Don’t sell your house cheap
Local real estate professionals urge caution on cash-for-your-home schemes
Last fall, utility poles in Roxbury, Dorchester and Mattapan were mostly bereft of adornment, aside from the occasional campaign sign left over from legislative races.
But with spring came a flowering of corrugated plastic signs bearing messages of hope for beleaguered homeowners: “We buy houses cash,” “Tired landlord? Need 2 sell fast?” and “We buy houses $$$.”
The signs, which companies illegally staple to wooden utility poles or attach to metal ones with plastic ties, are one of the more troubling signs of the city’s overheated real estate market. With home values across the city at an all-time high, speculators are looking to make a quick buck on distressed properties, distressed owners or gullible owners looking to make a quick exit.
And some community members are not pleased.
“I, for one, rip them down whenever I see them,” said Jose Lopez, who resents seeing the signs in his Roxbury neighborhood. “Roxbury is not for sale. I’m not going to make it easier for people to come into where I live and prey upon my neighbors.”
A half-price offer
Real estate broker Alex Edwards called one of the cash-for-your-house firms recently.
“Just to see what their process is and what they’d offer,” he said.
While Edwards’ five-bedroom, two-family Dorchester home has an assessed value of $650,000, the firm offered him $310,000.
“It would have been a fabulous deal in ’08,” he said.
That offer was below the 60 to 70 cents on the dollar that national firms such as HomeVestors (the company that has trademarked the phrase “We buy ugly houses”) typically pay homeowners for real estate. While sellers going through a traditional broker won’t receive cash within 24 hours, a competitive bidding process always favors the seller, Edwards notes. With median home prices in Roxbury at $680,000 as of 2016, according to Boston Magazine, most owners should have sufficient equity in their homes to walk away from a sale with some cash.
“Even if your house needs work, you could take off $100,000 and still walk away with $580,000,” Edwards said.
A quick buck?
While critics say entrepreneurs who flip homes are doing little more than separating guileless owners from the equity they’ve built in their homes, flipper Tyrone Smith, who answered to a phone number posted on one of the many “Tired landlord?” signs he’s posted in Roxbury and Dorchester, defends his work. He said his service is aimed at sellers who have run out of options — landlords with nonpaying tenants who won’t vacate, homeowners with properties they can’t afford to maintain and people facing foreclosure.
“I deal in cash,” he said in a telephone interview. “I don’t charge a 2.5 percent broker’s fee. It’s a quick process. They don’t have to deal with foreclosure.”
Although he’s dealing with competition from national firms that have ad budgets sufficient to purchase space on billboards and from smaller operators, with whom he competes for space on utility poles, Smith, who worked as a photographer before getting into real estate, said Boston is a good market.
“You have an opportunity to make money in a legitimate fashion,” he said. It’s not quick money, but it’s quicker than most.”
Smith, who grew up in and lives in Boston, said he often drives through the city looking for distressed properties. Junk on the front porch, peeling paint, uncut grass and rotting window frames are among the signs indicating that an owner is unwilling or unable to keep up a property. Using a special service, Smith can take a photograph of a distressed property and hit send. The service will automatically mail the owner a postcard with a message addressed to the owner offering a cash sale.
Resisting the quick sale
Before responding to unsolicited offers from cash buyers, Boston Home Center Deputy Director Maureen Flynn said, owners should reach out to her office, which works with four nonprofit entities to help keep people in their homes.
“If someone’s calling you, most likely, it’s not a good deal,” Flynn said. “It’s probably not the best price you’ll get for your home.”
The Home Center, operated by the City of Boston, monitors homes that have gone into default and reaches out to owners, offering assistance ranging from restructuring or refinancing loans to agreements to allow owners to stay in their homes during foreclosure.
Last year, the Home Center, working with Urban Edge, Nuestra Comunidad, the Ecumenical Social Action Committee and Mattapan Family Services opened 233 cases and helped 222 owners stay in their homes. Of the remaining 11 cases, several are still being resolved, Flynn said.
It can be difficult to reach people who are in arrears on their mortgage. Whether they’ve lost a job or suffered a different financial setback, the stress of the steady stream of threatening phone calls and urgent notices prompts many beleaguered owners to stop opening their mail. That’s where the “cash for your home” operators’ post cards come in handy.
Flynn advises that it’s always a mistake to go that route.
“They should instead call us at the Boston Home Center,” she said.
To contact the Boston Home Center, call 617-635-4663 or visit https://www.boston.gov/departments/neighborhood-development/boston-home-center