👉 These types of ugly home companies out there are house flippers or companies that sell leads to house flippers. Their business model is to pay as little for homes as possible. The less they pay homeowners, greater their potential profits.
There is nothing wrong with this, if their targets are fully aware and have the capacity to make informed decisions. It’s when they do not, that we get into these sticky situations.
🚨 The economics of the house flipping business model is to buy homes at 40% or more below market value. Once they factor in remodeling costs, loan fees (they borrow money from private lenders because banks will not fund flip deals), real estate commissions and other costs, what is left over is their profit.
Most reasonable sellers will not sell their homes for 40% below market rate. That is why these companies are targeting the elderly or other sellers who may not fully understand what is happening to them. This is where the predatory practices may come into play.
💸 Home flippers are middlemen who take out potential profits. If a home needs work to remodel to bring into selling condition, there are other ways to get the home sold without giving up all the profits to these middlemen. Talk to a local realtor like me who can help renovate homes without having to put in lots of money up front. There will be some fees to use the money, but nothing like 40% off the market rate.
➡️ Talk to a local realtor or reach out to me. I can help find someone who can help with renovation before putting the home on the market. Keep all of your profits, don’t give it to a middleman.
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