(WSPA) – Have you ever wondered what is behind those TV ads or even signs on the side of the road claiming to buy your house fast?
It’s an industry called wholesale real estate, and while the quick sales can be helpful to certain types of homeowners, they can also catch homeowners off guard.
As we learned from a couple in Greer, without an agent to represent you, a seller can be at a steep disadvantage.
In this 7NEWS Consumer Exclusive, a warning about what you should know before you sell.
A home, no matter the size or shape, is more than just a roof above one’s head, especially when you’ve lived in it for 15 years like Jacquelyn and Douglas Thompson.
During COVID, the Greenville County couple fell on hard times and they responded to a TV ad from a company called Worthy Offer Team that said it would “sell your house fast.”
“We made a mistake signing our name on something that they sent over the phone, and from that point on they threatened to take our home,” said Mr. Thompson.
Signing the contract
The Thompsons said they were asked to electronically sign a document they thought was giving permission to look into a sale, but soon learned it was the sale.
Their Greer home, with online estimates of nearly $140,000, was now selling for roughly what they had put into it, $60,000 to Michael Fitzgerald the owner of Worthy Offer Team.
“The scariest time for me was when they told us we had to be out in three days,” said Mrs. Thompson.
The Thompsons showed 7NEWS an email from a Worthy Offer Team employee threatening legal action if they didn’t comply.
Over the next few weeks, they were visited by a barrage of people, one of whom handed them a contract from another company called New Western.
It said if they continued to stay in the home, they would have to pay a $1,200 occupancy fee and daily damage.
When the Thompsons reached out to 7NEWS Here to Help, they said they had no idea their home was being wholesaled.
That’s where “Company A,” the wholesaler, gets the home under contract and then sells that contract to Company B, a real estate investor, who sometimes sells it to other investors before the closing ever occurs.
We asked Fitzgerald with Worthy Offer Team about the confusion.
“I hate to hear that because I have no idea where the pressure would have come from because after we assign our interest to our strategic partner we aren’t part of that,” according to Fitzgerald. “But I would always suggest that the seller that has the original agreement with us, if they are ever feeling pressure come directly to us because that is the person you built the relationship with.”
Understanding wholesale real estate
Greenville Attorney Bryan De Bruin said the quick sales that are a hallmark of wholesale real estate can benefit struggling homeowners who need to sell fast. Still, he cautions, since the transactions don’t involve real estate agents sellers can find themselves at a disadvantage.
“The warning is being unrepresented in any transaction of this magnitude leaves you open to someone having information and knowledge that you just didn’t even know you were supposed to know, so the sumation of that is be represented before you sign a contract,” said De Bruin.
De Briun said watch out for buyers who:
- Fail to disclose they are wholesalers
- Offer one page contracts you sign electronically
- Don’t disclose the end buyer
In the case of the Thompsons, the end buyer was New Western. CEO Stuart Denyer said when they bought the contract, they had no idea the Thompsons didn’t want to move.
“We were unaware of what they were wanting and weren’t involved in that initial transaction so we tried to make that accommodation when we became aware of their need or desire for that…I think if ever they get uncomfortable, they should absolutely stop the transaction,” said Denyer.
“We had started packing. We had packed up our whole life. I talked to you, and they stopped calling us and I started unpacking,” said Mrs. Thompson to our 7NEWS crew.
“I’m hoping we can save somebody else from remotely going through what we went through because it was frightening,” according to Mr. Thompson. “We came that close. If we hadn’t called Channel 7 we don’t know where we would have been.”
7NEWS also helped connect the Thompsons with the SC Help Program so they could get caught up on their mortgage payments.
The South Carolina Real Estate Commission has created a task for to review the practice of wholesale real estate to see if it requires licensing.