The three young men standing in my kitchen who wanted to buy my house for cash gave off the vibe of fraternity brothers. Or at least frat boys who enjoy slumming. I’ll grant they were more personable than the scads of fake-cheery postcards and pseudo-friendly texts and calls I receive daily. Especially the letter from one opportunist who wrote “…hope you’ve been reading my letters and not throwing them away as they cost me a lot to print and mail out.” But what they all have in common is promising to buy my house “as-is for FAST CASH.”
By the time I’d dumped enough of these postcards to gag my recycling bin it occurred to me to check out these people and their business model. I returned a text to a random message. Talked to someone who said they could set up a meeting between me and the three frat boys.
The house in Durham where we met is one where I had lived happily for years before meeting my wife. When we decided to move in together, we rented out my old house and I moved into hers (her best friend lived next door, so there was never a debate about whose house we’d live in).
I had no plan to sell, but I was willing to entertain offers. After a tour of the place, we chatted a bit. When one mentioned they’d all decided to work together because their “values aligned,” I found my opening: the “V” word. What were those values? They looked at each other, said they chose five values, but could only remember three. One guy had to look up the other two on their website.
The ones they remembered were: 1) Be an entrepreneur, 2) Have grit and 3) Make it fun. None of these seemed valuable to homeowners. The two other values that might matter more—Commit to excellence and Do the right thing—had slipped their minds.
After they left, I checked out their website and found they had neglected to mention another value: “Our proprietary marketing system allows us to acquire properties ‘off-market’ for prices significantly under market value.”
I think that admitting to “acquiring properties … under market value” is a euphemism for the other “V” word: “Vultures.”
Before we even met, via text, sight unseen, they had offered me just $192,000 for my 1,300 square-foot bungalow on a double lot, a mere ten-minute walk from Duke Campus.
After our meeting they sent me this offer: “All-cash – $226,500- cash is cash!” I turned to the real estate website Zillow, which says the market value on my well-cared for house is $302,000 (bought for $80,000 more than 20 years ago). But even Zillow isn’t keeping up with prices in Durham. Many sell way above their list price. A similar house next door had sold for over $400,000. And the one next to it—which rented for $250 a month when I lived there in the ‘80s—for nearly a million. Cash is cash!
The Triangle Business Journal recently commissioned a study of Triangle housing conditions which showed that as many as 34 percent of houses were bought not by homeowners but “entities that are preying on this market to make a profit.”
Is there anyone who doubts these buyers—they call themselves “wholesalers”—are exploiting people with a small grasp of the true market value of their home, even when sold as-is? Any homeowner who takes a quick look at Zillow could watch these low-ball offers collapse like a house of spent gift cards. The Venture-Stack site shows them marking up homes by 20 percent to over 100 percent above what they paid. Almost all homeowners exploited by these wholesalers could have made a shit-ton of free money with no effort and only a little extra time, just by engaging even the dumbest realtor in the Triangle (nothing against realtors—just making a rhetorical point). So imagine how much more a homeowner could make with an average realtor even when you factor in their 6 percent fee. Why let these wholesalers rake in the profit? Why not cut out the fast-talking, low-balling middleman?
It’s no wonder I meet so many young couples lamenting that they can’t find an affordable fixer-upper anymore. Many of these “wholesalers” are buying older homes for under $150,000, then selling them at a big profit to someone who remodels houses, who then makes a mint selling to a tech bro.
And this is a national problem. The pro-business website Bloomberg.com, in an article titled, “Fast-Cash House Flippers Flood Poor Neighborhoods,” states, “Critics say cash-for-contracts deals dupe distressed owners …. States and cities in the U.S. are cracking down on a niche in house-flipping known as wholesaling conducted by a flood of largely unlicensed middlemen lured in by YouTube tutorials and a torrid market.”
In 2020, Philadelphia demanded a license for these wholesalers and mandates they tell owners how they can obtain fair-market value. Illinois has begun regulating these wholesalers. Even red states are curbing their ethical breaches. Oklahoma requires wholesalers to be licensed and has set rules for them. Arkansas began regulating wholesalers in 2017.
When is Durham going to crack down on this mining of equity in poor neighborhoods? I could not find any active program in Durham aimed at keeping homeowners from losing wealth to wholesalers.
Real estate agents are deathly afraid to talk about this issue for fear of being targeted by these wholesalers and losing their licenses. Perhaps some retired realtors would be willing to talk?
Could neighborhood associations and affordable housing advocates help marginalized homeowners learn to use Zillow and recognize the true market value of their homes? Could they vet realtors who could keep wholesalers from raiding our neighbor’s hard-won equity?
Could these efforts open up more housing to young couples who want to build their wealth through sweat equity?
The answers are “yes” but we can only protect our neighbors’ homeownership capital if some people start spending their political capital.
Frank Hyman has held two local elective offices and wishes he had saved the hundreds of FAST CASH postcards he received just so he could burn them on the downtown plaza. Read his other essays at www.bluecollarcomeback.com
Support independent local journalism. Join the INDY Press Club to help us keep fearless watchdog reporting and essential arts and culture coverage viable in the Triangle.
Sweat Equity Won’t Get You a Home in the Triangle Anymore
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The three young men standing in my kitchen who wanted to buy my house for cash gave off the vibe of fraternity brothers. Or at least frat boys who enjoy slumming. I’ll grant they were more personable than the scads of fake-cheery postcards and pseudo-friendly texts and calls I receive daily. Especially the letter from one opportunist who wrote “…hope you’ve been reading my letters and not throwing them away as they cost me a lot to print and mail out.” But what they all have in common is promising to buy my house “as-is for FAST CASH.”
By the time I’d dumped enough of these postcards to gag my recycling bin it occurred to me to check out these people and their business model. I returned a text to a random message. Talked to someone who said they could set up a meeting between me and the three frat boys.
The house in Durham where we met is one where I had lived happily for years before meeting my wife. When we decided to move in together, we rented out my old house and I moved into hers (her best friend lived next door, so there was never a debate about whose house we’d live in).
I had no plan to sell, but I was willing to entertain offers. After a tour of the place, we chatted a bit. When one mentioned they’d all decided to work together because their “values aligned,” I found my opening: the “V” word. What were those values? They looked at each other, said they chose five values, but could only remember three. One guy had to look up the other two on their website.
The ones they remembered were: 1) Be an entrepreneur, 2) Have grit and 3) Make it fun. None of these seemed valuable to homeowners. The two other values that might matter more—Commit to excellence and Do the right thing—had slipped their minds.
After they left, I checked out their website and found they had neglected to mention another value: “Our proprietary marketing system allows us to acquire properties ‘off-market’ for prices significantly under market value.”
I think that admitting to “acquiring properties … under market value” is a euphemism for the other “V” word: “Vultures.”
Before we even met, via text, sight unseen, they had offered me just $192,000 for my 1,300 square-foot bungalow on a double lot, a mere ten-minute walk from Duke Campus.
After our meeting they sent me this offer: “All-cash – $226,500- cash is cash!” I turned to the real estate website Zillow, which says the market value on my well-cared for house is $302,000 (bought for $80,000 more than 20 years ago). But even Zillow isn’t keeping up with prices in Durham. Many sell way above their list price. A similar house next door had sold for over $400,000. And the one next to it—which rented for $250 a month when I lived there in the ‘80s—for nearly a million. Cash is cash!
The Triangle Business Journal recently commissioned a study of Triangle housing conditions which showed that as many as 34 percent of houses were bought not by homeowners but “entities that are preying on this market to make a profit.”
Is there anyone who doubts these buyers—they call themselves “wholesalers”—are exploiting people with a small grasp of the true market value of their home, even when sold as-is? Any homeowner who takes a quick look at Zillow could watch these low-ball offers collapse like a house of spent gift cards. The Venture-Stack site shows them marking up homes by 20 percent to over 100 percent above what they paid. Almost all homeowners exploited by these wholesalers could have made a shit-ton of free money with no effort and only a little extra time, just by engaging even the dumbest realtor in the Triangle (nothing against realtors—just making a rhetorical point). So imagine how much more a homeowner could make with an average realtor even when you factor in their 6 percent fee. Why let these wholesalers rake in the profit? Why not cut out the fast-talking, low-balling middleman?
It’s no wonder I meet so many young couples lamenting that they can’t find an affordable fixer-upper anymore. Many of these “wholesalers” are buying older homes for under $150,000, then selling them at a big profit to someone who remodels houses, who then makes a mint selling to a tech bro.
And this is a national problem. The pro-business website Bloomberg.com, in an article titled, “Fast-Cash House Flippers Flood Poor Neighborhoods,” states, “Critics say cash-for-contracts deals dupe distressed owners …. States and cities in the U.S. are cracking down on a niche in house-flipping known as wholesaling conducted by a flood of largely unlicensed middlemen lured in by YouTube tutorials and a torrid market.”
In 2020, Philadelphia demanded a license for these wholesalers and mandates they tell owners how they can obtain fair-market value. Illinois has begun regulating these wholesalers. Even red states are curbing their ethical breaches. Oklahoma requires wholesalers to be licensed and has set rules for them. Arkansas began regulating wholesalers in 2017.
When is Durham going to crack down on this mining of equity in poor neighborhoods? I could not find any active program in Durham aimed at keeping homeowners from losing wealth to wholesalers.
Real estate agents are deathly afraid to talk about this issue for fear of being targeted by these wholesalers and losing their licenses. Perhaps some retired realtors would be willing to talk?
Could neighborhood associations and affordable housing advocates help marginalized homeowners learn to use Zillow and recognize the true market value of their homes? Could they vet realtors who could keep wholesalers from raiding our neighbor’s hard-won equity?
Could these efforts open up more housing to young couples who want to build their wealth through sweat equity?
The answers are “yes” but we can only protect our neighbors’ homeownership capital if some people start spending their political capital.
Frank Hyman has held two local elective offices and wishes he had saved the hundreds of FAST CASH postcards he received just so he could burn them on the downtown plaza. Read his other essays at www.bluecollarcomeback.com
Support independent local journalism. Join the INDY Press Club to help us keep fearless watchdog reporting and essential arts and culture coverage viable in the Triangle.
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