Because of the low inventory of homes for sale, it’s not unusual for homeowners to receive offers to buy their home without putting it on the market. Sometimes it’s from a real estate broker, but other times it might be from an investor or an unrepresented buyer offering to save you the cost of paying a real estate commission.
Or perhaps you saw a sign like the one below offering to buy your home for cash.
Here’s some advice on handling these types of offers.
First, the real estate broker: It could be a ploy for getting a listing. Don’t fall for it! If interested, offer to allow a showing and pay only 2.8% commission, which is the typical co-op commission offered to buyer’s agents. If the agent produces a buyer and submits an offer, call me or another broker to ask our help. I can’t speak for other brokers, but I will give you a free opinion about the offered price and whether you might do better paying for your own representation. If you still want to accept the offer without listing your home, talk to me about helping you with the transaction for a reduced fee.
Second, the investor: Whether the investor approaches you or you respond to his sign, just remember that he (or she) is not going to offer you market value. They’re in this business to make a profit — a big profit! On average they’re going to pay you 65% of what they expect to get when they “flip” your home with little or no improvement. Again, I’m available to help you determine the true market value of your home..
Third: the unrepresented buyer: This is a buyer who might actually be willing to pay fair market value or higher, but has been frustrated by the lack of inventory and is taking direct action to find a good home in a neighborhood they like. They are also thinking they can pay less for your home by saving you the expense of listing your home with an agent. Nevertheless, you do need professional representation. Real estate transactions are not as simple as you may think, with the state-mandated contract heavily weighted in favor of the buyer, not you. An agent can negotiate not only the price, but also inspection issues, appraisal issues, and more. My approach is to treat any offer to buy your home as the “opening bid” for your home. Even if you’re happy with the offered price, wouldn’t you like to get more? If I can show you that you can net more by listing your home, I can, based on an analysis of comparable sales, help you counter that one buyer. If they don’t come up to what you and I agree is a reasonable offer, I might then suggest listing your home on the MLS using their offer as the listing price. If doing so doesn’t net you more money, you can then proceed with the original buyer’s best offer and I won’t charge you the higher commission for having put it on the MLS.
Although I have described how I personally might serve you in such scenarios, I suspect that a preferred broker, including one of our broker associates, would agree to similar arrangements with you. Ask!