Some Homeowners Refuse to Sell to Investors

COLUMBUS, Ohio – A few days after Francie Orthmeyer listed her Northeast Side home this spring, she had 26 offers on the house, the highest one for $250,000, in cash.

She instead accepted an offer for $13,000 less. The reason: She did not want investors to buy her home of 31 years.

“I just did not feel good about it,” Orthmeyer said. “I thought, ‘this guy must be an investor, not someone buying it for a home.’ I didn’t want to do that with my neighbors. I like my neighbors.”

Orthmeyer instead sold her home to a young couple purchasing their first residence.

“I knew they had been looking for a long time, I knew they were getting discouraged,” she said. “I’m 78. I think they need a house more than I need the money.”

Orthmeyer is one of many Columbus-area homeowners who are fighting back against real-estate investors’ growing presence in the only way they know how: by refusing to sell to them – even if it means leaving cash on the table.

It’s impossible to know exactly how many sellers have refused investor offers, but when Orthmeyer’s agent, Kathy Chiero, mentioned Orthmeyer’s decision on Facebook, her post received about 500 likes and more than 100 comments, many from other agents who said they had similar clients.

“What it tells me is that this surprising choice of this woman is inspiring in its reflection of the rare time when a homeowner chooses a buyer’s need over their wallet,” said Chiero, with Keller Williams Greater Columbus Realty.

Investors have played a growing role in the Columbus housing market during the pandemic. During the last three months of 2021, investors bought 16.8% of Columbus-area homes, or about one out of every six homes, up from about 12.4% a year earlier, according to the real-estate firm Redfin.

Another study, released Tuesday by the National Association of Realtors, found that institutional buyers purchased 16% of Ohio homes in 2021, tying the state for the sixth-highest rate in the nation. Institutions bought 20% of homes sold last year in Franklin County, according to the study, while in Cuyahoga County, they bought 26% and in Hamilton County, 23%.

“I really started noticing investors early on with the 2021 market, mainly with Blacklick and Gahanna listings,” said Tina Wedebrook, an agent with RE/MAX Connection in Gahanna. “Especially in Licking Heights schools, every single listing had investor offers – we’d have three, four, even five curb offers, sight unseen, all for cash.”

But, while many sellers take the investor cash, others don’t.

“I’ve had sellers say, ‘This is a family home,’ and they didn’t want to sell to an investor who might just flip it or rent it out,” Wedebrook said.

Buyers typically find themselves at a disadvantage against investors, who often offer cash and the promise of a quick closing, and frequently go over the asking price.

Kat Hartnagel understands first-hand how hard it is to compete with investors. She and her family moved to North Carolina three years ago after repeatedly being beat out of buying a home in California.

“We just couldn’t get a house, no matter how much we offered, because investors were getting them all,” she said. “We just couldn’t compete.”

So when Hartnagel’s mother, Donna Gerlach, passed away in the fall, leaving her Westerville home, Hartnagel made the decision not to sell it to an investor, even if it meant less money.

“I flat-out said, ‘I want a family in there, I don’t want an investor,’” she said. “It’s not about the money, it’s who’s going to be there.”

Working with Karen Newbanks, with LifePoint Real Estate, Hartnagel listed the home at the end of January. Within days, the home had attracted 18 offers, about half of them from investors, Newbanks said. Hartnagel sold the home to a man with two children.

“Having a family in the house is more important than an investor,” she said. “There are families out there who have been trying to get homes for years.”

Agents are careful to note that homeowners don’t have carte blanche on who to sell to. They can’t, for example, refuse to sell to people based on race, religion, sex or age.

But investors are not a protected class, noted Chiero.

When Joe DeFrancis and his family recently sold their Delaware home, they received an offer from an investor the moment the “coming soon” sign was posted. DeFrancis told his real-estate agent, Dena Feraru, with Coldwell Banker, he wasn’t interested.

“I wanted to make sure I was selling to someone who would welcome the home as we did when we moved in, and the satisfaction of selling to someone who would make it a home,” DeFrancis said. For DeFrancis, whose family had lived in the home seven years, the property meant more than money.

“I wanted someone to benefit from the family environment of the house, instead of someone trying to just make money off the house,” DeFrancis said. “Given how intense the housing market is right now, not a whole lot of families are able to jump in front of the line like investors … For me it meant more to sell to a family instead of an investor.”

Chris and Christy Reaman were both hurt and helped by homeowners who chose not to sell to investors. The couple was renting a home in Reynoldsburg when the investor-owner sold it to someone who planned to occupy the home, giving the Reamans two months to find a new place. As active duty Army, Chris was relying on a VA loan, which made it very hard to compete against cash offers.

“We were outbid on every single house we’d bid on,” he said.

After nearly giving up, the couple noticed a three-bedroom, two-bath Reynoldsburg ranch newly listed for $235,000. They connected with the agent, Taylor Miller, with CRT Realtors, who spoke with the owner, Nelson Kohman, himself an investor who runs the firm Scioto Valley Enterprise.

The home ended up getting four offers, one for $10,000 over asking with a clause agreeing to go up to $10,000 more if the appraisal didn’t come in high enough.

Instead, Kohman went with the Reamans’ offer for list price of $235,000.

“We found out he was in the military and needed a place to live,” Kohman said. “There was a considerable difference in the offers, but it still allowed us to profit on it, and we felt he was a special person.”

Buyers like the Reamans who are relying on FHA or VA loans are at a particular disadvantage when competing against investors because of some of the requirements that come with the loans, such as inspections.

Real-estate agent Jeanne Zekan has landed homes for some of her veteran clients by linking them with sellers who choose veterans over investors.

“Typically, the bottom line is people want the most money. Who wouldn’t?” said Zekan, with eXp Realty. “But I’ve had some who want veterans.”

Zekan recently represented a veteran who bought a home from another veteran on the West Side for list price after her client wrote a letter explaining why he wanted the home.

“I’m sure they had other offers well-above list,” she said.

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