I received a two-page “offer” in the mail of $47K for some real-estate I own, with a contract ready to sign. It wasn’t a real offer. I’ve done some analysis so that other folks can understand what’s going on when someone out of the blue sends you a letter offering money for your property.
The offer was from Richland Acquisitions of Dallas, Texas, owned by one Armaan Premjee. You can see a YouTube video of Mr. Premjee explaining his business here. He claims to be a “wholesale” land flipper. It seems that sometimes he actually does buy land. He just doesn’t buy all of the land for which he sends offer letters. Or maybe not much of it. Which seems deceptive to me.
What you read here is all my opinion, and I am neither an attorney nor a real estate expert. I’ve been sued for defamation before, so I am careful to stay on the right side of the 1st Amendment and the California anti-SLAPP law. (I won my case, and the court made the guy who sued me pay $315,000 for my defense.)
Mr. Premjee and his company’s offer included a contract that I would have been required to sign by April 10 if I wanted the money. It was March 20 when I received it. It had a few interesting things:
- It was binding on me, but it allowed Mr. Premjee and his company to back out any time right up to the final closing date, for any reason.
- It had a maximum 112-day delay between contract acceptance and closing, when I would supposedly get paid.
- It included a term allowing them to advertise my property before they actually paid for it.
- It included the fact that there could be a “double closing”. I think this means that they may sell your property to someone else at the same time that they buy it.
I wrote to Mr. Premjee asking for the name of his escrow company and why there was a 112-day delay between the contract acceptance and closing. I quickly received an email back from one “Brian Smith” stating “After taking a closer look at the property we have decided it would not be a good fit for us.”
So, the offer wasn’t real. I can guess a few things from this:
From the video referenced above, it’s clear that the letters are sent out in bulk. He talks about making offers in “entire counties” and scaling to “entire states”, for a set of properties in those areas that fit his initial parameters, stated in the video, things that make the property more easily buildable and more likely to sell.
Although the letters appear to be offers, I don’t believe that Mr. Premjee and his company have performed their full due diligence on the property before making the “offer”, as indicated by Mr. “Smith’s” email quickly rejecting my property once I inquired about it. They make no commitment to actually go through with the offer. So, for all of the people who return signed contracts, it sounds to me that Mr. Premjee and his company then take a look at the properties and decide which ones they are interested in, and maybe at what price.
And what about the “double closing?” One of the contract terms allows Mr. Premjee and his company to advertise your property before he actually pays for it. So, it sounds to me like the “wholesale” part is that he actually gets his own buyer for your property before he pays you for it, buys and sells at the same time, and pockets the difference. And perhaps if it doesn’t sell in those 112 days, he doesn’t buy it at all.
OK, clever “system”, as he calls it in the video, but in my opinion somewhat shady, because it’s not explained to the land owner what is really happening, and that the offer isn’t really an offer. Probably nothing illegal but I will check with the California Department of Real Estate.