Be cautious of companies offering quick purchase of your home

Several new companies recently have come into the Phoenix Metro marketplace offering to purchase homes directly from homeowners for cash.

These are not the first companies to try their luck in the Valley. Investors have been drawn to the Phoenix market for decades. Each time a new company arrives, there is a new twist, but mostly they offer a hassle free experience and quick closings.

Companies offering to quickly purchase your home are not in the business to do you a favor. They are in the business to make money and pay for radio ads. Their greatest advantage is you don’t know all of the ins and outs of real estate.

Here are some reasons to be cautious:

1. Unless you already have your home listed, you, as the seller, do not have any representation. The companies buying your property are fully aware you are unrepresented, and are ready to take advantage of that fact.
2. Not all investors submit lowball offers. Instead, some companies offer something that sounds reasonable according to Zillow. If you have read our columns in the past, you know Zillow values usually are inaccurate. Investors seek out homes that already have a low Zillow value for the marketplace, fully knowing the Internet is the place where homeowners look to get information.
3. Some companies pay cash, but then ask for closing costs. It is highly unusual to ask for closing costs in a cash transaction. Closing costs are used to assist financed buyers and usually are a point of negotiation. This is the company’s way of using psychology to actually come in with a lower offer without you really realizing it. Other companies come in with a reasonable offer, and then charge a series of fees. In both situations, your bottom line net is much lower than it appears.
4. They usually close quickly, but don’t always conduct their inspections until the last minute. Some companies ask for a huge dollar credit for repairs (in some cases we have heard more than $20,000). If you don’t agree to pay for the repairs, they cancel the transaction. A few days before closing, most sellers have already arranged to move, so they pay the repair costs believing they have no other options.
5. Many bulk investors just have one agent handling all of their transactions. It is very difficult to get in touch with anyone at the company, and there are frequent errors along the way, not usually in the buyer’s favor.

Being represented when you buy or sell a home means you have an advocate on your side. Professional Realtors know how to not only get a house under contract, but they can negotiate it all the way through to closing. It seems like it should all be simple, but it rarely is. Think of it this way. If you were involved in a lawsuit, you would hire the best lawyer to represent you. You wouldn’t try your luck being your own attorney. Why risk trying to sell what is most likely your largest investment by yourself? It only will end well for the other side.

John Karadsheh is the Designated Broker for KOR Properties. He has been a Multi-Million Dollar producing agent for more than 12 years, and is an Accredited Buyers Representative (ABR) and Certified Residential Specialist (CRS). In 2014, John was voted the No. 1 Real Estate Agent in Arizona by Ranking Arizona. You can reach John at (480) 568-8684, or visit his website at KORproperties.com. KOR Properties is the creator and one of the founding sponsors of Mesa Food Truck Fridays.