They’re everywhere in Ocala and around
You’ve seen them on the side of the road at every major intersection: signs that say: “We’ll Buy Your House—Any Condition” or “We Buy Houses—Fast Cash.” Sometimes they are pre-printed. Many times they are hand written. You’ve probably wondered who’s putting up these signs? Do people really call the phone numbers on these signs?
In the real estate investing industry these we buy houses signs are called “bandit signs.” They’re called that because they are against local ordinances everywhere. Hence if you place them, you are a “bandit”. Real estate “wholesalers” are behind most of them. Wholesalers are a type of middleman. They find motivated sellers desperate to sell their home in as-is condition and sell it to investors who buy, renovate, and resell to retail buyers, flippers or landlords.
Contrary to what the we buy houses signs promote, however, wholesalers don’t really “buy homes for cash.” Rather, in exchange for the seller agreeing to accept a discounted price, they promise to deliver cash for the home within a certain time frame — typically 30–45 days.
Once a wholesaler has a house under contract they “assign” the contract to the investor who will actually pay for the house. This is who will sit across from you at closing with the check. The wholesaler makes his/her money by charging the investor an “assignment fee” for finding the deal. Of course the we buy houses sign could also belong to the investor who will negotiate the deal and be the one at closing.
What are the benefits to the seller?
There are three primary benefits to the seller.
- Sell fast.
- Sell as is– no repairs, painting or updating the houses kitchens, baths, lights and faucets.
- No selling costs– no commissions or closing costs
There will be showings. Serious investors won’t buy a house without seeing it. But unlike the retail home inspector inspections that 2-3 hours, an experienced investor can walk through the house in a half hour.
Wholesalers and investors are looking for houses in poor condition where they can “add value”. The seller has no money, time or both to do the kind of work that add value to the house and will bring a top dollar sale through an agent. The other, is sellers in situations where they need to sell faster than they could going through an agent. And let’s face it, there is a minority of sellers out there who will do anything to keep from listing with an agent.
Should you buy a house from a we buy houses sign?
Wholesalers serve a niche market of “motivated sellers” who, for various reasons, don’t go through the traditional sales process of calling a local real estate agent and listing the home on the multiple listing service.
Wholesalers can bring houses to market through their we buy houses signs that might otherwise go through foreclosure, a slow process that gives properties more time to deteriorate and become less valuable. So experienced wholesalers can snag some good deals for investors or retail buyers interested in instant equity by doing a little repair and renovation to bring the property back to full market value.
With no real barriers to entry, wholesaling is pitched by some “gurus” as a lucrative side hustle to make thousands without investing any money of your own. This tends to attract beginners who lack real estate experience and knowledge. As an investor, or end buyer you might be dealing with a novice, so make sure you dig deep to understand all aspects of the deal before you move forward.