Two Cash Offers, Two Different Outcomes

Over the past year or so, two of our past clients set out to sell their homes quickly.

Both succeeded in selling, but their experiences revealed how unpredictable the “cash offer” marketplace can be – the one you see advertised on TV, online, and even on hand-scrawled signs by freeway exits. Seller beware!

Let’s see how much we can share – without getting sued.

Client Backgrounds and Choices

One client had bought with us six years ago in South Torrance. The other, five years ago in the Hill Section of Manhattan Beach.

Both reached out for advice, but made clear they were exploring “cash offer” options.

One ended up with a smooth transaction. The other endured a nightmare with a wholesaler, before turning back to us for a traditional market sale.

Unusual Torrance Modern

5251 Zakon Rd. (4br/4ba, 3,293 sqft.) sits on a quiet, elevated block in South Torrance. Larger than most neighborhood homes, it was custom-designed in bold style for a former rock-and-roll drummer. Our clients bought it in 2019, appreciating both the size and quirky design. By mid-2024, they were ready to sell quickly to fund a move out of state.

We came prepared with a marketing plan, and some research. History showed that whenever this house hit the market, sellers overestimated its value. It would linger and eventually sell for less. Our advice: Price it right from the start.

Before we could list, however, the sellers spoke to an investor offering cash. The net proceeds matched almost exactly what we had projected for a properly priced market sale.

The only question was whether the firm would honor the deal. They did, fully, closing at $2.221M. Our clients skipped the prep, staging, and uncertainty — and left with cash in hand. We congratulated them.

Then, the pattern we’d warned about repeated.

The investor listed the home for resale at $2.470M in July 2024. The home sat for nine months, price cuts followed, and the listing was canceled at $2.300M. Re-listed in May 2025, it finally sold for $2.240M.

Considering acquisition price, holding costs and other costs of sale, this deal did not work out for the investor, which likely aimed for around $200K profit, but instead took a loss.

Hill Section Tuscan

508 Larsson (5br/6ba, 4,680 sqft.) is a custom Tuscan that sits on a double lot at the eastern edge of the Hill Section. After five years enjoying the home, our clients were ready to move on, so they reached out.

They were aware that the home had taken quite a while to sell in prior attempts. (See our post, "Last Time, 4 Years - This Time, a Quick Sale," for details.) We offered a valuation and a plan, but the sellers opted for one of two "cash offer" companies that had put pen to paper for them. It would all be over so quickly, it seemed.

The buyer turned out to be a real estate wholesaler – a firm that contracts to buy, then assigns the contract to another buyer for profit.

Soon after signing, the wholesaler buyer began marketing the home, even putting it on the MLS (although in a way that, oddly, blocked most online distribution).

As they shopped the deal, they came back to our sellers with reduced offers, evidently after learning from other buyers that the liquidation price for the home was too low for the profit that the wholesaler expected.

The sellers felt betrayed. They canceled the contract and called us.

We listed the home as “coming soon” at $4.249M. Almost immediately, we received a full-price offer – without even a showing.

The sale closed at that price, which was actually $49K more than the wholesaler had listed it for, and our seller clients netted more than the wholesaler had initially offered. 

Ethics of Wholesaling

Is it ethical to offer less than market value?

To contract for a property you never intend to close on?

Wholesaling is often promoted online as a get-rich-quick scheme. (Imagine being able to profit from real estate sales without ever buying or taking possession of a property!)

There is a growing argument that wholesalers should be better regulated, and perhaps licensed for the real estate activity in which they engage. Some of what a wholesaler does is more like a principal (buyer or seller), while other stuff is either on the line, or over the line, into the practice of real estate brokerage.

One thing we don't like: Most of these cash-offer firms urge sellers to proceed without representation, disclaiming any agency role. That leaves homeowners unrepresented in multi-million-dollar transactions with sophisticated operators who know every trick – and who aren’t obligated to share information or treat the seller with any particular deference.

What stood out in these two cases: The firm that concluded the Zakon Rd. purchase as agreed – but later lost money – was a licensed brokerage. The wholesaler that repeatedly reduced its offer for Larsson – until the sellers walked away – appears to be unlicensed.

So, is a cash offer too good to be true?

Sometimes, yes. And either the buyer or the seller may suffer.