Homeowners in small town America say they’re being pestered with speculative inquiries on their homes, even though they’re not listed for sale.
And in some cases the speculation is hitting ridiculous levels, with one homeowner claiming to have received over a hundred such offers!
In an interview with the Wall Street Journal, Chuck Vukotich said that he typically receives queries on his small, yellow-brick home that’s located in a working class neighborhood of Penn Hills, Pa., several times a week. He said that his home, which is 15 miles from downtown Pittsburgh, isn’t listed for sale, nor does he have any intentions to do so.
Nevertheless, he reckons he has received more than 100 inquiries about selling his home, mostly through fliers stuffed in his mailbox asking if he’s interested in an all-cash deal and a quick closing.
“I don’t mind somebody trying to make a buck,” he told the Journal. “But it’s kind of a pain in the butt.”
It used to be the case that these kinds of unsolicited offers were only really seen in larger cities, on homes deemed to be particularly desirable due to their location near large employment centers and with lots of amenities nearby. But the low inventory of homes for sale is plaguing every niche in the housing market and has prompted real estate speculators to look elsewhere.
Now, they’re increasingly on the hunt in smaller towns and suburban areas for homes, seeing an opportunity amid the tight supply and huge demand from buyers. Investors are searching for relatively inexpensive homes that can possibly be flipped or rented at a profit.
Nick Schindehette, an investor in the Pittsburgh area who claims to be able to close on an all-cash offer in just two weeks, told the Journal that he sends anywhere from 5,000 to 20,000 pink note cards a month to homeowners across 20 ZIP codes asking if they’re interested in selling. His cards typically say something such as “Could we possibly discuss making you a cash offer? Either way, please let me know.”
Schindehette said the response rate for his cards is around 1%, and that the majority who accept his offer are those that need to sell quickly, for whatever reason. He said that using this tactic, he’s completed around 50 deals in the areas he targets. He then rents out those properties or does them up and sells them on. He considers the areas to be “C+ neighborhoods” where homes are more affordable but can still be sold or leased fairly rapidly.
The approach is not only being used by real estate investors. Some agents have also reported making unsolicited bids for homes on behalf of their clients, who simply want to find a house to live in. In April, Ryan Waller, an agent with Home Group Realty in Ontario, said that when one of his buyers is unable to find a suitable home, he takes a stroll with them around whatever neighborhood they're interested in, to look for homes they might find desirable. If they find any, he helps his clients to draft a letter asking the homeowner if they might consider selling.
He said although it might be considered an unusual tactic, he has had surprisingly good results as some homeowners aren't aware of how much their home's value has appreciated over the last year.
That said, some investors have been accused of making lowball offers on unlisted homes, before quickly doing them up and selling them on for huge profits.
Vukotich told the Journal he has received a number of very low offers for his home, as well as some that might be fairer, but he hasn’t entertained any of them. Several of Vukotich’s neighbors reported offers in the region of $50,000 for their homes, but an investor model shows that a fixed up home in the Penn Hills neighborhood could sell for around $115,000 to $120,000, showing just how profitable those lowball offers can be.