These investors, often known as wholesalers, have blanketed parts of the city with “We Buy Houses” signs, leaflets, mailers and cold calls, searching for houses that are not on the market. They convince homeowners to sell at a discount, then re-sell them — often on the same day — for at least thousands of dollars more. They do so without making a single upgrade.
Experts warn that wholesalers and other investors are stripping longtime residents of tens of thousands of dollars in hard-earned wealth. Homeowners too often sell without knowing the real value of their home, and realize too late that they cannot afford a new place to live with cash from the deal. In Atlanta, even subsidized senior housing can cost hundreds of dollars a month.
"It is a problem that is rampant in Atlanta right now," said Sarah Mancini, an Atlanta Legal Aid Society attorney who represented McGauley. "Once you go under contract, you really can be stuck."
The impact can reach across generations, experts warn. A house is often a family's most valuable asset, especially among African Americans, research shows. The profit from a sale can send a grandchild to college, or help the next generation put down payments on their own homes.
Jacob Naviaux, a representative for SMQ Properties LLC, the investment company that offered to buy McGauley’s house, said he treated her fairly and followed the law during her sale. Some wholesalers may deserve criticism for their tactics, but he explained his deal with McGauley carefully.
“She breached her contact on her house,” Naviaux said. “Sellers can’t just choose one day to back out of a sale.”
Complaints about real estate wholesalers have skyrocketed in recent years. Often, seniors call Atlanta Legal Aid Society for help after they sign a sales contract, making it difficult to help them. West Atlanta resident Debbie McGauley signed this contract after 20 minute meeting with an investor, she said. ALYSSA POINTER / ALYSSA.POINTER@AJC.COM
Wholesaling is legal in many cases and can provide a useful service. Investors offer cash deals and fast closings. Industry-savvy homeowners who are willing to take a financial hit can use them to unload a property quickly.
But in intown Atlanta’s rapidly gentrifying neighborhoods, where homes purchased for less than $20,000 30 years ago are now worth $200,000 or more, residents complain wholesalers are using hardball tactics to make money off inexperienced sellers.
The barrage of solicitations has gotten so bad that the Atlanta Legal Aid Society hands out cards to seniors to post on their doors that say, "No Soliciting. This House Is Not For Sale."
In some Westside neighborhoods, wholesalers have turned the real estate market into the Wild West. Seminars tout wholesaling to inexperienced investors as a way to enter real estate without a license or cash reserves. Courses teach how to coax an unwilling buyer into selling. Some wholesalers market properties for sale well before they own them, attorneys and real estate agents familiar with their practices said.
In some cases, wholesalers report houses they’re interested in purchasing to authorities for code violations, said Lisa Flowers, executive director of the home repair nonprofit HouseProud Atlanta, which serves low-income seniors, veterans and disabled people. A senior who can’t afford to make city-required repairs may decide to sell under financial strain.
"Not to say all investors are bad, but there is a lot of pressure on seniors," Flowers said.
In one case referred to Atlanta Legal Aid, investors gained the trust of a homeowner near the booming Westside Beltline by bringing over meals and offering to pick up her prescriptions, said Robin Andrade, a Realtor who tried to help the senior find a new home after the sale.
“They gained her trust and took her house out from underneath her,” Andrade said.
The senior, who declined to be interviewed, sold her house to an investment company for $95,000 on July 30, records show. It re-sold that same day to another investor for $130,000.
The senior failed to find a new place before demolition day. Investors streamed the demolition on Instagram with her lamps and other furniture still inside.
Not for sale
West Atlanta homeowner McGauley said she found SMQ Properties as she mulled selling. She signed a contract in April 2018 after Naviaux made a 20-minute visit to her home, she said.
McGauley said Naviaux did not send her a copy of the contract immediately after she signed as he promised. Naviaux said emails show he did, and their text messages show that she understood she sold her home.
Soon after, McGauley found a nursing home for her bedridden uncle and decided to stay. SMQ filed suit against her in Fulton County Superior Court and later asked for $35,000 in damages.
With the help of Legal Aid, McGauley filed bankruptcy and halted the sale of her home. But she must pay SMQ $8,000 over about three years as part of a settlement agreement.
On a recent afternoon, barbecue grills and other cooking tools sat at the ready in McGauley’s backyard, in preparation for a Thanksgiving feast. McGauley, a mother of seven, has so many children, grandchildren and other relatives that they can no longer fit in the 1,175-square-foot ranch.
Wholesalers continue to send mailers and make cold calls.
“I tell them no. It’s not for sale,” McGauley said.
The home will stay in the family.