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Real Estate - Residential

Buyer beware: Research, caution urged amid soaring housing market

Real Estate - Residential
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By Christina Lee Knauss

WE BUY HOUSES!

I WANT TO BUY YOUR HOUSE!

Postcards, flyers, letters and roadside signs with these slogans have blanketed Midlands neighborhoods in the past few years, with skyrocketing demand in the current residential real estate market intensifying the trend. Some people, especially senior citizens, are even receiving phone calls, emails and text messages from people asking if they want to sell their houses.

Recently, in some areas of Northeast Columbia, vans with a “We buy houses” slogan and North Carolina plates and advertising a company out of the Charlotte area could be seen driving up and down neighborhood streets, putting flyers and postcards into mailboxes with the driver occasionally stopping to talk to residents.

Who are these people and why are they approaching total strangers about selling their homes?

They are real estate investment groups looking to buy up large numbers of houses, and in the current hot market, with historically low home inventories and interest rates, they’ve stepped up their efforts.

These groups come into an area and buy up as many homes as possible, even sight-unseen or as is. Often, they focus on neighborhoods with a large number of older homes, and senior citizens are prime targets for their sales pitches, industry insiders say.

These investment groups typically buy up houses that they later convert to rental property or invest in to flip later for a higher price.

Their offers frequently appeal to homeowners who need to make a quick sale because of financial problems, a pending move or other factors.

“These are institutional-level buyers who are coming into the area and see Columbia as a good market to invest in houses,” said Graeme Moore, a realtor and owner of The Moore Co. in Columbia. “Often these are people from out of state with deep pockets who are business savvy and can easily take advantage of a buyer if they’re not careful.”

While many of these sales pitches come from reputable companies, prospective sellers need to be careful because these large-level buyers frequently make an offer for a home that is significantly below what the home would draw on the conventional market.

As with any unsolicited business offer, prospective sellers should research the company making the offer. Check out its website, do online research and check with the Better Business Bureau and other resources. A key thing to remember is that an offer that sounds too good to be true often is.

“If you get an offer from one of these companies, the best thing to do is call a trusted realtor, someone you know personally or is recommended to you, and run the offer by them,” Moore said.

Los Angeles-based Schorr Law offers additional tips for both buyers and sellers in its online blog. Buyers are encouraged to examine a title report, especially if buying a property with cash. A commercial bank will not typically lend purchase money without a clear title, but in the cash of cash transactions, the buyer must examine the title report for any liens on the property.

Would-be buyers are also warned to be cautious of inadequate disclosures, which can occur in the case of cheaply flipped properties. A thorough property investigation, including inspections, is recommended. And beware of off-market transactions, such as properties offered for sale by an owner or another private seller, with unusual terms that could lead to future disputes or litigation.

Sellers are advised to know their buyers and perform due diligence before accepting an offer.

Such caution can prevent situations such as the recording a notice of pendency of action to renegotiate sale terms even after an agreement has been reached, which the law firm warns is a common scam tactic

The S.C. Department of Consumer Affairs also advises similar caution in searching for long-term rental housing. Would-be renters should tour the property before putting any money down, be wary of owners who show little interest in an in-person meeting, and get any verbal promises in writing.

This article first appeared in the July 19 print edition of the Columbia Regional Business Report.

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