Real estate mistakes to watch out for
Over the years, we’ve seen just about everything from happy crying at closing to foreclosure scam artists. Below are a few stories from clients to help you see why working with an experienced real estate agent is key especially in today’s world. Some of these folks are people we helped work with directly, others we found about through our own research or colleagues.
Read on if you are interested in common mistakes people make when selling a home as well as some scams we see going around today.
Agent inflated home estimate
This one is pretty common but not always the most harmful of scams. When someone goes to sell their house, they call a few agents to interview them. Sometimes when an agent really needs a paycheck they’ll essentially lie to the homeowner making it look like their house can sell for more than it actually can. It’s hard to know who to trust if you are the homeowner. If you have 2 agents telling you $250k – $260k, but a third agent $270k….who do you believe? Maybe that third agent is just better at their job? The truth is, agents don’t influence the price your house sells for at all. If the house is underpriced, it will get multiple offers and sell for what it should. If it’s overpriced, it probably won’t sell or will get offers under asking.
That third agent is just fudging the numbers a bit to get you to sign with them. Remember – it costs the agent $0 to put a sign in the yard and sign a contract with you. 30 days later the house doesn’t sell for $270k and the agent blames it on the market. The homeowner drops the price into a realistic range and the house sells in a month or two. It’s annoying to see this happen, but it’s pretty common. Unfortunately the homeowners here just wasted 30 days while their house was incorrectly priced over realistic market values.
To avoid this, make sure you understand how your agent is getting their numbers. If you are seeing something different, ask them to explain it.
Wholesaler equity theft
This one is very sneaky and can cost you a lot of money. Wholesalers are just a middle man between someone wanting to sell their home and someone wanting to buy the home (typically an investor). Wholesalers present themselves as cash buyers, ready to close fast and buy as-is. Once you sign a contract with a wholesaler, they need to have a “partner” come look at the home. That partner is actually another buyer to whom the wholesaler is trying to sell your home to at a marked up price. So if a wholesaler is buying your home for $100k and they find an investor to pay $120k, they keep that $20k.
What’s the problem with this? If you get the price you want for your home, does it really matter? Well that’s up to you. The issue with wholesalers are:
- They don’t tell you they are wholesaling – The act like they are buying your home without disclosing they might not financially be able to or have 0 intention of actually closing.
- The contracts are one-sided – usually you are stuck with them once you sign. So if they close, you are forced to sell. If they don’t close, you have no recourse and will waste a lot of time. Often times you see only $10 earnest money.
- Last minute closing cancellations – we see this one a lot. Sometimes wholesalers can’t find a buyer and wait until the day of closing to tell you they can’t buy your home. Imagine packing up, finding a new home, only to find out the day of closing you can’t sell your house. The worst of this is when wholesalers do it intentionally knowing that you’ll lower the price if they try to delay closing.
- Loss of equity – most often, homeowners don’t understand what their house is really worth in these cases. What might look like a good deal for the seller turns out to be a bad decision when you look at the facts.
The simple way to avoid this scam is just call Unicorn Real Estate when you want to sell your home. If there is a reason you are leaning towards an off-market, cash sale, we can help. Whether that is making you a fair market as-is offer OR helping you sell your house off-market to legitimate investors and netting you more money….call us before you sign anything.
Overpaying for repairs
Every business out there is trying to make a profit. There are some companies that take this a little too far. A common example we see is with HVAC systems. Most companies charge fair prices on installing a new HVAC system however some charge almost double or triple what a fair price is. Imagine spending $20,000 on a new HVAC system to find out the parts only cost $2,500. Would you be upset?
This applies to a lot of trades in construction and home-related repairs and updates. There are some things you can do to protect yourself though:
Call Unicorn Real Estate – A normal agent would tell you to call around, find a few quotes, and pay for the work yourself. Not us. We already know all the best contractors in town and have our own in-house construction crews. This means you get access to high quality work at below retail prices. We’ll also manage the whole process for you. Depending on your situation, we can even float the money for certain repairs until your house sells.
Get multiple bids – always get 2-3 bids for any work. This is especially true on anything that costs over $500.
Don’t always listen to your agent – Unless your agent has a history of construction experience (like us), don’t list to your agent about what a repair should or shouldn’t cost. Too many times we’ve seen agents blindly give advice on repairs they have no experience with.