Guaranteed Sales programs. Real or hype?

Real Estate

There are some real estate agents right now pushing this idea of a guaranteed sales program for your home. Let's take a real look at what that is and whether there is value there or not.

The idea behind a guaranteed sales program is for a company to come in and purchase your home outright where you don't have to do anything. No repairs, no showings or anything else that comes along with traditionally selling a home. Sounds really great doesn't it? Not so fast.

The reason I say that is, you haven't heard the details yet. You have to listen carefully for the wording of the ad. They will typically say competitive market value or fair market value offer. What exactly is that? If you hire a licensed real estate agent to represent you in the sale or purchase of a home, they have a fiduciary responsibility to you. but if you sell the house to them outright do they have a fiduciary responsibility to you? Now they're trying to purchase your home for the best price they can. to me that sounds like a conflict of interest.

It's no different than the real estate agents who tell you that they can sell your home before it even goes on the market. my response to that would be, how hard is that? You as the seller won't even know if they got the most they could for the home. the only way to truly know is to put the home on the market and expose it to as many buyers as possible.

The other part of the guaranteed sales program is the fact that it's typically 10% or more under the current market value. They will tack on a higher Commission rate and in many cases charge you closing costs, holding fees in a variety of other fees. when everything is said and done you can be down over 20% of your home’s value. I'm not saying this is the case with everybody, but it seems to be the trend in most situations.

I'm convinced those agents don't even want to buy your house; they're just looking for a way in to list your home. They wait for you to say well that's too much of a discount. then the next thing out of their mouths would typically be something along the lines of, no problem we could just list it the traditional way.

If they're going to purchase your house for guaranteed sale program, no they must make sure that they're getting it at enough of a deal that they can turn around and put it on the market without losing money. More importantly they want to make money when they do list it.

Here's another way to look at it. If i had 100 people in a room with me and I said to them if you'll come and stay at someone's home for 2 to 4 weeks. you need to keep the home clean and ready for showings. You need to leave for a few hours when you do have a showing. But as soon as the home is sold, I'll give you $30,000 for that job. how many people would turn down an offer like that? my guess is almost nobody. so why would you give away $30,000 or more of your hard-earned money for a little bit of inconvenience?

I'll take it one step further. right now with the current interest rates, if you had $30,000 left on your mortgage and you were able to pay it off today versus over the course of the next several years, you will save on average an additional $10,000. That's real money coming out of your pocket on the back end. But they market these plans in a way to make it sound like the only negative is you're going to have to pay a little bit higher of a house payment because you're giving up some on the sales side.

Before you decide as to whether this type of program is right for you, the best advice I can give you is to meet with several different real estate professionals. let them share with you how they will market your home it put more money into your pocket.

I'll never tell you what you want to hear, but I'll always tell you what you need to know.