Calling them “deceptive,” and “predatory,” Allegheny County Council passed a motion last week calling on state lawmakers to regulate real estate wholesale transactions.
In such deals, a wholesaler often has a very short-term agreement with the homeowner that gives the wholesaler the ability to re-sell the property to another person, who will pay a much higher price. The wholesaler makes money by pocketing the difference. They are often advertised with “We Buy Houses!” or “We Buy Houses/Fast Cash” signs in neighborhoods.
Council’s motion does not do anything to halt or regulate such sales, but it calls on the state legislature to do so, or to allow the county to have the authority to do so.
There are no bills in Harrisburg to do this at moment, supporters of the measure said.
“The reason we're so supportive of this is, we consider it a consumer protection act,” said John Petrack, Executive Vice President of the Realtors Association of Metropolitan Pittsburgh.
Petrack said he doesn’t believe all individuals or companies in this market segment were acting unscrupulously, though he said many of them are.
“Especially with … the large increases in appreciation in real property values over the last five years, there's a lot of … consumers that don't realize their property’s value," Petrack said. "And I think that some individuals may be taking advantage of that.”
Council Vice President Bob Macey, a co-sponsor of the legislation, said hopes the bill can educate some homeowners.
“I think that this industry … or this particular … group of people need to be regulated. When we're talking large sums of money like this, I just don't think it's fair to take advantage of someone who is in dire need and who doesn't have the background or education in the real estate business or understand the value of property,” said Macey, a Democrat representing Mon Valley communities.
A Philadelphia law regulating such transactions took effect in February.
Supporters of the measure say the deals can take advantage of senior citizens or other vulnerable homeowners.
Dan Sullivan, who administers the Housing Stabilization program for nonprofit Action Housing, said he sees homeowners facing foreclosure or Sheriff’s sale targeted.
“If you're going through a foreclosure, and all of a sudden, there's random solicitations from third parties who are willing to buy your house and help you avoid foreclosure…what I would recommend is that the homeowner contact a HUD- certified housing counseling organization,” Sullivan said.
A number of individuals with phone numbers on “We Buy Houses” signs did not respond to messages or declined to comment.
