Cont.

Are "Cash" Offers For Homes Legit?

By Evelyn (Evie) Preston, The Money Lady

Q: Who are the people or entities behind these radio ads and personal appeals ranging from “We’d love to live in your neighborhood” to the more direct offers

from house flippers or private companies?

I’d chosen wisely and spoke with down-to-earth Jeff Pollock of Trident Equity Group in Redwood City. He explained his company’s viable solution for a short and straightforward home sale vs. the costly, time-consuming process of readying a typical home for

the open market.

"If you give me 10 mil it’s yours,” I said, “house, furniture and I’ll even throw in all my knick knacks!” 

He laughed and I admitted I was calling for an interview to acquaint Scoop readers with this off-shoot of the real estate market. We agreed to meet.

I wound up enlightened and impressed.

Q: Will a seller receive the highest possible price selling “as is” to a private party?

Probably not. As well as any special terms of the sale, the “as is” seller must discount what most owners must spend—and endure—prior to a top listing price via realty firms.

There’s always upgrades for landscaping, repairs, inspections, code compliance, permits, staging, etc. You’ve seen termite tenting; probably a home about to go on the market.

I know sellers who’ve paid between $60,000 and $100,000 prior to MLS listings. Years ago, the woman next door to me was so thrilled at the pre-sale rehab, she almost refused to move.

Q: How does a seller get paid by this off-market transaction?

Homeowners sign an agreed upon contract. They

can consult an attorney or other experts, set their

own conditions and time-frame, specify type of payment—cash, annuity, etc.—and the sale goes through escrow like any other real estate transaction.

Q: Who are the entities willing to pay upfront and design a made-to-order “as is” sale?

It’s often a single large investor, company or diverse groups who amass a major part of the financial backing to fund the purchase. They handle the work and worry in a package deal. This type of investment can even be used as an effective diversification for

an IRA.

Q: What are the risks for the investor(s) who borrow and put up their own funds.

Time and money! Loans and cash must be quickly accessed. Resources should be readily available to move forward. A good reputation, effective working relationships and reliable contacts with lenders, contractors and designers must be in place.

A short turn-around time (6 months to a year,) is the key for a successful outcome and reasonable profit.

Q: What’s the risk to the homeowner in this type of off-market sale of their home?

Not much unless the payment is over time and the buyer disappears. However, it’s best to research whom you’re dealing with and to be realistic. If the deal is too good to be true, the buyer has no ties to the community, no references, or rushes you to sign a contract, back off.

Trident Homes offers a “good faith” payment at signing so, there’s little risk if the deal falls through. You get your home back and keep the cash.

As in any financial transaction, you must feel free to seek other opinions, research background info and negotiate.

Trust your instincts. Involve your family or a trusted friend. Make a list of the pros and cons and sleep on your decision. While most home sellers will do what it takes for “top dollar” via realtors, an “as is” home sale might turn out to be an easy and lucrative way to just move on into the sunset like any other happy ending.

Evelyn (Evie) Preston is a financial columnist for A050 and worked as a financial advisor for over 25 years. Reach her at [email protected].

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