In a free and open market, people are allowed to buy and sell their homes for whatever they think they are worth. But many homeowners don't know what their homes are worth. Of course, if they planned to sell their homes, they would talk to a realtor and start with an honest appraisal. But there are some companies that try to catch these homeowners off guard. They use manipulative tactics to pressure people into selling their homes quickly for far less than the homes are worth, without giving them time to get an appraisal and make an informed decision.
The Pressure Game
The sales pitch starts with a simple postcard in the mail. The postcard informs a homeowner that a company is purchasing homes in their area, and lists a phone number to call to discuss a possible sale. The offer is for a quick cash sale. For homeowners in need, this may seem like a great way to cash in on the value of their homes. But what they don't know is that this is actually the beginning of a scheme to rip them off for tens or even hundreds of thousands of dollars.
If you don't respond to the postcard, these predatory investors will start calling you, leaving messages offering to purchase your home for cash. They may even tell you that they have walked around your property and want to make an offer. It can seem a little intrusive, but it's all part of the pressure game.
If you return the call, these investors, sometimes called wholesale homebuyers, will start in on a hardball sales pitch. The pitch follows a script intended to catch homeowners off guard and trick them into selling their home for hundreds of thousands of dollars under market value. As the call progresses, the buyers ask a series of questions about the house. As you're talking, they look up your home Google maps, check your tax records, and ask about the condition of your home. The questions can get pretty personal, and ultimately lead to a low-ball offer to sell your house fast. This offer is always tens or hundreds of thousands below market value. The buyers don't want to give you time to get your home appraised or talk to a realtor. Instead, they offer cash for a quick deal, knowing they are taking advantage of the homeowner's lack of information.
How it Works
This isn't just a simple case of a buyer trying to get the best deal on a home. This kind of predatory homebuying is a well-established business model, complete with scripts, manipulation techniques, and businesses making a buck teaching other people how to do it. One such company is Ace Home Offer. Ace Home Offer tries to teach people how to manipulate homeowners into below-market sales through their homebuying training program. The flashy program offers a complete system, including dozens of publicly-viewable YouTube videos about their methods. In their videos, they give tips on not just what to say, but also how to say it, to make homeowners believe they are getting a good deal. In one video, they recommend buyers look up a nearby landmark and mentioning that landmark in their call to give the impression that they are an expert on the seller's neighborhood. In other words, they are teaching buyers to lie. They also recommend buyers hesitate after receiving an offer, even if it's way below market value, to give the impression that this is a fair price, and they have to think about whether it's worthwhile. Again, the goal is to get the seller to believe something that isn't true.
There's nothing illegal about this tactic, and some people may say that the blame is on the homeowners for moving too quickly and not doing their homework. But at TrustDALE, we think that these practices are highly unethical, especially since they are specifically intended to mislead homeowners into a bad decision. And we're not alone in that view. Ace Home Offer, the company that targeted one of our senior producers to buy her home, has an F rating with the Better Business Bureau due to multiple unresolved complaints.
We say this often, and it bears repeating: if someone is pressuring you to make a deal quickly, back off and slow down. Whether it's signing a contract for roof repairs or selling your home for cash, pushing consumers to act quickly is a common manipulation technique for scammers. They want you to make a decision before you have time to consult your partner, do your research, or get other offers.
Legitimate businesses are happy to let you take your time and do your research because they are confident that their products and services are worth what they are asking. So before you sell your largest investment or make any business decision, ask for time. If you're hiring someone for a service, ask for references, and get estimates from at least three service providers for larger jobs. If you are selling a home, work with a realtor and an appraiser, so you know your home's true value. And if someone can't wait for you to do that, there's probably a reason. Don't get pushed into a bad decision.