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House Co-Sponsorship Memoranda
House of Representatives
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | March 15, 2024 10:03 AM |
|---|---|
| From: | Representative Emily Kinkead and Rep. Lindsay Powell |
| To: | All House members |
| Subject: | Protecting Homeowner Sellers from Predatory Buyers |
| In most cities, signs like, “We Buy Houses” and “We Buy Houses for Cash” can be found displayed in public areas. These advertisements, along with flyers and phone calls, are used to target vulnerable homeowners and make it appear as a convenient and stress-free way to sell their home. Predatory homebuyers will use these tactics to solicit homeowners who may not know the true value of their home, and in turn sell these homes for a fraction of what they are worth. Particularly egregious is so-called home wholesaling where the purchaser makes a low offer on a home and then turns and sells the contract to another buyer for a substantial profit without communicating that exchange or the sale price to the original seller. Often, the property owner does not have representation and does not have an advocate looking out for their interests. According to a report from Drexel University, Philadelphia homes that are sold to these homebuyers are sold for an average of 51% or $126,000 less than a similar traditional real estate transaction through a licensed real estate agent. According to the Pittsburgh Tribune-Review, “A study by the Pittsburgh Community Reinvestment Group showed that 24.8% of Pittsburgh home sales in 2021 involved wholesalers, up from 15.5% in 2010. The study said the wholesalers, on average, paid about 70% of what individual buyers would have paid for those properties.” These trends are not exclusive to our Commonwealth’s most populous areas and exist across the state. Without protections, our homeowners will continue to be taken advantage of and lose out on receiving the full value of their home. For these reasons, we will be introducing legislation to require a seller to have a licensed real estate agent or attorney present during each transaction with a buyer who does not intend to live in the home. This will ensure that the seller has representation with a fiduciary duty to represent the seller’s interests during these transactions and is fully informed about the process from start to finish. In addition, our legislation will prohibit the marketing of real estate services by a non-licensed real estate agent or an individual that is not an attorney, which will prevent public displays of misleading real estate advertisements used by predatory homebuyers. Real estate is the primary method to accumulate generational wealth for families, thus it is crucial that we provide these protections to safeguard this important investment. Homeowners that wish to sell their homes should not have to fear being exploited during a real estate transaction. Therefore, it is necessary that we help these homeowners by requiring a real estate agent or lawyer to be in their corner to prevent them from agreeing to an unfair deal. We hope that you will join us in co-sponsoring this legislation to support homeowners throughout Pennsylvania. |