Ontario woman says using 'cash for houses' company was costly mistake
CBC
Laurie Thompson admits she needed to sell her townhouse in Smithville, Ont., fast.
The pandemic had done a number on her finances — the bar where she worked had shut down, twice — and rising interest rates meant her monthly mortgage payments of $2,000 were going to almost double last January. Thompson was facing foreclosure.
"I was desperate," she told Go Public.
Thompson had seen street signs and posters in her neighbourhood — companies offering to pay quick cash for houses. She'd even received what appeared to be a hand-written flyer in the mail, advertising a hassle-free cash sale — no renovating, open houses, or Realtor commissions.
She hit the internet and found a company with positive reviews and attractive promises called Honest Home Buyers Incorporated (HHBI), based in nearby Hamilton.
"The website said, 'Cash in your hand [quickly],'" said Thompson.
The website promised other advantages, too — "more cash" in a seller's pocket, a quick closing date, no Realtor fees and it claimed homeowners sometimes get a cheque "the very same day!"
Thompson knew this option meant she wouldn't be offered top dollar, but figured it was worth getting the house sold, quickly.
"You're not going to get fair value from a company that's paying you in 72 hours," she said. "But … I didn't want it to sit on the market for three to four months."
When HHBI owner Mike Chow arrived at Thompson's townhouse for a walkthrough last January, she told him her employment had been sporadic, the mortgage lender wanted her debt paid off immediately and that she was struggling emotionally — a few months earlier, her partner had unexpectedly died from a heart attack.
Chow produced a contract and offered $575,000. Thompson says she peered over his shoulder as he read through it speedily and encouraged her to sign on the spot.
The whole transaction took about half an hour. Thompson says it likely cost her tens of thousands of dollars in profit, if not more.
An internet search by Go Public found house-buying companies that make cash offers in all provinces and territories. They make similar claims — offering a lifeline to people who've suffered a death in the family, are facing foreclosure, divorce or mounting debt.
"It's clearly preying on people who are desperate and vulnerable," said housing-market analyst Ben Rabidoux, who dislikes how the contracts lock sellers into terms that cut them out of potential profits.