Buying out real estate: a quick solution, but at a cost

Selling a property through a buyout can be compared to selling a car in a car dealership - you get the money quickly, but well below the market price. Usually you lose 15 to 30 % values of your property.
In contrast, a well-organised classic sale takes less than three months.
Is speed really more important than a fair price?

Does buying up real estate make sense?

The real estate market as we know it today began to take shape in the 1990s. Real estate agencies were established, the number of brokers grew and the quality of their services gradually increased. From the very beginning of this profession, in addition to the classic intermediation of sales, the possibility of direct purchase of real estate or shares in them appeared. In recent years, many new players have entered this segment, increasingly larger companies rather than individuals. This leads us to think more deeply about this type of transaction and its benefits and risks for sellers.

Mediation of sale vs. purchase of property

What is the main difference between a traditional broker sale and a direct purchase? The best way to compare it is to sell a car - either you sell it yourself at the market price, or have it bought by a car dealer for a lower amount, but immediately.

The advantage of a buyout is therefore the rapid availability of finance. The disadvantage is that the seller usually gets significantly less money, often 15-30 % below market value.

Companies or individuals specializing in buyouts usually do not own the properties for a long time, but immediately resell them at a higher price. Their advantage is their readiness to pay cash immediately, which can be useful, for example, in the event of an impending foreclosure. Although such situations do exist, according to the experience of the Czech real estate market they are relatively rare. If someone sells a property far below the price, it is usually due to lack of information or aggressive business practices of buying companies.

How much can a buyout cost you?

When buying a property outright, you must expect to lose at least 15 % of the real value, but often more. A classic sale with a real estate agent usually does not take more than three months. Is three months of waiting worth sacrificing hundreds of thousands or even millions of crowns?

A properly selected real estate agent will take care of all the administration and legal service, so that the sale will not be more complicated for you than a direct purchase. Before you make your decision, we recommend you get an independent market appraisal.

Who can provide property buyouts?

If the buy-out service is offered by independent business entities, this is acceptable. It is a tough business, yes, but it certainly has its clientele and therefore its place in the real estate market. It is more risky if real estate agencies provide this service alongside classic brokerage.

Why is this a problem? The broker's role should be to get the highest possible price for the seller. However, some estate agents prefer to buy to let because they have a higher margin on it. Brokers are often incentivised to offer a buyout first and then try to sell at market price. This conflict of interest can lead to a reduction in the credibility of the whole real estate market.

How do we approach this?

In our office, we believe in transparency and fairness. Our goal is to provide our clients with the best possible conditions for the sale of their property and always help them find the optimal solution. If you are considering a buyout, we are happy to provide independent advice and help you determine the fair market value of your property.

The role of a real estate agent when selling a property

My main goal as a real estate agent is to ensure that your property is sold at the highest possible price that the current market allows. However, some estate agents who offer buy-to-let properties do not follow the same process. Often, brokers are encouraged to try to acquire the property through a buyout first - as this means a higher margin for the office. Only if the buyout fails do they proceed to a normal sale.

This means that they first act as potential buyers trying to get the property at the lowest possible price. Only then do they offer their services as intermediaries who should help you sell as cheaply as possible. This approach raises questions about the ethics and fairness of the real estate business.

How do we work at RE/MAX Horizont?

In our office, we do not usually deal with property buyouts, because in the vast majority of cases there is a better solution for the client. We firmly believe that a real estate agency cannot simultaneously defend the interests of the seller and act as a direct buyer.

Our main goal is to get you the highest price for the property you entrust to us. Our commission is considerably less than the costs associated with the purchase. In addition, we guarantee you the utmost comfort and professional approach throughout the sale. Read more about commissions in this Article.

Buying up real estate - why avoid it?