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C - Guaranteed Home Sale: What about agencies that offer a buyout?

 ERA to the rescue               

In an attempt to increase business, ERA brought out a buyout plan.

While each office may offer a variable to better suit their local marketplace, the elements of the plan features include:

• The offer is extended to homes with a value between $50,000 and $750,000.

• Sellers must agree to use an ERA office to buy their next home.

• Sellers agree to have the home appraised by appraisers recommended by ERA.

• A minimum of two appraisals must be less than 5% apart in the appraised value of each other to be used. Additional appraisals will be performed until two appraised values are within this 5% difference.

• The average of these two appraisals becomes the appraised value.

• Sellers must list with ERA for 180 days at the office commission rate.

• Sellers agree to follow ERA’s marketing plan (periodic price reductions?).

• Seller agrees to pay a fee of 2.75% if the buyout is taken or the listing is cancelled.

• ERA Franchise Systems will pay sellers 90% of the appraised value if unsold.

• When ERA remarkets the home and sells it for more than the original appraised value, the seller gets the profit. ERA will absorb any losses.

          Observations:

This is a nice option for those needing a security blanket.

The 180 day period is exceedingly long. If the sellers have bought their next home, the dual mortgage payments will hurt.

The possibility of the home selling for more than the appraised value and profits going to the former sellers are poor. ERA will accept the first offer that comes along since they will have little incentive to sell above this figure. That's because the longer it’s on the market, the more it costs ERA.

If nothing else, this is an option to consider when selecting a real estate agency. 

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