As can be seen from the following article, you really do need to get expert advice when dealing with one of your largest investments and purchases in your life. by no means do I think that all realtors are created equal, just as all doctors, mechanics , lawyers etc. are not created equal, however, when buying or selling a home, you really do need the help of a realtor, just as you would need a doctor when you are sick. Even a mediocre agent from a established brokerage is still better than none at all.
*********************************************************************************
Buy Owner, the nation’s largest company for broker-free real estate sales, is the latest victim of the housing crunch, filing for liquidation in Broward Circuit Court.
Buy Owner and 18 affiliates filed an assignment for the benefit of creditors Monday after turning over all their assets Friday to Michael Moecker & Associates managing director Philip J. von Kahle.
Moecker is an auction firm that specializes in liquidating insolvent companies.
An assignment for the benefit of creditors, also known as an ABC, is a state court alternative to federal bankruptcy action. The insolvency proceedings are seen by some attorneys as less expensive and more efficient than bankruptcy.
The Deerfield Beach-based real estate company aggressively expanded to 10 of the country’s top real estate markets, including Miami, Fort Lauderdale, West Palm Beach, Chicago, Dallas and Atlanta, catering to homeowners who wanted to sell their property without the expense of agent commissions.
“They were extremely busy, business was booming, and they took on debt from Bank of America for the purposes of expansion and purchasing their franchisees back. In doing so, they got up to 400-plus employees and — just like that — the bottom fell out of the real estate market,” von Kahle said.
Experts also say the competitive landscape has changed with the real estate downturn and that simply listing a home on a website is no longer enough to sell a property.
Buy Owner could not turn a profit even after laying off all but 20 employees at its Deerfield Beach and Chicago offices.
The company claims at least $5.1 million in debt and listed assets of about $60,000 plus an office building in an assignment contract signed last week. The contract is the legal document transferring control of its assets to von Kahle, who is charged with selling them off to repay creditors.
He said he did not know how much money creditors might see from the liquidation.
The company owes more than $3.9 million to Bank of America, its only secured creditor, and $1.2 million in back wages to its top executives. Listed assets include an office building in Oak Brook, Illinois, a $55,338 Illinois tax refund, furniture and $4,647 in bank accounts.
“They still cannot afford to pay the secured debt, and that’s what really choked them,” von Kahle said.
Although Buy Owner is essentially dead, von Kahle said he will attempt to keep its website and services alive and available to consumers, who should not notice a change.
“If we just sit there, turn the key off and shut the web page down, there’s little value here,” he said.
An assignment for the benefit of creditors allows the operation to continue under von Kahle’s control — but only to raise capital to pay creditors.
A petition commencing the assignment for the benefit of creditors was filed by von Kahle’s attorney, GrayRobinson shareholder Leyza F. Blanco of Miami.
Eckert family members who led the firm, including Buy Owner president and CEO Scott A. Eckert, resigned Friday. Staff at the company’s Deerfield Beach office said Tuesday that he declined to comment.
If any of the company’s 33 shareholders are owed money, they will become creditors as well. Calls to several of the company’s top investors were not returned.
Creditors will have until Nov. 23 to file claims against the company.
Since its founding in 1984, the company expanded by opening franchises in Atlanta, Chicago, Dallas, Jacksonville, New Orleans, Orlando, Philadelphia and Tampa. On its website, the company claimed to be the most popular destination for homeowners interested in buying or selling homes with 10 million page views each month.
But its simple philosophy — cutting costs by eliminating the middleman — hasn’t proven strong enough to carry the company through the recession. That surprises Brad Hunter, chief economist at Palm Beach Gardens real estate consulting firm Metrostudy.
“I thought they had a business model that would be viable in today’s tough market because it allows people to save the commission. On the other hand, it demonstrates it is so hard to sell a home in this market that you do need a real estate expert to get the job done,” he said.
Going with Buy Owner meant going it alone, without the expertise needed to sell a home in a depressed market, said Oliver Ruiz, managing broker of Fortune International Realty in Miami and residential president for the Realtor Association of Greater Miami and the Beaches.
When the market was healthy, the share of brokerless transactions made up nearly a tenth of all properties sold. Ruiz said it has decreased in recent years as homeowners realize they need the marketing depth of agents to complete sales in the tougher market.
A study prepared for the Florida Association of Realtors last November showed the share of Florida sellers who sold their own homes was 10 percent compared with a national average of 11 percent. The study also showed 40 percent of those sellers knew the buyer before the sale.
“Marketing is a very important tool,” Ruiz said. “Just putting a property on the MLS (Multiple Listing Service) doesn’t do it anymore.”
Buy Owner is free to buyers but made money by selling advertising and charging fees to market properties in its magazines and on its website. Fees were based on the number of photos and virtual tours a seller wanted to place on the company’s site. The service included pre-screening prospective buyers and helping sellers with the paperwork required to sell their properties. Sellers were responsible for showing their own properties.
The company landed on the wrong end of a class action lawsuit after consumers complained the company would not allow customers to cancel contracts.
A 2009 settlement covering thousands of customers resulted in refunds for many who paid Buy Owner from 2002 to 2008.
