We have gotten that email too and agree with your assessment 100%.  Some of our sellers have gotten similar proposals where the 'eager buyer' promises them fair market value for their home...

My suggestion to the seller is, "call them and get the fair market offer in writing".... yeah, right!

It is interesting that some sellers steadfastly refuse to come off their price one iota but think that some 'investor' is going to come in and pay them what they are asking... desperate people grasp at the most flimsy straws sometimes.  

Do any of you know about the "Guaranteed Sale" program that some real estate agencies offer? I wonder how bogus these are. Are they promising to buy property if it doesn't sell, at what price? Is it just to get the mortgage paid off?

From what I know, the "guaranteed sale" is a predetermined amount that they agree to buy your home if it doesn't sell within, say, 90 days. Usually it is less than .80 on the $. Most of them also specifiy that you must buy a new home from them. I was contacted by someone about this and I didn't like it one bit.

Well, I have a slightly different perspective on this subject. As realtors are we factoring in the cost of upgrades, repairs, location, and other characteristics associated with price. As to a home in need of major repairs there is a profit that is due the buyer who is going to do the work on the home. Usually that profit is a minimum of 20-30k. And it is well deserved, especially in cases where 25-40k is required in updates and repairs. In doing our homework we then are better able to determine what is a reasonable offer.

As to guaranteed sales in the event your home does not sell within the listing period of 6 months, usually; An appraisal is required that is based on a quick sale within 45-60 days. That puts the value at probably 90-95% of value. Then a marketing plan is devised that reduces the price each month until sold. These are usually 5k adjustments each month bringing you down to the 80% of appraised value, which is more like 70-75%. These usually sell prior to getting to this point. Now, in the event the listing office does buy it, should they sell for more the excess does go to the seller. This was my experience with one such program on the market. The program is utilized more to get leads than an actual benefit to sellers. Though there are individuals that have found this program beneficial to their clients. It is very similar to the programs offered by these investors except they cut to the chase and offer the discounted value up front. And of course the real estate office is setting it up so they don't have to buy the property as they really don't want it.

I sold a home of one of these type of investors.  He or someone in the office is also a broker.  The letters from them do let the owner know that they are only interested in discounted sales.  Basically the guy got it through an estate sale, delivered what he offered to the seller and then re-listed the house at a fair market price. His take was about 30k, not bad for sending a letter and listing a house for 3 months.  As for the guaranteed sales listings my experience with them was that they agreed to purchase the home at a pre-determined price.  It was a good bit less than what they were listing the house for, closer to 93%

Realtor, Columbus Ga

Being with an ERA Franchise, I can give an explanation of their program.  There are some limits on the type of home that will be accepted depending on the area in which it is located.  It has to have an appraisal and a home inspection done.  The offer is 90% of the appraised value.  However, the sellers have 6 months to sell it before the offer from ERA Franchise is closed.  Then if it sells after that, since it is kept on the market, the seller gets any profits over their contract price, but doesn't have to eat any of the loss if it sells below contract price.  Also, there is a specific marketing plan which has to be followed.

Darcy

Hi C Team,

With that "We'll sell or we'll buy it" program, I imagine ERA has plenty of disclosure forms which their legal team came up with for having a program like this. I understand ERA has used this for many years and that not all that many homes actually get purchased by ERA.I've wondered "who buys the house at ERA, the corporation or the individual agent?" I imagine it is the corporation, taking the individual agent out of the position of personal gain from the eventual sale of the propetry. I see non-ERA agents trying to copy this marketing strategy here in Dallas. I wonder if they have covered themselves adequately from a legal standpoint.

Oh sorry, I just reread your post and you answer one of my questions there. ERA has definitely thought this thing through over the years. I see a couple of agents in the Dallas area who seem to be investors or flippers who use a similar marketing program to get properties cheap and sell that at a personal profit. Flipping is not illegal but if you are supposed to be representing a seller in a listing you shuold not be competeing with potential buyers of that same property. Being an investor is great. I invested for years before getting my RE license and still invest but see ethical problems with mixing listings with my buying of investment property. I keep the two thing separate. When I list I try to help my client get the best price possible for their property as if it were my own.

I used to see quite a lot of the "guaranteed sale" advertising around here when the market was hot but haven't seen much of it recently.

Steven Pallesen,  In your picture, who is the team leader?

Very interesting post. Learned a lot and as an investor myself. Aren't we all looking for those deals?