Virtual Home Buyers: Do You Know Who You’re Dealing With?
In our previous article, we talked about iBuyers and some of the pitfalls to avoid if you’re considering selling your home remotely to a national house buying outfit. As we pointed out, iBuyers initially appear eager to buy your home, but, due to serious shortcomings in their business model, only close on about 50% of their deals.
In this article, we’re going to take a look at a second tier of remote buyers called virtual wholesalers who, unlike iBuyers, have no intention of buying your home at all. In fact, their primary reason for existence is to gather your information and sell their rights to the contract to another end buyer. Where it goes from there is anybody’s guess.
Virtual Wholesalers: What to Look For
Virtual wholesalers are a combination of fly-by-night investment companies and shady operations that use seller-friendly websites to acquire contact information from home owners.
Characteristically, their references are difficult to check, their location is a mystery, and it’s often up for grabs if they’re even a legitimate business entity.
Although they never make an effort to see the property, they do their dead level best to contract the home with the home owner. Once under contract their intention is selling the rights to that contract to a third party before the end of their option period. It’s another characteristic of a virtual wholesaler to set up a very long option period which gives them the unrestricted right to back out if they can’t find a partner which can leave the seller stranded at the closing table.
Ultimately, they have no financial obligation to the seller or to purchasing the property.
In essence, virtual wholesalers are “lead” sellers who have passed your contract on to a novice buyer who has most likely never bought a house before. A “lead” is an industry term for seller contact information such as name, phone number and property address which may also include personal information. You’ve seen this newbie’s sign on your street corner before–handwritten in marker on poster board at a busy intersection along with low cost health care promises–offering to buy your house for cash. In many instances, this buyer has recently attended a sales’ seminar in hopes of breaking into the house buying business but has no experience in the complexities of doing so.
In effect, virtual wholesalers make false promises to the consumer, contract your information out sight unseen, and make good money out of the lead. It’s a classic bait and switch at your expense.
Their absence of a local office, however, is probably the number one reason to be wary of because everything else that can go wrong stems from their lack of local boots on the ground.
A virtual wholesaler’s eagerness to convey the message that you’re dealing with someone local to the Texas market is only part of their disingenuousness.