If someone asks you to “Go Homing” …… Don’t!

 

We found this great house a few weeks ago for a client of ours. We’d been looking for months in a particular subdivision and this house was just what she wanted and the list price was reasonable for a bank owned property that needed just a little TLC. We went to make an offer and were directed to “GoHoming.com”…..uh oh…. I remembered running into this before with another client…this was not going to be pretty.

GoHoming is an auction format, marketing platform for bank owned properties. It’s just like Ebay, but they’re selling houses. Sounds kind of fun…until you dig a little deeper. Anyone can make an offer, you don’t have to be a realtor, which is fine. I’m ok with people who want to do it themselves, we used to do that too. The problem is GoHoming is set up entirely for the ease and benefit of the sellers and Buyers put themselves at great risk in purchasing a home from them, whether you work with a realtor or not. Here’s our story as a case in point.

Our client really wanted to make an offer on this house, so we started reading everything on the website and making countless calls to the call center in India to ask follow up questions. We read the sample purchase contract. We did all the due diligence we could to make sure that we weren’t putting our client at risk. Here’s what we found.

  • Unlike most real estate contracts, which are set up with the Buyer in mind and provide numerous contingencies for the Buyer to get out of the purchase without losing their earnest money, GoHoming’s contract provides no such contingencies for the Buyer.
  • For the house we were interested in, there was no Inspection contingency, meaning, if we did an inspection and found something grossly wrong, we could not cancel the contract. We got an inspection done before considering making an offer on our own to be sure there were no surprises.
  • In Colorado, where we work, Buyers have the opportunity to get out of the contract for any of the following issues: Inspection; Title; Survey; Loan; Appraisal and HOA policies. GoHoming’s contract did mention the Title and Loan contingencies but when I pressed them about it on the phone, their response was…”it is up to the Seller’s discretion”….meaning, the Seller gets to decide if the Buyer’s concerns with the Title or the Loan they are trying to acquire are valid. In our standard, state approved real estate purchase contract in Colorado, if the Buyer objects to something, that’s good enough and they can pull the plug on the contract and get their earnest money back. The Seller doesn’t get to decide or object.
  • What this means, is that the Buyer’s earnest money is at risk. And the earnest money is steep!! In our case for a $190,000 home it was $10,000!! That is 4 or 5 times the norm in our area where earnest money is usually 1 or 2% of the sale price. Once you’ve signed the contract, you are all in. There are no guaranteed ways to get out of the contract, even with totally legitimate cause. That’s not a good thing.
  • Even knowing all of this, our Buyer still wanted to proceed. So we said, ok, we’ve done the Inspection, we know the house is basically ok. We’re confident of your loan and the appraisal. How about the Title? So, we had an O&E (Ownership and Encumbrance) report done by our Title company. This is something anyone can have done by a Title company. It’s a quick snapshot to see if there are any liens on the property and who the owner is. Lo and behold, we found 5 or 6 liens on the property, including $140,000 federal tax lien, an HOA lien, a car lien…even though the house had gone through foreclosure.
  • That was the straw that broke the camels back. It’s possible that these liens could have been cleared up in the foreclosure process already and they just hadn’t been recorded properly yet. In a normal purchase situation, it may have been possible to explore that and resolve it. But in this case…..no way we’d get into that. We’d heard horror stories online about dealing with GoHoming and we could just imagine what this process would have looked like dealing with call center employees in some distant land. Let alone the fact that we would have had no clear means to cancel the contract and get our earnest money returned.

So, bottom line, we would recommend staying far away from GoHoming.com. This is not because we are opposed to the concept of selling property in different ways. It’s possible that a process like this could work well. The problem is, this particular process is completely unfair and risky for Buyers. I can’t imagine what it would be like as an innocent buyer stepping into a home purchase in this way. Your everyday home buyer has no idea of the risks and what they’re getting themselves into. It’s amazing in a way that something like this is allowed at all. This is not like purchasing an Ipod or even a car on Ebay….these are houses, costing Hundreds of Thousands of Dollars! It’s pretty scary.

 

 

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About Tom & Beth White-O'Connor

We've lived in Boulder and the surrounding mountain area for over 23 years. We're Realtors at The White-O'Connor Team, Coldwell Banker Residential Boulder. Tom loves to write, play music, look at houses and find great house deals! Beth can fix anything and she loves house design and remodeling. Our house is a testament to her creativity. We have a daughter in San Diego who gets to ride horses for a living. Our two cats and the most amazing 16 year old dog in the world keep us company at home. Give us a call at 720-276-0826 or 720-366-6196 if we can help you Buy or Sell a home or find a great rental property. Best, Tom and Beth.
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2 Responses to If someone asks you to “Go Homing” …… Don’t!

  1. Hi Tom and Beth,

    My name is Jonathan and I work for GoHoming.com. I ran across your blog and wanted to offer clarification on some items you raised. First, GoHoming is not the seller of properties available on our website. The buyer is entering into a contract with the seller, not with GoHoming. GoHoming.com is merely the portal through which sellers market and sell their properties.

    Second, you’re correct that the sellers do not allow finance or inspection contingencies in these types of transactions, which is standard and customary for these types of properties.

    Third, please note that the sellers encourage prospective buyers to do their own due diligence prior to bidding, which includes inspecting the property. You made a smart decision by advising your buyer to research the property prior to placing a bid. Any real estate transaction has risks for both the buyer and seller, and REO transactions are generally handled differently from traditional sales.

    Thousands of buyers successfully close great deals on properties listed on GoHoming.com every month. I’d love to speak with you about your experience with GoHoming.com and clarify any concerns you may have. If you can provide me with additional information in regards to the specific property you were interested in, I can communicate your concerns to the seller.

    Best,
    Jonathan Dees
    855-453-6503
    jonathan.dees@GoHoming.com

  2. Hi Jonathan. Thank you for your response. I’d like to reply to a few of your comments. First of all, perhaps I didn’t make it clear that GoHoming is not the seller, but rather a portal or a platform for the seller to sell their properties. No argument there.

    However, regarding the contingencies, I would disagree. We just went through another bank owned property purchase and there were clearly stated contingencies for the buyer. There was a 10 day period allowed for the property inspection and their was a deadline for the financing, title work, etc. This is completely different than the terms provided by the Sellers through GoHoming where there are absolutely no contractual means for the buyer to withdraw from the purchase for legitimate reasons.

    A second key difference is the earnest money that the buyer could potentially lose and the additional marketing costs that the buyer has to pay through GoHoming. The earnest money for the GoHoming purchase in our case was $10,000 vs. $1500-$2000 on similarly priced homes listed in the local MLS. That is a huge chunk of money that a buyer could stand to lose if something came up after they went under contract (like they couldn’t get their loan or they discovered some property defect that hadn’t been seen before) In addition, GoHoming charges a web technology fee, which was around $200 and a Buyer’s Premium Fee, which was about $7,000!

    My point is that there is a big difference between the way GoHoming markets and sells bank owned properties and the way other companies sell them. The bottom line is that buyers are at much greater financial risk with GoHoming than they would be with a typical bank owned transaction that is handled through a local real estate company.

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