Many companies advertise quick, cash purchases of homes, but often, they don't actually buy your property. Instead, they engage in wholesaling—securing your property under contract only to sell the contract to another buyer at a higher price, profiting from the difference.
You might be saying what is wrong with that? In my opinion the difference between what you get paid and what the end buyer pays should be your money.
Moreover, such companies often employ deceptive tactics to lock down your property:
- Confusing Language: Contracts may seem sensible but could prevent you from selling to others if the wholesaler fails to follow through.
- Extended Contract Durations: They might use excessively long contract periods to locate an end buyer, or even auto-renewing contracts.
- No Earnest Money Deposits: A serious buyer would typically place a substantial, non-refundable deposit, ideally around $2,000.
- Bait and Switch:
They may initially agree to one price, only to lower it after the contract is signed.
Signing a contract
not designed in your favor can trap you, allowing wholesalers to coerce or threaten legal action if you try to back out.
