The other day I got a postcard in the mail offering to buy my house.

Oh joy!  I hadn’t thought of selling my house at all, but since you sent a postcard that says you will buy it, lucky me!  I’ve truly been blessed by your gracious offer!”  Sarcasm

There are times when it makes sense to sell to a home investor.  In the total real estate sales marketplace in St. Louis, I would think about 5 percent of all the homes listed for sale makes perfect sense to use an investor.  I’m just going to go through the high points of this postcard that I got and see where one could be swayed to use an investor to buy versus selling a home with a professional real estate agent.

  1. The fellow gives his name. His picture shows two people in it.  Who is that guy?  They both have smiles on their faces.  They seem to be happy that you are looking at their ad and thinking to sell to them versus list your home for sale in the open marketplace.  They think you are a shmuck.
  2. The advertisement says that he has a family business. What are we to take from that?  Some families hate each other!  Is this a play on those darn greedy corporations?  Is this because a family business could never be greedy?  Are you kidding me?
  3. The advertisement says they have purchased many homes. How many homes is many?  Is 4 homes many?  It’s many more than 1!  Why are these people buying so many homes?  Do they not have their own home to live in?  Are these people drifters?
  4. They purchase homes and it is easy for them and stress free. Let me see if I have this straight…You buy my home for pennies on the dollar.  You fix it up and sell it for a large profit, if you are lucky, and for that, you make the process easy and stress free?  This, opposed to miserable and disappointing?  Tell me more!
  5. They buy property “as-is” That sounds great!  No one else buys houses “as-is” I’m sure!  I can’t go look on the multiple listing service in St. Louis right now and see 1,000 or more properties listed for sale “as-is”  Thank you so much for this!
  6. The advertisement says they buy occupied, vacant, ugly, and homes with tenants. Great!  This really is my lucky day!  I’ve never seen a vacant house for sale, or one that is occupied, or even one with tenants’ rights.  What about a house that will sell for over ask if I list it with a traditional real estate agent?  Will you pay me more than that?
  7. These saints will buy your house with no escrow fees or repair costs, and they will do it without a commission! OMG!  You mean I can sell you my house, right now, for pennies on the dollar, and you won’t charge a commission.  How charitable of you!  Clearly, you are working in my best interests!  What’s an escrow fee?  Did you just make that up?  When has a seller ever paid an escrow fee?

This whole ad is garbage.  I wonder if it will work on anyone?  The sad thing is that it will probably work on the most desperate, or some schmuck.  And this is my major issue with this sort of advertising.  There are people who are desperate, who have very little in the form of cash, who think they are doing the right thing by selling their home in St. Louis to these types of folks when, if they used a traditional real estate agent, they would be far better off long term.  Let’s look at one issue, commission.

Let’s say it costs you 6% to list and ultimately sell your 100,000 home.  That’s $6,000.  If your house is really worth 100,000, do you really think an investor is going to buy your home, fix it up, and then re-sell it for 100,000?  No!  That is a sure way to lose money.  Family owned or not, businesses don’t stay open when they lose money year after year.  So what will these saints of the real estate world really pay for your $100,000 home?  The answer is as little as possible.  I suspect one of the more enterprising investors will start their negotiation at $60,000 and maybe top out at around $80,000.  If you own the home outright, that you’ve just handed an investor $14,000 more than you would have had to pay a traditional agent to sell your home!  All for the joy of no commissions, escrow fees (which don’t exist, and if they do, it’s less than 50 bucks, or repair costs!

I’m 100% biased as a real estate agent and broker in St. Louis.  I’ve worked in the real estate investor field, and I know how that works too.  If you want an honest evaluation of what you should do with property that you inherit, or there’s a divorce, or something where you need to sell your home quickly, give us a call.  We work for you and our commission is what allows us to do that.  This is a thousand times better than no representation at the cost of no commission.