Selling Your Home to an iBuyer with The Zembala Group
For your ease, we have provided a transcript of Evan and Dave’s conversation. Enjoy!
Dave: What’s up guys? I’m here with Evan Shelley. He is a wholesale specialist. How’s it going man?
Evan: Good, how are you?
Dave: Good, thanks for coming on.
Evan: I appreciate it.
Dave: So, Evan does a little bit of a more nuanced sale than I do typically. I’m more of a retail specialist and searching the MLS as well as homes, you know, for Sale By Owner, etc., but tell me a little bit about what the wholesale process is for you and maybe what type of properties you guys are concentrating on.
Evan: Typically what I’m working with are properties that have issues like title issues, like a probate case that maybe it’s 20 years old. Tax delinquency, if a property needs to be redeemed in the next week or two weeks or it’s gonna go to tax auction I’m gonna save properties from those sales and then also I really work a lot with properties that need a lot of work. Rehabs in the 50 to hundred thousand dollar range. Those types of properties are what I like to specialize in.
Dave: We’ve been hearing a lot about this iBuyer – you know – scenario and I wanted to kind of ask you because you’re, you come up against that sometimes. Sometimes that actually can be a good benefit for people. Can you kind of explain when that would be good versus working with someone like yourself?
Evan: One of my biggest competitors is Zillow Offer, Offer Pad, Open Door – but in reality they’re not a competitor to the properties that I’m looking for. I’m looking for properties that are more distressed than what an Open Door would want to buy. An Open Door wants to buy a property that they go in maybe change the carpet, change the floor, throw some new paint on and they’re done and the property doesn’t need to be too old. Whereas, I’m looking for properties that have extensive repairs, title issues, maybe something a lien on title that’s gonna be complicated to fix. Someone like an iBuyer like Open Door and Offer Pad, they’re not even gonna mess with those properties. They’re gonna just hand those on to someone else or just tell them that they can’t give them an offer. Whereas my company, Meli, we actively take on those properties. It may take days, weeks, months to clear up title or figure out what’s going on with the rehab, but we will take on those properties.
Dave: Yeah, and as a regular agent like myself we can handle stuff like that, but it is like Evan said, it is much more complicated and there can be you know months and months so you’re not gonna see as many of those things on the MLS, for example, because you do need a clear chain of title in order to close that sale. When would it behoove someone to use an iBuyer scenario versus someone like myself?
Evan: The biggest differentiator that I see between a realtor and an iBuyer is that the seller of the home is wanting to get out of the property very fast and have a guaranteed cash offer for that property. Typically, you know, someone like Zillow Offer can close within 14 days, assuming clear title, whereas they’re not gonna get top dollar. That’s the thing that you need to understand. A home seller that’s using an iBuyer will not get top dollar, but they will have a guaranteed transaction in probably 14 days and with a realtor it may possibly be a slower process but with a good realtor like Dave.
Evan: You are going to get top dollar for your property and it’s going to be a smooth transaction. So that’s the biggest differentiator that I see.
Dave: You know some people are in a position – they need that money fast, or like, you know, have something to do, et cetera, but most people that’s their, one of their most important assets so to take what I’m not sure if it’s a around 9% of a hit, and that’s a huge percentage.
Evan: It can be more.
Dave: Yeah it can be more exactly. So, you know, I’ve had situations where we’ve gone to these iBuyers and they wouldn’t even consider the property for one reason or another. Yeah, look we are trying to do is try to educate people about this process and sometimes it’s not all black and white, you know, to work with a wholesaler if you have some liens on your property or if you need to, you know, get out of that house fast, maybe a iBuyer scenario, you know, is your best option. You have to make those decisions and talk to some qualified experts and do some research on your own before making this important financial decision.
Evan: The benefits of dealing with a reputable realtor or a reputable home buyer or wholesaler is they’re gonna tell you what your best path is. I have plenty of clients that come to me and I can’t give them an offer that makes any sense. I tell them, you know, you need to see a realtor a reputable realtor or if you’re needing cash match an iBuyer is going to be able to give you a better offer than I can because I can’t take that much risk on a transaction. So, if I think the biggest thing is dealing with someone reputable. Dealing with someone that you trust and you have a relationship with. No matter if, you know, you need to sell your property for cash fast or you need a list of properties.
Dave: Yeah, or you might not have to sell your property. Maybe you have equity in it, you just need to refinance it until you get your feet, you know, in a better place financially and then you can make that decision of do you need to sell now and then you can take your time with it.
Evan: Yeah, absolutely. I agree with that.
Dave: Yeah, tell me like an example recently that you’ve had a scenario that worked well for you and worked well for the client.
Evan: Last week, I closed on a property where it was an interesting situation especially with the hurricane that came through. The property was going up for tax deed sale last Thursday. We could not close that property before Thursday due to a title issue, okay, so I’ve made a promise to the seller that I would save the property from the tax deed sale. So, I redeemed the tax certificate $7,000 up front, that was my risk, okay the seller at that point we were under contract, but there was significant risk for me. I redeemed the tax certificate on Thursday and then we closed the property on Friday, but those are the types of things that a reputable wholesaler or home buyer is gonna do for you. You’re not going to see someone that isn’t reputable take on that type of risk or develop that relationship with a seller, yeah, so that’s that’s one of the transactions that I look at and I say you know that is what simple sale of my company is all about.
Dave: So you said reputable, I think that sometimes wholesalers get a bad rep because they are doing some kind of, you know, not always above the board kind of stuff like you know simultaneous closings, etc, so tell me like what, what kind of pitfalls can you see and obviously that you try to avoid in this process.
Evan: I think the biggest thing that I see is transactions for a seller that is motivated needs to get out of the property and it gets held up in closing for what was supposed to be a 30-day transaction turned into a 60 or 90 day transaction because someone has the property under contract for more than what it’s worth, they’re not able to flip that contract. Now they’re stuck there making seller promises and the seller is believing them, they’re not wanting to lose out because every other offer they have maybe ten, twenty, thirty thousand dollars less. Which is a lot of times where I’m at, and I’m a lower offer but I’m telling them you know I’m going to get this transaction done for you, right, but there’s people that don’t understand the real estate market that are out there making offers, right. It makes it very difficult, and I think the worst part is it puts the seller in a really bad spot.
Dave: One of the things that I’ve heard about the iBuyers is they’ll give you one offer, but then they’ll do a little bit of research, and then they’ll basically do a bait-and-switch and it’ll be a lot less of a deal and then they’re kind of stuck if they’re in a time bind.
Evan: Yeah, so I get your expectations up right. The seller is like, “Well I’m gonna get 250 for this”, and then they get a Zillow inspector to come in and maybe they actually only get 200, but they’ve kind of put their life on hold for a couple weeks waiting, you know, for that offer. I would say that’s one of the biggest things I see. Also, another thing that I see, and I hate this, is getting a week before closing and then that whole seller will actually take – get the seller on the phone and say I can’t do it for X amount, I can’t do it for 200, I’m not gonna be able to get it done. I know we’re closing in a week let’s do it for 180. That and then what you see there is that person’s already spent that 200, maybe they’re flipping that into another house, you know, maybe they’re moving across the country, yeah. Maybe they have plans, you know, they have other plans set up across the country. What is that seller gonna do at that point? They have no other relationship with anyone else, at that point they plan their life out. They’re gonna take that $20,000 reduction and that is horrible, yeah, that is horrible.
Dave: At the end of the day, you just gotta try to, you know, do your research, work with reputable people, whether it’s an iBuyer or regular realtor or, you know, wholesale, you know, scenario so.
Dave: Hey man I really appreciate your time, it was interesting, and I’m sure people want to know more and we’ll put everyone’s information at the bottom so,
Dave: Appreciate it brother, alright man, cool.