What’s the deal with the We Buy Houses signs in Boston

Ever wonder what the “We Buy Houses” signs really mean? You see them mostly in the outer areas of Boston, usually in middle to lower priced neighborhoods, and older transitional areas with a lot of fixers. (I doubt you’ll ever see one in Beacon Hill) Often the signs seems homemade and haphazardly placed. The words “fast” and “cash” are on most. If you were to call this sign, would you really receive an offer to close fast, for cash?

Maybe, but probably not.

Bandit Signs: Boston real estate

The signs, called “bandit signs”, are actually a lead generation tool used by Boston real estate wholesalers and flippers. Some of these guys are actually legitimate Boston real estate investors looking for motivated sellers with dumpy homes who want or need to sell fast. 

The main goal is to make you an offer and get the home under contract at a price that will produce a profit on either a wholesale resell (selling the contract) or a rehab/flip.

What sort of offer will these guys (or gals) make you?

The formula is fairly universal and straight forward. 70% of market value minus repair costs. Market Value, also known in the business as “After Repair Value” (ARV), is the value of the home if it were in retail sales condition and able to sell to a buyer using a conventional mortgage.

So, let’s say you inherited an old junker outside of Boston that would sell for $225,000 in good condition, but it has a bad slab, bad roof, major plumbing problems, severe neglect and multiple trailer loads of junk to haul out of the rat infested back yard. And let’s say it would cost $100K to bring the home up to par, including the investor’s holding time costs, interest, insurance, utilities, risk factors, etc.

That home would be worth (0.70*225,000) – $100,000 = $57,500.

I’m over-simplifying the formula, and there are a lot of other components that go into the “repair costs” part, but this is an accurate “quick and dirty” computation. Also, the terms of the deal will often not be “all cash”, but instead some sort of creative financing. And, these deals are very, very hard to find.

Bottom Line

In almost all cases, the signs seek sellers for whom time or the “situation” is a bigger problem than foregoing top sales price.

Be careful. I think the “We Buy Houses” signs may create more victims than rescues. That’s because it’s not a regulated business, and you don’t even have to have a real estate license to do it. Nor do you need money. So all the risk is usually on the seller unless actually getting cash at closing.

Author Profile

John Ford
John Ford
EXPERIENCE

Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs



In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.



HISTORY

For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.

AREAS COVERED

Back Bay

Beacon Hill

Charles River Park

Downtown/Midtown

North End

South End

Seaport District

South Boston

Waterfront

Brookline

Surrounding Communities of Boston
Contact
John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.




John Ford
Ford Realty Inc
137 Charles Street
Boston, Ma 02114

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