Southern Ontario homebuyers who are offering cash to buy homes in disrepair have begun to invade northern Ontario due to the region’s hot real estate market.
Devin Labranche, a Sudbury-based eXp Realty estate agent, began his career in London, Ontario, where he says the practice of selling homes for cash had become common by 2017.
“We started to see that the market grew a little there, and we could tell from the demographic distribution that people were dispersed across a large area of the GTA to other areas due to the housing crisis,” he said. “So it was only a matter of time before they came here [to Sudbury]… “
Since the onset of the COVID-19 pandemic, Labranche said he has heard from clients and family members who have seen advertisements for companies offering unconditional cash buyouts.
Companies include SLG Home Buyer and Cash House Buyer. Some use roadside signs, while others send out letters that often appear to be handwritten.
“It’s just a great way for people to think, ‘Oh, I was chosen for someone who wants to buy my house,” Labranche said. “They tend to prey on vulnerable people who don’t know the market or are in distress and need immediate sales.”
Labranche said people looking to sell their homes should speak to at least three local realtors to find out what comparable homes are selling for and what they can expect on the open market.
Labranche agrees that buying and renovating homes can be a good business model, but cautioned that sellers must be diligent if they want the best possible price for their home.
Tyler Peroni, chairman of the Sudbury Real Estate Council, said homeowners should meet with a local realtor before making any decisions about selling their property.
When asked if companies that buy houses with cash are targeting the vulnerable, Peroni was more cautious.
“I hate to press charges against those who do this,” he said. “We want to see the best in any business model or any business that operates in Sudbury. As long as there is full disclosure and transparency, I don’t think we will necessarily be able to disrupt any business practice. ”
Growing Northern Ontario Market
Real estate investor Ammar Beg owns Canada Fast Offer from Markham, Ontario. He advertised in Sudbury and other parts of northern Ontario and bought homes in the region.
Beg said there are several reasons why businesses like his have become more widely represented in northern Ontario since the COVID-19 pandemic began.
The first reason, he said, is that rising house prices have forced investors to buy homes in the region, invest in renovations and resell them at a profit.
“Before, say a couple of years ago, if I was looking at properties in Sudbury, Timmins, North Bay or some of these areas, even Salt St. Marie, there was simply no value,” he said. “Now that the numbers have gone up, this is starting to make sense.
“We can give them a reasonable price at which they can pay off their debts, they can have some cash in their hands. They can move forward with something and we can still make a profit. “
The second reason companies like Canada Fast Offer have come to the market is because more people have turned to investing in real estate over the past 18 months, Beg said.
“Now that the pandemic has started, I think what has happened is that there are a lot of people who are either using CERB, or perhaps their business has received some kind of grants, and now they have the time and opportunity to find these OTC sellers and the market. them, ”he said.
Beg said his business focuses on homes that are not suitable for living. He offers a cash ransom, renovates the house, and either turns it into a lease or sells it on the market. He most often said that he was reselling the house.
“We’re actually adding to the list of livable homes,” he said. “We are not removing housing from the market, we are actually adding to it, because this is not the property you would like to live in.”
He said that many of the sellers he works with prefer not to use the traditional way of selling through a realtor and find it easier for them to accept an offer for their property for cash.
“If you live in this situation and are classified as a hoarding, and here is a mess and uninhabitable, the last thing you need is a revolving door for people passing through your house,” Beg said.
Regarding these mailed flyers, Beg said the direct mail marketing rules mean that companies have to spread a wide web. Real estate investors cannot target specific homes with direct mail marketing, but must instead cover all mail routes.
Homeowners who are not going to sell and who may not need major renovations can fall into the trap of a marketing attack.