The housing market has been on fire since 2020, and experts are predicting that 2022 will continue to see high competition and low inventory. As a result, homeowners can expect to receive offers to purchase their house—whether or not it's actually for sale. Although these offers often tout enticing perks, like quick cash payments, there's usually one big drawback: they typically lowball the price. We asked real estate professionals across the country what you should do when you get an offer on your unlisted house.
Why am I receiving offers to buy my unlisted house?
"Unsolicited offers are quite literally offers to purchase your home without you listing it or even talking to a real estate agent about listing your home," says Georgia-based realtor Tim Grant. These offers to buy unlisted property come in many forms, from mass-produced postcards and spam-y text messages and phone calls to hand-delivered flyers and knocks at the front door. Although it's a standard real estate tactic, homeowners are experiencing it more due to the current housing market.
Most unsolicited offers come from investors (both large companies and individual people) looking for opportunities to make below-market purchases for resale profit. These investors use many strategies, such as targeting properties through public information like online real estate listing services and tax, mortgage, and foreclosure records, as well as sending out broad offers to every house in an area. "They do this because they need an asset to invest in, and there aren't very many for sale right now," says Katharine Davis, a realtor in Jacksonville, Florida. "Also, this type of marketing is easy. For every thousand or so contacts, they get 1-2 yeses," she says.
"Now, with inventory so low, everyday home buyers and their agents are using the same playbook," says Grant. These buyers are actually interested in occupying your house. They are seeking off-market sales to avoid bidding wars or secure a home in a sought-after neighborhood, school district, or otherwise desirable area that has low (or no) available inventory.
Evaluating the Offer
If the house is unlisted and the homeowner isn't interested in selling, what makes an unsolicited offer appealing? It's usually attention-grabbing promises of quick, large cash payments and a fast process. They might also offer to cover necessary property repairs or assume closing costs. But despite the immediate appeal, the offer should be critically considered.
Regard initial details with skepticism—they're not set in stone.
According to Gwyn Ice, a real estate agent practicing in Ponte Vedra Beach, Florida, the details of that initial offer are subject to change. For example, Ice says a property inspection is likely to drop the sale price and additional fees can impact the seller's earnings. Plus, there's financing to consider: price can take a hit if an appraisal finds the property to have a lower value than the initial offer—and even if it's a cash offer, the money has to be there. Offers that promote closing in a certain number of days might also not be guaranteed.
Consider the source of the offer.
Generally, these offers are legitimate and not scams to get money or property from the homeowner. However, it's still important to look into the source of the offer. Tim Knuth, a Milwaukee-area broker, notes that some unsolicited offers come from unlicensed persons or entities rather than regulated real estate professionals. In some extreme cases, Knuth says entire parts of a real estate transaction can be left out of these interactions, such as skipping the title transfer. Dealings with these individuals might also be more vulnerable to theft via wire fraud and email scams if they use common, less secure methods for requesting and transferring funds.
On the other hand, offers from an individual (or real estate professionals acting on their behalf) typically align with a traditional on-market selling process. "These offers are usually prequalified," says Eileen Lacerte, a broker in Kamuela, Hawaii. "In many cases, they are cash buyers or at least have a pre-qualification letter from a lender." Lacerte also notes that these offers are more likely to meet fair market value for the property.
Take a hard look at the offer price.
For investor-driven offers, the offer price will be quite low. Their broad marketing approach means their offer likely isn't property-specific, and their goal is to make a profit, so you can guarantee it will be lower than an on-market evaluation. "These types of buyers are relying on your limited knowledge of the current real estate market," says Lexington, Kentucky, realtor Kim Soper. While most people are aware of the current housing market, they might not realize the impact it's had on their property. "With home prices skyrocketing—sometimes over 20% in the last year—you may be surprised to learn that what looks like a really great offer may be pretty low," says Davis.
Remember you're moving.
Don't forget that if you decide to sell your home, you still need a place to live. This might not be a concern for someone with a second property or family with space to spare for a while. But for many homeowners, it means arranging financing and entering the competitive housing or rental markets. Does the offer do enough to offset the time, energy, and incurred expenses?
Determine Your Priorities
For many people, the convenience of an off-market sale is highly attractive. "No prepping the house for sale, no showings, no strangers, no open houses, no failed contracts—you can even choose your closing date," says Davis. A large sum of quick cash also has appeal, while others are interested in having a way out that won't require renovations or necessary repairs to make the house marketable. But if getting the best price or recouping the value of the property is your priority, an off-market offer—especially one from an investor—is not the right route. "As a seller, if you were to accept one of these unsolicited offers, you are potentially missing out on tens of thousands of dollars and selling your home below its true value," says Grant.
What should I do if I'm interested in an offer on my unlisted house?
"When someone makes an unsolicited offer on your house, you are in the position of strength," says Davis. Knuth agrees. "Selling a house off-market can be a win-win for both the seller and the buyer—if the seller knows what they have," he says. Real estate agents warn that homeowners are susceptible to being financially taken advantage of with an unsolicited offer. Examples include accepting a drastically under-market value, paying costs that could have been covered by the buyer, or through "wholesaling"—when a proposed buyer actually arranges for the property to be purchased by a totally different buyer at a higher price than what was negotiated with the seller, thus willfully undercutting the homeowner and pocketing the excess money for themself.
Homeowners considering an unsolicited offer fare better with a real estate professional on their side. "Sellers should seek some sort of professional advice before accepting an unsolicited offer," says Lacerte. "Legal advice and a real estate market analysis will go a long way in avoiding regrets." A pro can help identify an appropriate value for the property, as well as represent the homeowner's interests by negotiating terms and price.
According to Soper, engaging a professional early not only lets them evaluate an unsolicited offer, but they can also help determine if selling is the right move for you at that time. She notes another benefit is having someone ready to help find your next home if you decide to sell. Knuth also recommends getting someone on your side before responding to the unsolicited offer, and he suggests letting them do all the liaising with the potential buyer. But even if you've already been communicating about an offer on your unlisted home, Knuth says it's not too late to engage a professional. "If telling someone you're bringing a realtor on board halts the process or they encourage you not to do it? That's a big red flag," says Knuth. In that case, you should be very wary of the offer and the buyer.
How to Turn Down an Unsolicited Offer
If you're not interested, you don't have to respond! This is especially true for impersonal pitches that come from large investors—though you might want to reach out if they offer an option to remove yourself from future communications. Knuth recommends the Do Not Call Registry is another way to cut back on unsolicited offers. If the offer comes from a local buyer or real estate agent, a reply is appreciated. "A polite, 'Thank you, I'm not interested at this time' usually is the response," says Lacerte.