Trade-ins enter Toledo area market
7/18/2009YOU RE READY to move but worried you won t be able to sell your existing house in a sluggish real estate market with nearly 8,000 residential listings in northwest Ohio alone.
What if a real estate agent or builder promised to buy the house if you were unable to sell after purchasing a house through him or her?
A limited number of agents and builders are making such offers.
Buy this house through me and I ll buy yours, reads a for-sale sign on the lawn of a $127,500 house on Convent Blvd. near Lourdes College in Sylvania. Your home sold in 120 days or we ll buy it.
It draws people to a listing, said Mike Rable, the agent who is selling the house.
The problem we see in real estate today is that, it s not that people don t want to buy. They have to get rid of one house before they can go to the next one.
But Mr. Rable and others caution that sales guarantees carry conditions and aren t suitable for all sellers.
And sales experts advise people considering signing up for such deals to study the details.
You have to be careful if you re a customer, said Jon Modene, owner of ReMax Masters in Perrysburg, where Mr. Rable is an agent.
He is familiar with Mr. Rable s plan and said it is above board.
But he urges customers to avoid programs he is aware of none going on in the Toledo area now in which an agent takes control of a house, pays nothing up front to the owner, and then finds a tenant in a lease-for-sale transaction that goes up in smoke and leaves the original owner on the hook.
Guaranteed-sales programs aren t new.
Builder Bill Dold, of Dold Homes in Perrysburg, estimates that he has taken in more than 250 homes in trades from customers over the past three decades.
It s been a very good program, he said. It s helped a lot of people to enjoy home ownership.
His program requires that the houses be in good condition and cost no more than $130,000.
The firm requires an appraisal and inspection.
Its purchase price is based on what we feel your present house will sell for, minus a 10 percent trade-in fee, company officials said.
Once the firm assumes ownership of a house, it typically leases it or attempts to sell it on land contract.
But Mr. Dold acknowledges that deals involving trade-ins have become more difficult to arrange as property values have slipped and sales have slumped.
We can only purchase homes for what they re worth, he said.
A lot of times now the mortgages are higher than the present value of the property.
Builder Forrester Wehrle Homes, of Sylvania Township, began taking trade-ins about two years ago.
It is negotiating with a few buyers now.
But once those deals are finalized, the company plans to phase out the program, said Jeff Wehrle, president.
Such deals have become more complicated, he said.
A spokesman for the National Association of Home Builders was unable to say how many builders nationwide take trade-ins.
The Internet is full of offers from sales agents nationwide promising, Your home sold in 120 days or we ll buy it.
Mr. Rable, of the ReMax Masters agency, said he has purchased three homes from customers.
His offer is open to people who buy a house listed by him without using an outside agent.
The listed house must be more expensive than the buyer s existing one.
He gets to list the second house and has 120 days to sell it.
If he is unable to do so, he will purchase the house at a discount.
The size of the discount varies by house, he said, adding that it would be larger for a house on busy street or in another less desirable setting. He didn t provide details.The size of the discount varies by house, he said, adding that it would be larger for a house on a busy street or in another less desirable setting. He didn t provide details.
He said he probably wouldn t buy a house valued at more than $250,000. (In two transactions examined by The Blade, the houses purchased were under $100,000.)
Because Mr. Rable represents both the buyer and seller in the original transaction, he doesn t have to split the commission typically 7 percent of the selling price with a buyer s agent. He also has the potential to make a commission from the sale of the buyer s house. It softens the blow when I have to buy a house, Mr. Rable said.
He doesn t promise to buy all houses.
Because the program requires that sellers be trading up to a more expensive house purchased through Mr. Rable, it excludes people who are leaving the area. It also doesn t include sellers planning to switch from owning to renting.
Buyers who need to sell an existing house know at the time of purchase if they will be accepted into the program and how much they will get for their place if the agent is unable to sell it in 120 days, Mr. Rable said.
To carry out the program begun about two years ago, Mr. Rable has backing from private investors in the Columbus area.
Acquired houses are either rented or sold through lease-to-own strategies, he said.
Craig Kuhnle is convinced that Mr. Rable s program helped sell his $210,000 home along River Road in Middleton Township even though Mr. Kuhnle wasn t eligible for the guarantee because his employer is transferring him to Chicago.
The agent could have had to issue a guarantee to the buyers if they had a home to sell.
But the guarantee didn t apply because the buyers had their own agent.
It helped attract attention to the house, Mr. Kuhnle said.
Mr. Rable s sign can also be found in the lawn of a home on Cobblestone Drive in Sylvania, but it isn t eligible for the guarantee because the owners do not plan to purchase a more expensive house, they said.
The Perrysburg agent s program was inspired, in part, by real estate guru and lecturer Craig Proctor, of Newmarket, Ont.
Mr. Proctor, who avoids homes over $500,000, has told other agents that he has issued hundreds of guarantees but has seldom had to purchase a home. It s rare that I m unable to sell a client s home when they ve met my conditions. he said.
We do not guarantee 100 percent of market value but typically 90 to 95 percent of market value, he told The Blade. If a Realtor was to offer 100 percent of market value sellers would have little reason to keep their home presentable or allow viewings.
The local program has not generated complaints to the Better Business Bureau of Northwest Ohio and Southeast Michigan nor to the Toledo Board of Realtors.
Spokesman Iverson Moore said the National Association of Realtors is aware that some agents are offering guarantees. He said sellers should make sure that agents offering guarantees have the financial means or the access to cash to complete the purchase.
Mr. Rable, who said he typically juggles about 30 home listings at any one time, said he has backed out of no guarantees.
He conceded that the program is no road to riches. I didn t get spikes in my income, but I maintained where I was at in a miserable business climate, he said.
Contact Gary Pakulski at:gpakulski@theblade.com or 419-724-6082.