With Terry Story, a 31-year veteran with Keller Williams, located in Boca Raton, FL
In this week’s Real Estate Roundup, Steve and Terry Story, who’s now got 31 years of experience with Keller Williams Realty in Boca Raton, had a conversation about selling your house quickly for cash. They also talked about the effects of aging baby boomers on the housing market.
Sell Your House For Cash Today
You’ve seen the signs on billboards or posters that read, “We Buy Ugly Houses”, or just, “Cash for Your House”. Steve asked Terry to explain the nature of that part of the real estate business.
She calls the people in that business “wholesalers” because that basically describes how they make their money. They look to buy houses at “wholesale” prices and sell them at “retail” prices. Terry explained how it works. “They buy houses, sometimes fix them up and then flip them, or they just buy them and flip them the same day. Say you want to sell your house right now. You call one of these numbers you see in an ad, and they write a contract to buy your house. A lot of times they assign it to a real buyer they already have lined up. As a seller, what’s really important to understand is that you’re selling your home at a severe discount.”
How The “Cash Right Now” Business Works
A successful real estate wholesaler makes their money by buying houses at a large discount and then quickly reselling them for a hefty profit. They can get a low price because they’re offering cash, and they’re offering to do the deal right now. If you’re a strongly motivated seller, for whatever reason, the offer of cash-in-hand right now may make you willing to sell your house for a lot less than it’s actually worth.
Steve offered an example to clarify things for listeners. “Say I’m in this business, and I have a buyer already lined up, willing to pay, let’s say, $140,000 for this house that’s worth $150,000. I go to the house. Maybe it’s owned by an elderly person who’s owned the house free and clear for years. I tell them, ‘I can give you cash today, no hassles, no long real estate closing time. I’ll give you 30 days to move out or whatever and I’ll give you $90,000 for your house.’ And they may think, ‘That’s good cash. That’s more cash than I’ve ever seen before.’ If the homeowner takes the deal, then I’ve already got a $50,000 profit locked in, since I have a buyer waiting with $140,000.”
The huge discount from the home’s value may make this kind of transaction look bad, like the buyer is maybe taking advantage of an elderly person, but there’s nothing illegal about it. Terry stressed the point that what homeowners need to know is that even if they’re desperate to sell their house quickly, they should still take the time to consult a professional real estate agent and get an appraisal. That way, she said, “If you still decide to sell it, at least you’re informed.” Steve agreed, urging sellers to at least do some minimal research on what their home is worth. He said, “I mean, at least go on online and pull up Zillow or something.”
That specific bit of advice prompted Terry to note to listeners that sites like Zillow don’t really provide accurate home values. The numbers you see on a site like that should be ignored as valid appraisals and only taken as very rough numbers. Those numbers are neighborhood averages. Zillow hasn’t really seen your actual house. For instance, they don’t know if you’ve completely remodeled the kitchen or the bathrooms. You might have a house right on the beach, but Zillow is averaging prices in the neighborhood that includes homes that are four or five blocks off the beach.
The Effect Of Baby Boomers On The Housing Market
Steve next turned the subject to the impact of aging baby boomers on the housing market. He started things off by quoting some recent statistics, saying, “Basically, boomers own one-third of all US properties, single-family homes and the like. And 27% of them will sell their home sometime within the next 20 years.” Terry contributed some more information: that between 2007 and 2017, roughly 730,000 homes were offered for sale by seniors, those over 60. She added that this is a trend that’s projected to keep growing for the next couple of decades. According to Terry, “From 2017 to 2027, they anticipate that number rising to 920,000 homes. And then from 2027 to 2037, we’re looking at 1.17 million homes for sale by boomers – and that’s per year for that whole decade.” She then made the point that this could lead to a really nice buyer’s market, since adding that many homes to the “for sale” inventory should put downward pressure on prices.
Terry wrapped up their conversation by joking with Steve, saying, “So, call me now to sell your house while prices are still up. Don’t wait 20 years.”
To learn more about buying or selling your home, you can connect with Terry at Keller Williams Realty.
Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.
Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent Terry Story. Terry is a 31-year veteran with Keller Williams located in Boca Raton, Florida. Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: So nice to see you in the studio once again. You know when you’re driving down I95 and you see these signs, We Buy Ugly Houses or you see a sign on an exit on 95 and it goes, Cash For Your House.
Terry Story: Cash for your house. Yep, yep, yep, yep.
Steve Pomeranz: What is that and what’s that kind of business-like?
Terry Story: Sure. Well, I’m going to call it a wholesaler. So they buy houses, sometimes fix them and flip them or they just buy them and flip them the same day. So what does that look like? So let’s pretend that you need to sell your house and you want to sell it right now. You call one of these guys, they go over there, they write a contract. They’re paying you significantly less than it’s worth. A lot of times they actually take the contract and assign it to…they already know a buyer, a real buyer for it. So as a consumer, as a seller of the property, what’s really important to understand in all of this, there’s nothing illegal with this, but understand that you’re selling your home at a severe discount.
Steve Pomeranz: You could be selling it.
Terry Story: You could be. Most likely you are.
Steve Pomeranz: So let me give you an example. So let’s say I was in this business, and I knew I had a company that was willing to buy … the houses in the neighborhood were kind of worth $150,000. And I had a buyer I knew that company would be interested in, or I had an individual investor lined up, willing to pay, let’s say $140,000. And I get that commitment. Now I come to a house and it could be an elderly person, and I say, “Okay, well, you know, I can give you cash today, no hassles, no long real estate closing. Today. I’ll give you 30 days to move out or whatever and I’ll pay you $90,000.” And they may say, “That’s good cash. That’s cash I’ve never seen before. I own the house outright.” And the seller has locked in $50,000 profit, and there’s something really egregious about that. But it’s not illegal.
Terry Story: Not illegal. Here’s the buyer or seller beware in all of this. If you’re going to put your home up for sale, you really need to consult a professional real estate agent to come out and do a valuation of the home. You can get a couple of agents. Get an evaluation or turn to an appraiser and get it properly appraised. If you still decide to sell it, I call it wholesale selling, at least you’re informed. So that’s the key. I believe that there is and could be potential bad dealings for those that are unaware of what’s going on.
Steve Pomeranz: Yeah. So again, I think what we’re trying to say here is that some of these people can or will prey on the elderly and the uninformed. And I mean, for goodness sake, go on online and pull up Zillow or something like that. It’s easy to get a good feel for what things are worth and just basically say no until you’ve had a chance to check it out. Don’t make any quick decisions.
Terry Story: Right. And Zillow’s not accurate, by the way.
Steve Pomeranz: I knew you were going to say that.
Terry Story: I can’t let that go.
Steve Pomeranz: No, it’s fine. That’s fine. Why isn’t it accurate?
Terry Story: It’s not accurate because how does Zillow, huge company, know what your home value is? It hasn’t been in the house. It doesn’t know if you have an updated kitchen, updated baths. It takes averages of a whole area, so you can be on the waterfront and averaging it to the houses across the street that are dry lots. It’s a good thing to watch to see the trends.
Steve Pomeranz: To see trends. That’s good, yeah.
Terry Story: And it will give you good information on “solds,” but other than that, that Zestimate or whatever they call it, forget it, don’t even look at it.
Steve Pomeranz: Yeah, I would agree with that. I mean I live in a community that is a nice community, but kind of surrounded by not so nice communities. Not terrible, but not as nice. And I know that my home is being priced-
Terry Story: Averaged down.
Steve Pomeranz: Averaged down. Yeah. So I look at that and I get aggravated, but I realize that it’s not that accurate.
Terry Story: It’s so funny when I go on a listing appointment, I’ll ask the seller, I’ll ask them point-blank. “So do you have any idea of what your home is worth? Have you gone to Zillow or other sites?” They all say yes. They know.
Steve Pomeranz: They know. Of course, they do.
Terry Story: Why do they look there?
Steve Pomeranz: Of course, because it’s easy access to information. I guess you get what you pay for, but it is very easy and they’re using an algorithm that averages out everything. Okay. So you get that off your chest.
Terry Story: Yes, I did. I feel so much better.
Steve Pomeranz: Well, that’s good. Changing the subject, and this is important because we’ve been talking about the lack of inventory in the real estate business for quite some time. And yet as the years tick by, the baby boomers are getting older and older and older. And I saw some statistics that kind of spoke to this very accurately, and I thought we would share them with our listeners.
Terry Story: Sure, sure.
Steve Pomeranz: All right, so let’s see where to start here. Basically, boomers own one-third of all US properties, I guess single-family homes and the like. 27% of them will sell their home within the next 20 years.
Steve Pomeranz: So this is kind of interesting because now we’re not looking out 40 years and 50 years. We’re talking about just the next 20 years.
Terry Story: Right. Well, I’m kind of bummed out because that’ll put me at 57, 67, 77 years old towards the end of my sales career.
Steve Pomeranz: I was just going to say, knowing you, you’ll still be in the business.
Terry Story: I think I’m going to hang out and wait for this boom.
Steve Pomeranz: You’ll be going around going, “No, I remember a night in 2019 you know, this happened.”
Terry Story: Right. Exactly. And again, this is kind of like we talked earlier on another show about climate change. You’re either a believer or a denier. Kind of the same theory. We don’t really know, but it’s-
Steve Pomeranz: We don’t know, specifically-
Terry Story: We don’t know, specifically.
Steve Pomeranz: But we do know that people don’t live-
Terry Story: Well, people die.
Steve Pomeranz: Forever.
Terry Story: There are certain facts in all of this. So, for example, between 2007 and 2017, roughly 730,000 US homes were released into the market by seniors aged over 60.
Steve Pomeranz: Yeah. Hold on. I just want to say that again. So what were the dates? 2007 to 2017. For the last 10 years, ending in ’17, 730,000 US homes were released into the market or put up for sale.
Terry Story: Correct. For people over 60.
Steve Pomeranz: The projection now is what?
Terry Story: From 2017 to 2027, they anticipate it to rise to 920,000.
Steve Pomeranz: That’s a pretty big rise.
Terry Story: Right. And then from 2027 to 2037, they’re looking at 1.17 million.
Steve Pomeranz: Per year.
Terry Story: Per year.
Steve Pomeranz: Okay. So look, 27% of the homes in the country are owned by baby boomers. Baby boomers are getting older. We’re talking about years now. We’re talking about 17 years from now, 2037. I’m not going to tell you how old I will be, but I will be pretty ancient at the time and guess what? I know I’m going to be selling my house sometime probably before that or maybe at that date. So I think it’s very logical, what you’re saying here, so this is good.
Terry Story: It is logical.
Steve Pomeranz: So this is good for the real estate agency. However, particularly, it’ll be very good for those areas that see people coming into the marketplace, right?
Terry Story: It could be great buying opportunity.
Steve Pomeranz: Well, if there’s more homes for sale and the demand doesn’t change, then prices should-
Terry Story: Then prices will drop.
Steve Pomeranz: Flatten out or drop.
Terry Story: So get out now. Call me. Don’t wait 20 years.
Steve Pomeranz: I’m going to leave it at that because you know what question I’m going to ask you next, but we are out of time. My guest as always is Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, Florida, and she can be found at terrystory.com. Thanks, Terry.
Terry Story: Thanks for having me, Steve.