I see these flyers on telephone poles, benches, internet, etc. of companies of unknown repute that claim they will buy your house from you, without the hassle of the regular method. Does anyone know if any of these are legit? I assume if they are, the basis for them is you need to have a certain amount of equity for it to be worth their while, and I also assume you shouldn’t expect much if any money back from the deal, but I’ll be looking to sell mine soon, with about 10-15K equity and frankly don’t care if I get a penny back from the deal, as long as I don’t owe anything.
From what I understand, they severely low ball the price. Even if you only have 10-15K in equity, you probably still would not come out ahead. I have my house for sale and get tons of mail for those companies. I’ve never persued it to find out what they would offer me. There is no coincidence that these things are becoming more common as the foreclosure rate is rising.
When the nice old man who lived down the street died, his daughter decided to skip the hassle and sell it to one of those outfits. They offered her about 2/3 of what the other houses on the block were selling for. Then they slapped a fresh coat of paint on it and made a few quick repairs and flipped it for the market price. As near as I and the other neighbors can figure, they probably made $50K on the whole transaction. The daughter, however, didn’t spend anything to get the house ready for sale and got a quick profit.
Kunilou got it. It’s legitimate and legal and all those other worrisome things, but they do lowball you pretty hard and with the markets as they are today? 2/3rds could be kind.
Still it never hurts to ask as long as you don’t mind an interior appraisal to be done on your home as soon as possible. They’ll find every stinking thing that could even be slightly wrong or undesirable in an effort to back up their offer figure, kind of like a reverse home inspection.
Thats what I’ll eventually try an do- tell them to come look at it and give them a minimum figure.
The practice itself is totally legit. But as far as individual companies go, you’ll want to check with your local Better Business Bureau for a report if you were to go this route. All part of being the educated consumer and all.
What these companies do, and many of these people make their living soley in this manner, is buy your house at under the appraised value. They are using the fact that you need to unload it quickly to their advantage. They do necessary repairs, upgrade it for curb appeal and modernization and then sell it for a profit. It can be quite lucrative if you know what you’re doing.
When I bought my house in 1971, the real estate agency had given a guaranteed price of 30K (amazing, my last assessment was for 560K) and given the seller 30 days to try to sell it for more. I found it before it even hit the MLS and made an offer of 30K. After one round of dickering, I got it for 31.8, a wonderful deal for me. The previous owner had been transferred and his company paid the difference.
When I was living in central Illinois, there was someone who randomly called listed houses and offerred 75% of the asking price. Most turned him down, but occasionally he would get a house like that and then sell it for close to the original asking price. He made a nice living that way, I understand.
Surely the daughter made a 33% loss on her asset, but got the remaining money quickly.
I’m confused. If the daughter inherited and didn’t spend a dime on fixing it up for sale how could she not make a profit (even if it wasn’t as big a profit as she could’ve made selling it herself)?
Let me reprhrase.
The daughter, however, didn’t spend anything to get the house ready for sale and got quick cash.
Does anyone know if you would be expected to pay anything extra, like closing costs, on a thing like this?
Of course. You’re still going through escrow and they’re still getting a title report. If they’re trying to do it without escrow, run away screaming.
OK, as soon as the daughter inherited the house, she was worth more. If you want to consider that inheritance as ‘making a profit’, you can.
But as soon as she sold the house to the company, she was worth less. This is not making a profit - it’s paying a company **a lot of money ** to save yourself the trouble of selling.
Suppose the house was worth $165,000 (based on similar nearby properties), but needed some repairs (call that cost $5,000).
The company buy it for $110,000, pay the repairs ($5,000) and sell it for $155,000. They make $50,000.
So the daughter used to have a house worth $165,000, less $5,000 for repairs = $160,000.
Now she has $110,000.
This is not a profit! 
True. (I hope you didn’t mind me correcting, but this is the SDMB )
So whether you use these companies depends what you think quick cash is worth.
For $50,000 extra I would put in the time to sell the house…
True. It’s not a profit, however, if she’d rather not have the hassle of paying contractors to fix up the place then trying to sell it, either herself of through an agent, it’s not what I would call a loss. She had nothing before the inheritance. She gets a house worth $165,000. If she’s willing to part with $50,000 she can have the money now with no hassle.
It’s still $110,000 than she had before her Dear Aunt Mabel died.
Now if my Dear Aunt Mabel died, I would be much more patient and try to eek out every penny that I could out of that house. 
In terms of value, as opposed to accounting, she made a profit of 110,000$. if she has a residence, then she most likely has taken care of her needs and another house is a pitiful and useless addition. So it has a value near 0.
My mother did this with her house last year. We had to sell fast (My mother relied on SSDI and child support payments, the child support was going to end when my sister graduated high school) and the house was in need of a complete tear out and redo. Carpets ruined, tiles cracked, porch falling apart,siding falling off, etc. She listed with a local real estate agency that understood, and contacted some of the more reputable “Buy houses fast” people. Within a month, she got an offer everyone was happy with ($115,000 for a house that, once fixed up, sold for $150,000). There was NO way that any regular buyer, even the “fixer upper” types, would have bought the house. It took people with the type of resources and experience the “Buy it fast” have.
YMMV, of course.
Well there’s certainly a profit from Dear Aunt Mabel.
When the inheritance arrives (which has nothing to do with the company of course), she is $165,000 (less $5,000 for repairs) in profit.
As soon as she deals with the company, she is worth $50,000 less. I cannnot accept that the company has made her any profit!
P.S. You put in your post that she is worth $165,000 more after inheriting - where does it all go?!
You could presumably say that she inherits $110,000 (since she can get that cash quickly), but then there’s a profit of $50,000 if you don’t deal with the company.
A second house has a ‘value’ of near zero? :smack:
Allow me to introduce you to the concepts of selling, renting or taking out loans based on the property.
There are millionaires in the UK (and I expect in the US too) who made their money entirely from ‘second houses’:
In his first bestselling buy-to-let book, ‘The Buy-to-Let Bible’ author and buy-to-let millionaire Ajay Ahuja provided the basics of successful buy-to-let.
(You will also face an very interesting discussion with the tax authorities if you claim your second house is valued at near zero!)