Amid Canada’s devastating housing shortage, some homeowners may have noticed an increase in flyers asking for cash upfront to buy a property. One real estate broker explains that while these mysterious notes are legal, they are usually a strategy by investors looking to make a quick profit.
“They’re trying to get some value out of it,” John Passaris, president of Realosophy Realty in Toronto, told Your Morning’s Anne-Marie Mediwake on Thursday. “They’re investors and they’re preying on people who don’t know the value of their homes.”
Mr. Passaris warned that these investors would “lock the seller into a contract” but would never end up buying the home, instead gaining value by finding a buyer willing to pay market price. There is.
“They make money on the difference between what they pay and what someone else is willing to buy.”
What is wholesale trade?
The practice is legal in Canada, and Passaris says it’s “basically like wholesale,” but what is it?
Real estate wholesalers typically find and contract properties for sale and then find third-party buyers.
Passaris said that while it’s appealing to some sellers because they don’t “need to do any of the things” normally associated with selling a home, such as staging or open houses, the reality is usually different.
“They usually sell the house at a deep discount.”
How does it work?
Passari said these investors typically cast a wide net, “basically investing in everyone,” but particularly target older people who have lived in the neighborhood for decades. .
“These are elderly people who have been living in their homes for a long time,” Passaris said. “There’s probably no one who doesn’t know how much their home is worth.”
The presentation of the flyer can also be part of a facade to make it look like it’s coming from an individual looking to buy rather than an investor trying to get a deal before passing it on to other buyers.
“It looks like it was handwritten,” Passaris said. “They look like a family or…someone trying to get into the neighborhood.”
Passaris says it’s important to note that these offers are not made by a real estate agent and, in most cases, do not result in the actual purchase of a home.
“They’re basically making money by passing the contract on to someone else.”