Understanding Middle Tennessee Offers: Contingencies and Red Flags
Brad:
The Middle Tennessee market is the best. What are some things you recommend a seller watch for when receiving offers on their property in the Middle Tennessee area?
That’s a great question and one we address with many people.
Checklist for Company Due Diligence
A few key considerations come to mind when evaluating a company.
1. Online Presence
First, can you find them online? Do they have a visible presence? Generally, if you can work with a more local company, you’re likely to receive a better offer. They know the area and understand the neighborhoods and their various aspects very well.
We encourage people to consider who they are actually communicating with. It’s vital to know the person representing the company. We strive to provide a genuine, authentic, and personal touch in our interactions.
2. Reviews
Secondly, look at reviews. What do others say about their experiences? How did it go for them?
This can give you a good sense of the company’s reputation.
3. Bait & Switch Tactics
Another important point is to be aware of the “bait and switch” tactic, often referred to as the “foot in the door” technique.
It’s quite prevalent these days. We do not operate that way, and we communicate transparently with our clients. If you hear an offer that sounds fantastic, we advise you to consider it carefully. However, if it seems too good to be true, it’s wise to proceed with caution.
If your experience changes at any point, please feel free to reach out to us.
To summarize, here are the top three considerations:
- Who are you actually working with?
- What do others say about them online? You can check sources like the Better Business Bureau or Google Reviews.
- Make sure that the offered price is the genuine price, without any hidden terms.
Brad:
It’s essential for buyers to pay attention to their due diligence period and the contract. If you’re considering a 30 or 45-day due diligence period, you need to evaluate if you’re comfortable with that. On the other hand, if the seller insists on closing in 60 days, that might be acceptable. However, if you’re getting an offer from an investor who wants you to close in 30, 45, or 60 days without prior discussion, that’s a red flag.
You also mentioned the importance of working with a local company, which is a great point. Since COVID, it’s become more common for people to make deals virtually without being local to the market.
I would bet that if you are dealing with a company that is not established in your area, there’s a 99% chance they are a wholesaler.
Wholesaling Strategy
Wholesaling isn’t inherently bad—many of us engage in it. However, these companies often rely on a single strategy: they only wholesale and lack a strong local presence. They might pressure you to sign a contract over the phone and then try to advertise the property to local buyers.
Typically, they will set a high asking price, only to later negotiate down several times. For instance, I saw a wholesale deal in my inbox that has been circulated daily since November 4th. Today is December 18th, 2024, and this wholesaler has reduced their asking price by $45,000.
I feel for the seller in that situation, waiting for updates and wondering why the sale is taking so long.
Do you have any additional tips for dealing with local transactions in Tennessee? I tell people they can research companies through the Secretary of State’s office, look up LLCs, and perform deed record searches. I imagine you have similar resources available as well.
- How long has that company been in business?
- Who is associated with it, and where do they originate from?
- Do they operate in Tennessee, or are they located elsewhere?
- Are they potentially misleading customers about their actual location?
Those are all important aspects of due diligence. Many people are simply unaware of the questions they should be asking or the information they need to look for.
For example, we advise people that if a company hasn’t even come to see the house or doesn’t know what it looks like, it’s very risky to accept an offer from them. That’s why we prefer to meet in person—to sit down in the living room, see the house, understand the story behind the situation, and talk to the homeowners directly. It’s important to shake hands, go over the agreement together, and address any questions or concerns. Let’s discuss any objections and clarify everything together.
Brad:
If buyers haven’t seen the property, how do they know its condition? I’m not accusing sellers of being dishonest, but after nine years in this business, I’ve noticed that many tend to downplay the issues with their properties. They do this not out of malice, but in an attempt to make the property seem more appealing to potential buyers, hoping to secure a higher price.
When we eventually investigate, we often find discrepancies between what was presented and the reality. I don’t want to undermine anyone’s home or property. However, I believe that if sellers are transparent from the beginning, it can help prevent misunderstandings later on.
Many out-of-state companies rely solely on what sellers tell them without having seen the property themselves, and they lack expertise in the local market.
At Probate Resource, we partner with local investors like Charles, who knows the individual markets better than I do.
Charles, you understand the Middle Tennessee market intimately. I prefer to hand off the customer to you because you can provide them with a better experience. You know the market and can give a more accurate offer, minimizing the risk of complications. Although I am not far away, I am still hundreds of miles from the property and can only evaluate photos. Your local expertise is invaluable. This is why our company focuses on collaborating with vetted local investors who share our values and can deliver the best service to our clients.
One thing I’d like to emphasize is that there is definitely a right way and a wrong way to conduct this business. I believe you’re doing it the right way, and I strongly feel that we are too. It’s all about communicating effectively with homeowners and sellers. We just want the opportunity to talk with them so they can hear and understand the differences among various groups.
We encourage people to reach out to others as well, ensuring they feel comfortable with their choices. We never pressure anyone to make a decision; it’s a natural instinct to consult multiple sources and gather different opinions. However, I believe that those who operate correctly truly stand out.