Thinking about buying or selling a home? There’s something you should be aware of.
Getting into real estate can be stressful. You’re dealing with properties that can be worth a lot of money—and no matter how much you spend, you could end up finding something unexpected and unpleasant.
Still, one would hope that the seller of a house would be honest about what they’re selling. One realtor says that this isn’t the case.
What Is This New Home-Buying Scam?
In a video with over 14,000 views, Charlotte, North Carolina-based realtor and TikTok user Kim Drakulich (@kimsellsconcord) says that there’s a problem she’s noticed in the current real estate market.
To start, Drakulich notes that there are companies that will buy people’s houses for cash under market value. This allows someone to get cash in hand and finish a sale on their house quickly.
Drakulich says that she knows someone who recently sold their house to one of these companies. One of the reasons they chose to do so was that there were “two huge, major issues in the house.”
“We’re talking tens of thousands of dollars,” she explains.
According to Drakulich, the seller met with someone from the company—Drakulich is unsure whether this person is a licensed realtor—and disclosed all of the issues. Despite this, they got an offer higher than what they expected, even with repair fees.
What Happened Next?
Drakulich says the seller assumed the issues would be handled. Then, they met with an inspector; the TikToker is uncertain of the inspector’s licensing status.
After the homeowners told the inspector the issues, the inspector allegedly stated something to the effect of, “If I can’t see it, then I can’t report it. And if I can’t report it…I’m not telling anybody about it.”
“And that’s when they start to realize, like, ‘Oh, crap, are they not gonna do anything about this?’” Drakulich recalls.
Soon, the house was on the market—with, it seems, none of the required repairs completed. The TikToker claims that these repairs would require significant work that she did not see being done to the house. According to neighbors, “They replaced some flooring, and they did some paint, and they did it in the areas that were showing evidence of… ‘something is wrong with this house.’”
Is This Legal?
The TikToker claims that none of the issues were disclosed on the listing.
“In North Carolina, the seller doesn’t have to disclose anything. … If a seller knows something, they should have to disclose it, but they don’t,” she explains. “They can check off on the property disclosures ‘No representation’—which is exactly what this company does.”
“However, if I—as a licensed realtor, the listing agent—if I know something is wrong, I have to disclose it,” she continues.
Drakulich states that she disagrees with this practice.
“So, if you are looking for a home, and you notice that it’s owned by a company that just bought it from the previous homeowner not too long ago, gosh, please be diligent when you’re looking at the houses,” she concludes. “This is really messed up. … It’s not right, what they’re doing.”
What You Should Know About This Practice
Whether this practice is legal or not is a matter of opinion.
In short, a seller in North Carolina can choose “no representation” on certain issues related to their property. This does not necessarily mean they’re concealing an issue. For example, a seller may be genuinely unaware of the condition of a certain part of their house. Rather than pay an inspector to determine the condition, they can select “No Representation” or “NR” on their Residential Property Disclosure Statement.
However, this does not necessarily mean that one can select “NR” to conceal issues with a home.
According to a bulletin from the North Carolina Real Estate Commission, if a home inspection finds a serious defect and the seller refuses to fix it, that defect becomes a “material fact” the broker has learned and must clearly disclose to future buyers. Even if one selects “No Representation,” the material fact must still be disclosed.
It is uncertain how this rule is affected if the inspector claims they could not identify the issue, as alleged in Drakulich’s story.
In order to prevent yourself from being scammed by this practice, experts advise hiring your own inspector before you complete any home sale.
@kimsellsconcord This is just gross. This should not be allowed in the real estate industry. #realestate #homebuyers #buyerbeware #realtoroftiktok
Commenters Aren’t Happy
In the comments section, users claimed that they were familiar with this practice — and they weren’t happy about it.
“This seemed to happen to my buyers basically. Previous owners and buyers that were under contract before then.. told the seller/agent the house was found to have Chinese drywall.. and the seller chose to sell the house without disclosing that!” exclaimed a commenter. “My buyers took him to mediation, sold the house, and it’s been a long nightmare of over 2 years.. it’s unbelievable what sellers think they can get away with!”
“Their needs to be more requirements for wholesalers & flippers,” declared another.
“The same company is here in GA. The definitely know bc that is how they structure their lowball offer. It’s based on their ‘findings’ and ‘repairs they’ll have to make,’” wrote a third. “Certainly unethical, but I’m sure there is some loophole being that they own and operate each part of their business under a different entity.”
BroBible reached out to Drakulich via email.