to, and then ask you to send the difference back to them. After you send them a check you find out the check they sent you was a forgery.
Wholesalers
To “wholesale” a house means to sign a contract to buy it, and then sell that contract to a cash buyer for an “assignment fee.” In other words, if a wholesaler agrees to buy your house, they are not really the ones buying it. They are brokering a deal between you and the actual cash buyer. There’s nothing wrong with wholesaling houses, and there are plenty of professional, trustworthy wholesalers out there that do lots of these deals and have lots of satisfied customers. But there are also a lot of other people that try to get started in wholesaling without knowing what they are doing. They’re usually not intentionally trying to scam you, but they may end up making promises they can’t keep, and wasting a bunch of your time before walking away without solving your problem.
So how do you know if the buyer you’re considering is trustworthy? Start with looking at how they conduct their business.
A main reason a lot of people try to get into wholesaling is because of the low barrier to entry. They’re hoping they can “buy” a house without actually having any money and immediately sell it to a house flipper for a profit. These people often don’t understand the real value of properties and the cost required to renovate them. They may sign a contract to buy your house but then be unable to find a flipper to sell the contract to. In these cases they cancel the contract and you’re back to where you started.
These kinds of wholesalers often try to find sellers with the cheapest marketing methods they can find. Did you get their phone number off of a sign posted on a telephone pole? Was the sign handwritten? Did they call you out of the blue and ask to buy your house? These cheap marketing methods may indicate you’re dealing with an amateur.
A professional wholesaler understands they have to invest in their company to be successful. They usually have a professional website. They may use professionally printed direct-mail marketing. If they do use signs posted around town, they’re probably going to be professionally printed. This type of marketing obviously doesn’t guarantee that you’ll have a positive experience with them, but it demonstrates they are making a commitment to the business they’ve chosen.
Willamette Home Buyers is not a wholesaling company because we buy houses with the intention of renovating them and selling them to an end buyer – someone who will live in the house. But in some cases we may end up with more houses than we can renovate ourselves, so we might wholesale a few of them to other cash buyers. If you end up talking to us about selling your house, feel free to ask what exactly we intend to do with it. We are happy to tell you how we do business.
iBuyers
This is a term used for big internet based companies that are trying to buy houses all over the country, such as Opendoor and Offerpad. Even Zillow and Redfin, which used to simply list houses on their websites, are now in the business of buying them.
These companies are relying on computer algorithms to determine the price they are willing to pay for a house. There’s an advantage to this – they save money by automating a lot of their systems, and they could put that savings into paying more to sellers. Or they could just keep that extra money. iBuyers are so new to the industry that it’s hard to know exactly how they do business.
But one thing we do know is they are not local. They may hire a few employees in some of the bigger markets, but do they really know the cities and owns they are buying houses in? Do you think anyone from Opendoor has been to the Albany Veteran’s Day Parade or the Saint Paul Rodeo? Do you think they care about the quality of neighborhoods in Stayton or McMinnville?
Local Investors
Of course I’m biased, but I think the best house buyers to work with are local real estate investors, like Willamette Home Buyers. We are your neighbors. We know your community and we care about it. How do we serve the Willamette Valley?
- Helping folks improve their lives by accessing the money they need right away. People often need the cash in their house to cover unexpected medical expenses, or to relocate to be close to a relative. We can make that happen in just a few days, and we deliver peace of mind.
- Helping sellers get rid of a burdensome property without the hassle of having to list it with a broker and wait months and month for a sale.
- Creating local jobs. We hire plumbers, contractors, electricians, brokers, title reps, loan officers, administrators and many other folks along the way. The average real estate transaction involves 86 people from start to finish. Our investments help create real jobs for people around Salem, Newberg, and throughout Oregon.
- Buying American-made products. We spend tons of money on materials that are made right here in the USA – that creates jobs in our lumber mills, factories, supply shops, distribution centers and more. The US economy depends on steady improvement, and that requires investment from folks like us.
- Increasing the value of local neighborhoods. When we improve a house, we’re helping to increase the value of the entire community. We often repair abandoned and neglected houses, turning them into beautiful homes for families. That activity strengthens Salem.
- Increasing the tax base. When a new buyer takes over one of our properties, they’ll pay a higher tax rate based on the new and improved value. Those taxes go to pay for our schools, fire, police, libraries, streets and other valuable pieces of infrastructure. Again, improving our neighborhoods.
When you talk with a local house buyer to potentially buy your house… ask them some of the questions below to ensure they’re reputable, knowledgeable, and honest.
I suggest open-ended questions like:
- How do you help your clients?
- What do you do for people?
- Can you tell me more about your services?
- What aspect of your business makes you the proudest?
- How would you describe your investment philosophy?
- How can I know that you’ll close on my house when you say you will?
The answers to these types of questions should help you determine if the buyer you’re talking to is trustworthy.
If you’re thinking of selling your house to a “we buy houses” company, we’d be happy to answer these questions and any others you have.