Buy My House on Netflix: The brokers aren’t buying it


Mark-André was recently interviewed by Samuel Larochelle, of La Presse, about the Netflix show Buy My House.

In this show individuals are looking to sell their property to investors, al la Shark Tank. This dynamic presented some interesting points, which Mark-André comments on… The main question being: Are the sellers on Buy My House actually getting the best price for their respective homes? How can sellers ensure they get the best price for their properties?

The process starts with determining the market value of a property. In other terms: The amount a buyer is willing to pay currently, and what a seller is willing to sell their property for currently; both based on how the subject property compares to other properties that have recently sold in a similar condition, on a similar market, of a similar type and size. All this is measured against overall real estate market conditions (ie supply and demand). 

When estimating market value, one must pull recent comparables: Sales that are similar to the subject property to provide the buyer and/or seller with an analysis of the current market sales, and then factor in the conditions of supply and demand. This exercise allows one to obtain an idea of what the general buying population in the current market condition is willing to pay.

Some consideration is given to market trends, and projections, and even improvements during this process, but the meat-and-potatoes is the astute reading of the market as it is.

Once an accurate representation of market value for the subject property has been determined, the property should be listed on the open market, and effectively marketed, for a reasonable time, in order to expose it to as many potential buyers as possible, to enlarge the offer pool.

Given these points, what we see on Buy My House, unfortunately, is unknowledgeable sellers (uninformed in terms of pricing based on comparables, and motivated by purely speculative perversions of the traditional market forces), standing in front of a pool of four institutional investors. Right off the bat, these sellers reduce their chances of coming out ahead in the transaction.

The article by Samuel Larochelle in La Presse, takes us more into detail with regards to Mark-André’s observations. 

A translation of the article below:

Samuel Larochelle 
Special collaboration 
La Presse

Buy My House on Netflix 
The brokers aren’t buying it

After making its mark in real estate with sultry reality shows like Selling Sunset, and its even crazier little sister, Selling the OC, Netflix offers Buy My House. More down-to-earth, the show invites homeowners to attempt to convince four investors to buy their single-family homes. Entertaining, at first glance, the concept disappointed the two Québec brokers we’ve interviewed.

The creators, who are also behind the shows Dream Home and Extreme Makeover: Home Edition, did not convince Mark-André Martel, of Groupe Sutton.

“I found it sad.” he says. “I saw people coming, with their life stories in hand, before investors who end up making them an offer that is too low. They’re “sharks” who walk off with some of these sellers’ real net worth before the episode ends.”

At first glance, though, one gets the impression that Pamela Liebman, Glenn Kelman, Danisha Wrighster, and Brandon Copeland are “chill” investors, sympathetic and able to move for, and be moved by, the people presenting their homes and stories in front of them.

It’s all showboating, according to RE/MAX’s Nathalie Bégin. “Investors are never going to be moved to offer hundreds of thousands of dollars for emotion,” she says. “For them, it’s all about the return. They’ll always listen to the nice couple before making a ridiculous offer.”

Advantageous market risks
She believes that the vast majority of sellers seen in the show, which went live on September 2nd, would have been better off testing the market. “They should not have taken the risk of losing $50,000 to $100,000, but rather put their property on the market to reach the general public.”

The emotional interest of the average person then comes into play. “Many factors push buyers to pay more than the value, whereas an investor only thinks about profitability.

Mark-André Martel also prefers to show the value of a property rather than let it slip away at a price that is considered too low. “When a house is listed at $850,000 and my clients receive offers of $700,000, I will guide them to succeed in selling it at the asking price, or even higher, after demonstrating that it is not necessary to consider lowball offers.”

He also believes Buy My House should not have normalized the dynamic they present between savvy investors and unrepresented individual sellers.

“It’s very clear in this context that investors are forced to buy lower than the open market would provide, in order to make the profit that should have been the seller’s on the investor’s resale. But, for the seller, there is no benefit to be had in this show’s dynamic.”
Mark-André Martel, of the Sutton Group.

Nathalie Bégin believes that the concept would have been more interesting if it had been about multiplex owners and not single-family homes. “When you sell an income property and compare the numbers, it’s different,” she explains. In the case of Buy My House, it’s individuals and couples, not investors for the most part, selling to people whose only interest in the property, much less the community, is the quick buck.”

Prepare your arguments
The show’s fundamental flaw highlights the need to know your comparables before selling. “On the one hand, participants who have good arguments end up not selling their homes to such investors because they know better,” Martel says. “On the other hand, wise investors won’t make a bid if they don’t feel knowledgeable enough about a territory.”

In fact, the broker felt that there was almost always an imbalance in the knowledge base of the sellers and the investors. “It’s like if a guy who’s been doing karate for years comes to me for a fight: He’s going to completely dismantle me. It’s not fair to the sellers. They’re facing investors , unrepresented, who know very well what they need to do to make money.”

Although Buy My House focuses on several markets in the U.S., Mark-André Martel believes the Netflix show has the merit of showing the risks associated with dealing with investors.

“In any market, if you talk to investors, they’ll buy for 10% to 30% less than your home is worth, claiming they’ll pay you quickly and you’ll save on broker fees.”
Mark-André Martel, of the Sutton Group

However, the investors themselves will have to pay when they resell. “If a house is worth $850,000, and they say they have to buy it for $700,000, it’s because they’ve taken into consideration the brokerage fees they’ll pay before long, and they are looking to make a profit on the backs of the sellers.”
His observation is clear: “Bringing in investors is for people in a big hurry, and poorly advised, who will sell at a loss.”

You can read the article here:

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