Have you ever seen the advertisements “If we don’t sell your home, we will buy it” or “If we can’t sell your home in 60 days – we’ll sell it for free” and wondered if it was really that good? Well, I am here to tell you the full truth about these guaranteed home sale programs – they are a gimmick and a lie.
What is a Guaranteed Home Sale Program?
A guaranteed home sale program is a little scheme that some seemingly kind, but unethical, real estate agents have come up with to “help” a distressed homeowner. The deal is that after a certain amount of time, if your home doesn’t sell, they promise to buy it.
Think About This…
- Is it realistic to believe that an agent will buy everyhouse that he cannot sell within 60 days? Where on earth is he going to find that kind of money?
- Do you really expect that the agent will pay full market value for the home? Or rather could you expect him to low-ball the price and then turn around and sell it for more?
- If he has an interest in buying your home, will he reallyput 100% of his effort in selling it to another buyer?
Check out the Fine Print
While on the surface, it may seem like a failsafe program for the seller. It is the fine print, however, that can create a major problem. It can unfairly take advantage of the seller. Check some of the most common conditions.
- You must agree to buy one of the agent’s other listings. Does that sound fair? Instead of having hundreds of homes to choose from, this agent effectively limited your freedom to choose. What if those homes are over-priced, in less desirable neighborhoods or just don’t suit your needs? Then what?
- You have to agree on a sales price. The sales price will be at least 10% below market value. While that doesn’t sound all that bad, do not forget that on top of that you will have to still pay the commission which will be another 6 to 7 percent of the sales price. If the market value of your home is $220,000 and the commission is at 7 percent, then you will need to agree to sell your home to the agent for $182,600. Is this really in your best financial interests?
- You have to agree to frequent price reductions.In order to sell the home, the agent is going to need to keep slashing the price to get it to close before the end of their contract term. Check and see what is the average price reduction and marketing time in your area and you will find these agents are about twice as aggressive with slashing your property value.
- You have to agree to stage and make whatever improvements the agent demands.If the seller refuses, the guarantee is void.
Once a seller sees all the fine print, very few actually agree to the offer. But even if you decided not to accept their guarantee but still traditionally listed with them, would you want to work with an agent that is willing to be that heartless?
Here is the Truth about “Home Sold Guaranteed” Programs
While there is nothing illegal about offering to buy your home if it does not sell. In my opinion it is unethical, deceptive and misleading. Consider some of these reasons:
- Being forced to buy one of the agent’s other listings guarantees that he makes a double commission at your expense.
- Setting a below market purchase price prior to marketing the property doesn’t encourage the agent to aggressively market your home.
- I believe there is a conflict of interest if your selling agent agrees to be your buyer.
- Guaranteeing a sale of your home within 90 days is not a guarantee that you will get a fair value for your home. Guess what? Any realtor can guarantee the sale of any home within 90 days if they price it low enough.
What if You Need to Quickly Sell Your Home
Rather than choosing the shady used car salesmen of the real estate world, I would suggest that you go and find a local agent that has been in the business full-time for at least 5 years and has some great reviews.
They will complete a Comparative Market Analysis (CMA) to find out what your home is really worth. Then they will find out how long it should take to sell it at market value. If that is too long for you, then they will consider some other options to get you the highest price in the quickest amount of time. They will create quality full-color marketing materials and aggressively market your property both on and off line.
You need an agent you can trust that is working hard in your best interests – not theirs. If that is what you want, then stay away from those offering “guaranteed sales” and choose a trusted and true real estate professional.