Thinking about selling your home ‘as-is’? Read this first | The Homepage

New law takes effect in January protecting homeowners selling through housing wholesalers

By Juliet Martinez, managing editor

They promise to buy your home as-is, close the sale quickly and pay you cash. As seductive as their marketing is, residential wholesalers are profiting off homeowners who do not know their home’s value or cannot afford needed repairs.

This winter, a new law will put protections in place for anyone selling a home through a wholesaler.

Residential wholesalers do not actually buy the home from the seller. Instead, they buy the right to sell the property to someone else. The seller is guaranteed an agreed-upon sum, but the wholesaler can list and sell the home for much more. This way, the wholesaler can walk away with significantly more than the seller gets.

On July 8, Gov. Josh Shapiro signed a bill into law that defined wholesale transactions, created licensing requirements for residential wholesalers and put protections in place for home sellers. The law goes into effect on Jan. 4, 2025.

Until the law takes effect, residential wholesalers can operate legally if they avoid certain actions requiring a real estate license. Beyond that, Pennsylvania’s current Real Estate Licensing and Registration Act does not contain consumer protections in wholesale transactions. So if a seller feels that a wholesaler took advantage of them, they have no legal recourse.

Once the new law takes effect, the agreement a wholesaler makes with a seller will have to disclose exactly — and prominently — what the transaction consists of. The wholesaler will also have to tell the seller that they have the right to get outside help by enlisting the services of an appraiser or attorney, for example.

Importantly, the seller will have 30 days after the sale to cancel the contract and get any payments refunded.

The Pennsylvania Association of Realtors wrote in a July 10 statement that wholesalers often maximize their profits by seeking out seniors or homeowners who are not aware of their property’s true value. The association praised the new law for offering sellers legal recourse if they feel the transaction harmed them in some way.

One of the most recognizable “as-is” homebuyers is HomeVestors of America Inc., whose motto, “We Buy Ugly Houses,” is seen on bandit signs around the city. CEO Larry Goodman wrote in a Sept. 13 email that about 85% of the company’s transactions in Pennsylvania involve taking title of the property, fixing it up and “flipping” it for a profit.

Mr. Goodman wrote that when a seller is not represented by a real estate agent or attorney, franchisees must use a special addendum to the contract. This addendum contains disclosures and resources, and outlines a three-day, no-questions-asked termination period after signing the contract.

Learn more about the importance of hiring a real estate agent or attorney before selling your home at parealtors.org/why-use-a-realtor.