"I saw an ad saying a real estate professional will buy my house if it’s NOT sold in 90 days."

(May 02, 2017 )

"I saw an ad saying a real estate professional will buy my house if it’s NOT sold in 90 days."

Should I Be Wary?

This type of offer is a guaranteed sales agreement, and while there is nothing illegal or wrong with a real estate company offering this kind of arrangement, it is rarely the best option for consumers.

In a guaranteed sales agreement, a real estate brokerage agrees to buy a piece of real estate from a seller at a previously agreed upon price, if it hasn’t sold to someone else before a certain date. Only real estate brokerages can offer these agreements, not individual real estate professionals.

If you’re selling your home to buy another one, you may be interested in a guaranteed sales agreement for the home you own now. It could help you avoid owning two homes and paying two mortgages. A guaranteed sales agreement might give you the confidence to proceed with your new home purchase before selling your current one.

What sellers need to keep in mind in these arrangements is that the real estate brokerage wants to minimize its risk.

For example, it’s rare that a guaranteed purchase price will be based on the property’s listing price or the property’s market value. In most cases, the brokerage calculates the guaranteed purchase price using a formula where legal fees, carrying costs, and commission on the resale are subtracted from the purchase price. This minimizes the brokerage’s risk, but it can also greatly reduce how much that seller receives for their home.

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