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What’s up with all those crudely hand-lettered signs saying stuff like “Off-Market Fixer, $249,000” and a phone number? I assume it’s somebody trying to sell a house, but isn’t this a pretty amateurish way to go about it? —Surreal Estate
I can certainly understand how this presentation might set off your internal scam-o-meter, Surreal. The purchase of a home is the weightiest financial transaction of most people’s lives; it’s a bit jarring to see it marketed with techniques more commonly associated with roadside sweet corn and free kittens.
“Off-market” means the property is offered through private channels, far from the watchful eye of the Multiple Listing Service, or MLS. There are legitimate reasons to do this—you don’t like strangers poking around your house, maybe, or the property is an inheritance stuck in probate, or you’re a celebrity ducking publicity.
That said, heiresses and celebrities can usually find buyers through personal connections. Shaquille O’Neal may cherish his privacy, but he’s not nailing up signs in the Target parking lot. So who is? It turns out these sign posters are (mostly) investors trying to “wholesale” contracts to other investors.
The practice of wholesaling is detailed in numerous get-rich-quick courses with names like “How to Make a Million in Real Estate Without Ever Putting On Pants.” Step 1: Find a distressed property whose owner is desperate to sell. Step 2: Sign a contract with that owner offering him X dollars. Step 3: Try to find a buyer willing to offer you X + Y dollars for that same property before the real owner figures out you don’t actually have any money. Assuming you don’t get shot, Y is your profit.
It probably comes as no surprise to learn that the people putting up “Off-Market Fixer” signs (to support Step 3) are the same people who also put up all those “We Buy Houses” signs (to support Step 1). People in this racket call these “bandit signs” because posting them is usually illegal. Their amateurish appearance is intentional, to convey authenticity. (“We find that a yellow sign with a handwritten message in black marker works best,” notes one wholesaling guru, straight-faced.)
Mind you, not just anyone can do this. In Oregon, you have to register with the state as a property wholesaler, a rigorous process requiring (a) a high school diploma and (b) $300. After that you’re golden—though, obviously, you’ll burn in hell for all eternity. Happy arbitrage!
Questions? Send them to dr.know@wweek.com.
