If we don't sell your home in 68 days, WE'LL BUT IT! Whats the scam?

Factual Questions
1

Over the last few years, this real estate cat showed up and started advertising heavily on the radio that if you list your home with him, he will sell it in 68 days or buy it. He claims that by making that promise, it creates immediate demand for the home. His ads claim that he is the #1 real estate office in the state, and they outsell other offices multiple times over. And JUUUUUST when you think theres a rat, they just won an award by a local, legit newspaper as the Best Place to Work in the area, as well as other “awards” from respectable publications:

http://dlprealty.com/sellers/guaranteed-sale-program/

I used to sell real estate in the early 90s and know it can be a very sleazy business, with real estate agents and brokers making all kinds of wild claims, and there are certainly plenty of shady business practices, but I’ve never heard THESE claims before, nor have I heard of a claim by a realtor they will buy your house if they can’t sell it.

My only angle is Im guessing they WILL buy your house, guaranteed, IF you agree to sell it to them at some ridiculously below market price, then they can flip it. But then where does this company get the capital to buy the house?

Can they really be selling scores of houses a month while other offices struggle to sell 10? If so how do they get these sales? Or is it all bullshit?

OR—is this just a totally legit business model and the reason this guy is kicking so much ass is because he has come up with an innovative program no other real estate broker has grown the balls to try before?

2

I didn’t read the links but is this guy promising a specific price? It’s not much of a offer if all he’s promising is to buy your house without specifying how much he’ll pay. I’m assuming you’d turn down an offer of two thousand dollars but he could then legitimately claim he offered to buy your house.

3

Reading the links, he’s actually offering to buy for the list price, although that is a price that his “expert listing agents” come up with, but presumably if they offered something ridiculously low you wouldn’t accept them anyway.

Edit: He does have “pre-owned” homes for sale on the site, too. Dare I say… looks legit?

4

Is he offering the most recent Zillow price?

5

I’m sure he’s just offering way below market value. Easy to sell more houses than anyone else when you are selling them for 20% below market and everyone else is trying to sell at market value.

6

This.

A realtor friend of mine is complaining that there is an office in our region (northern Virginia) that is pushing customers to sell 3-5% below market to move homes quickly. That is hurting some, but their philosophy is to move more houses with less effort.

But that’s the question you have to ask yourself. Do you want top dollar or do you want to sell your home quickly? You frequently can’t have both.

7

One day just to be doing it, I looked at a nice new house in the posh part of the Annapolis area. Nice but WAY too expensive and I still had a home, so to buy this new one I would have to sell the existing one which is a big time-consuming hassle. That provided me with a nice “out” to politely leave. Sorry, I can’t go to the trouble…

“Oh no, it’s not a problem” says the builder’s representative. “We have a realtor we work with who will sell your house within 90 days guaranteed.” I ask how can such a thing actually be guaranteed, and she says she will have this realtor call me and explain.

So I end up talkng to the guy if for no other reason than I just have to know how this works.

Here’s the deal: He determines the “fair market value” of your home and puts it up for sale at “only” 10 percent less. OK, according to him suposedly that is within a reasonable variation of the market and you otherwise might end up taking 10 percent less than you wanted if you wanted to sell quickly as opposed to whenever.

As they say on infomercials, “but wait, there’s more…”.

If the house doesn’t sell within 30 (IIRC) days, then another 10 percent comes off the list price. And if it doesn’t sell within the next 30 days, then another 10 off the original price comes off , and at 90 days if it hasn’t sold then he buys it from you directly after having taken another 10 percent off. In other words, if it hasn’t sold within 90 days, then he buys it from you at 40% off of the “fair” market value he originally determined --and that starting point could well have been low already.

So he still collects his commission as far as I know, and he gets the house at almost half under a market value that started low to begin with. With that cut, he should be able to resell it fairly easily and still make a good chunk of change. Plus, you paid him a commission to do this. But hey, you did say that you wanted to sell quickly, so this is what you signed up for.

Adjust the formula for 68 days, 120 days, however you like. Same principle.

8

My brother works for a company that guarantees his home will sell in a few months (or they buy it) whenever he relocates for the job. He has done this three times and twice they bought the house.

Their secret is time. Once they buy his house, they put it on the market and wait patiently. One of his homes took three years to sell, but it sold and the company got back their money.

9

Yep. If you have the capital to do the buying and the time to let that money sit all tied up for a while, it seems pretty straightforward.

10

So if he makes no good-faith effort to sell your house, he will eventually get a commission and your house at a 40% discount? Nice scam!

11

Arguably, of course, if the house sits unsold for months, it’s being offered above market price.

12

I was just thinking about this the other day after listening to his commercial. If you sell your house, you pay 6% to the realtors. Now let’s say he buys your house. He get’s all 6% instead of his 3% which means on a $250,000 house you are in effect paying him $7500 to buy your house.

13

Good thoughts.

I have yet to meet a person that didn’t sell their house above market value, or didn’t get a great deal on their new car. :slight_smile:

14

My parents sold their house at below market value. I bought it off them :slight_smile: