LANCASTER COUNTY, Pa. (WHTM) – Emails, texts, and sometimes home visits. That’s how wholesalers approach some residents about trying to sell their homes.
“It’s predatory in nature where you’re preying on people who might not know the value of the most important asset,” State Sen. Patrick Stefano (R -Bedford, Fayette, Somerset and Westmoreland Counties) said.
“They’ll identify sellers that maybe want to sell quickly and then they put them under contract,” Glenn Yoder with the Pennsylvania Association of Realtors said. “They offer them a cash offer for their house.”
Wholesalers typically don’t have the cash. That contract depends on the wholesaler finding another buyer.
“They put it under contract with the intention, not that they’re going to close on it, but that they’re going to turn around and market that equitable interest in the home to another buyer for a profit,” Yoder said.
That can cheat homeowners out of the actual value of their homes. Yoder says elderly folks may be targeted.
“They’ve been in their home for 50 years. Somebody offers them a price that’s a lot more than they paid for it,” Yoder said. “Maybe they don’t really know what the market value is. That’s why they’re able to turn around and sell it at a profit.”
Currently, wholesalers aren’t required to have a real estate license. That’ll change come January after Senate Bill 1173 was signed into law by Gov. Josh Shapiro.
“What we’re doing is we’re not making wholesaling illegal,” Sen. Stefano said. “What we’re doing is requiring any wholesalers to have a realtor’s license.”
Stefano says friends brought this issue to his attention. Signs along the road caught his eye, too.
“You drive down the road and you see on the the telephone poles and signs that says, ‘we buy houses’. We wondered about that,” Stefano said. “Now these people are buying all these houses and fixing them up, coming to learn that they’re not actually spending any money to buy those houses.”
The new law comes when housing prices are the steepest in American history. Yoder believes it’s about protecting that most important asset.
“It’s really not about how it impacts our business,” Yoder said. “It’s really about protecting the consumer. That was the that was the goal of this.”