Real Estate

Deception -- or alternate business model?

Real-estate investor defends modus operandi

Local residents have been caught in a five-year debate over the activities of one man, a real-estate investor named Jason Buzi.

Hundreds of people have commented on the Weekly's online Town Square forum, claiming Buzi's tactic for buying homes in Palo Alto and surrounding cities is a scam.

There is not a firm consensus on what it is he does. Some claim he buys properties for below-market value and then sells them (through a clause in his contract with the seller) to another buyer for a profit.

Buzi denied it, saying his contracts simply provide room for a partner to help him pay for the houses he buys.

"I'm not wealthy enough to buy every property I make an offer on," he said. "So I add partners to the contract."

Those partners are sometimes added to his contracts after the fact, Buzi said, but that he works with the same people consistently. However, he was not comfortable giving out the names of his partners, saying they do not necessarily want to be associated with some of the bad press Buzi has received online.

"It's not like I go out and find random people," he said. "I've worked with these partners for six or seven years."

Backing out of a contract is rare for Buzi, who said the only times he has not been able to find a partner to invest with was while working in unfamiliar areas, like in Alameda across the bay.

"When I enter a contract, my intent is to close," he said. "There have been very few contracts that I have walked away from."

He also said the prices he pays sellers are fair.

"I don't lowball," he said. "That is exactly opposite of what I do. Most of the profit is coming from adding value not from low prices."

Buzi said he rehabs properties that have not been put on the market yet, meaning he buys homes that need some fixing up. After refurbishing, remodeling and sometimes rebuilding, Buzi and his partner will resell the home for profit.

This kind of real estate tactic is fairly common, Buzi said, but his marketing technique is what has garnered him a not-so-savory reputation in the area.

"There's a lot of investors but there are very few people who do the marketing that I do," he said.

Buzi floods local neighborhoods with fliers asking homeowners if they are looking to sell their homes to him. His perks: no real estate agent, no staging and no open houses. He also tells prospective buyers that they can remain in their homes for a time, presumably enough time for him to partner up with another investor.

"This is how I make my living," he said. "Actively looking for deals and trying to get one a month."

Originally working in the mortgage business, Buzi said he found working for someone else in such a volatile market difficult.

Buzi left the mortgage business in 2005 and started helping a friend flip houses.

By 2008, the poor economic climate got to Buzi's business.

"Things got tougher and I kind of took a break," he said.

As he saw the market getting better, Buzi decided to reenter the real-estate game in 2010, readapting to the new housing environment, he said.

"You have to be adaptable," he said, noting that he hadn't purchased a short-sale home, one that a bank had taken ownership of, until last year.

As far as allegations against Buzi for scamming sellers and even for having illegal practices, he said most of that is coming from people who either do not understand or who are threatened by his business.

"Real-estate agents obviously don't like me buying right from the seller," he said.

David Blockhus, a real-estate agent with Coldwell Banker, confirmed that what Buzi does is not illegal, but that is misleading.

"How he makes his money is by buying houses that have not been put on the market," he said. "We have a board of ethics that we have to follow, he doesn't have that."

Blockhus warned sellers that they will be getting less than market value for their homes when selling to buyers like Buzi.

"In today's market, if you put (your house) on the market, with full visibility, you are going to do substantially better," he said, noting that there are some cases in which people do not want to go through a real-estate agent, even if it means more money, because they will have to disclose information about their property or have open houses and other disruptions.

It has been speculated that the people selling to Buzi are not informed sellers and Blockhus agreed.

"I don't know for sure, but I think his target market are people who don't know what they are doing," he said.

Buzi said his partners and the people he has actually purchased from are not among those accusing him of bad business practices.

"The people I have done business with have nothing bad to say about me," he said. "I've gone to attorneys, I've made sure everything I do is totally legal."

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10 people like this
Posted by No-thanks
a resident of South of Midtown
on Oct 18, 2012 at 4:04 pm

OK Jason, hope you are reading this. Enough. No more fliers, letters, fed ex envelopes with ready to sign contracts. We know how to contact you if we want to sell. So stop with the mass marketing.

4 people like this
Posted by Journalism
a resident of Another Palo Alto neighborhood
on Oct 18, 2012 at 4:45 pm

I'm a bit surprised that the reporter didn't do a little more digging about Mr. Buzi's activities. His outing as a spammer (Web Link ), his Cashtomato stunts (Web Link and (Web Link), his BBB rating of F (Web Link), he's listed at AccessBancMortgage in San Jose, and Pantera Group in Redwood City. He's somehow involved with Loanswift in San Jose.

Seems he's quite an active guy. The story needs fleshing out.

2 people like this
Posted by Jan H.
a resident of Old Palo Alto
on Oct 18, 2012 at 8:11 pm

We got a letter in the mail from this guy in February, claiming he had a buyer, a nice family, who wanted to buy our house and would pay top dollar. It sounded too fishy to be true, so I threw it in the recycling bin.

A couple of days later I had second thoughts and showed it to my husband, who laughed and said that if it were true, another letter would be forthcoming. So, I tossed it in the recycling bin a second time. After all this time, I never received anything else from this guy.

Did everyone in town get one of these letters, or what?

4 people like this
Posted by Marliver
a resident of Mountain View
on Oct 23, 2012 at 11:42 pm

He's still around. And this week, he advises against his prospective sellers seeking an attorney to review his 'offers'.

Like this comment
Posted by ducatigirl
a resident of Old Palo Alto
on Oct 25, 2012 at 12:40 pm

ducatigirl is a registered user.

Sounds like he was caught with his hand in the cookie jar.

2 people like this
Posted by David Blockhus
a resident of Los Altos
on Nov 15, 2012 at 11:20 am

Here is a link to a post I did on a selling home to anyone who shows up on your doorstep - Web Link

Like this comment
Posted by David Blockhus
a resident of Los Altos
on Nov 15, 2012 at 11:24 am

[Post removed.]

Like this comment
Posted by Gordon
a resident of Palo Alto High School
on Nov 6, 2013 at 9:16 am

Wholesaling homes is very legal. It is don't quite a bit in other parts of the U.S. where average price of homes is 50k. Agents don't make much money on homes at 50k or less so wholesalers sell them to end buyers.
Homes in the bay area are way too expensive so people get in an uproar if someone sells fast to the middle man who makes so money.
If you want a wholesale home , go to Web Link

Like this comment
Posted by annoyed
a resident of Midtown
on Apr 8, 2014 at 2:39 pm

got a letter from this guy today. letter with no return address. letter content is pretty condescending, to say the least.

scam artist. go somewhere else.

Like this comment
Posted by Concerned
a resident of another community
on Apr 14, 2014 at 8:39 pm

I received a letter from Jason Buzi today, (04-14-14) on a plain paper. No letter head. He stated he can offer all cash, no closing costs, no commission, no escrow fees, no title reports, no repairs, no costs of any kind. [Portion removed.]

Like this comment
Posted by Ptown2
a resident of another community
on Apr 16, 2014 at 10:29 pm

I too just received one of his 'letters'. He's annoying but don't think it is illegal. If I get another I'll consider it harrassment and will then report it to authorities

Like this comment
Posted by Kay
a resident of Old Palo Alto
on Apr 22, 2014 at 3:51 pm

I have been receiving his mailings for over 5 years. It is a nuisance, I get about 2-3 a year. It seems like a scam! I think he may be targeting older homes, ours is built 1932.

Like this comment
Posted by pat R
a resident of Barron Park
on Apr 29, 2014 at 4:30 pm

i have received several letters from this guy and I'm a Realto he is false and mis-leading.
I want him to stop.

3 people like this
Posted by Wondering
a resident of Mountain View
on Jun 6, 2014 at 8:18 pm

Plenty of Realtors were involved in shady loans, sales, and purchases during the lead up to the popping of the real estate bubble, and now have the gall to call out anybody?

What's property worth in MT View? Who knows?

Give me a break.

When at the carnival, count your change.

Like this comment
Posted by watcher
a resident of Adobe-Meadow
on Jun 6, 2014 at 10:06 pm

[Post removed.]

11 people like this
Posted by Scott
a resident of another community
on Jun 7, 2014 at 12:51 am

Buying and selling real estate without a broker is not illegal. In fact, there are several reasons that a seller might want to pursue a direct sale, including if their property is in poor condition. If your property is in poor condition, lenders will not lend on your property until it meets certain standards, essentially limiting your buyer pool to all cash buyers. An all cash sale is understandably and typically made at a discount, so it should not be a surprise that the sellers of these properties may not want to entertain the additional 6% brokers fee when they can negotiate directly with savvy all cash buyers.
If you are a seller trying to sell a property in poor condition, your options are:
Option #1:
Contact a broker:
1. Have them give you the long list of what needs to be done before they can/will market your property (lenders are fairly particular these days on what they will lend against)
2. Arrange and finance the necessary repair work that could cost you tens of thousands and weeks or months to complete.
3. Finally list the property and endure the open houses, offers, counter offers and hopefully obtain and accept a fair offer
4. Get nickeled and dimed after the buyer locks up your property in contract, completes their inspections, and finds more issues with the home that need to be repaired
5. Perform the additional repairs or credit the buyer to perform them after escrow closes
6. Hopefully close the deal and then pay a 6% commission to your broker
Option #2
1. Negotiate a fair price with a direct buyer and close in a week without having to deal with all of the crap associated with Option #1.
There is really no option for some sellers as they may not have the resources to pursue option #1. Granted, option #2 is not for everyone or every situation, but it is an option and there is absolutely nothing wrong or illegal about it. It does however cut out the brokers, who understandably take issue with this option. (Reference David Blockhus comments above)
As far as the marketing strategy is concerned, welcome to our capitalist society. I am sure most of us receive mail from Bed Bath & Beyond on a weekly basis. Does this mean that if their offerings do not appeal to us that they are harassing us to spend our money at their local venue and that we need to report them to the Police, or do we simply discard their offerings with the rest of our junk mail?
And finally, why are there no unsatisfied customers expressing their dismay at this person's business practices or ethics? Why do the only folks speaking out here seem to be brokers or folks that don't like his marketing strategy?
Things that make you go ...hmmmm
....a capitalist sympathizer

5 people like this
Posted by Bob
a resident of Menlo Park
on Jun 7, 2014 at 6:37 am

You don't suppose that real estate agents and newspapers are only complaining because of the added competion do you? If they were truly interested in sellers getting top dollar dropping their commission would achieve that goal. And you'll never see newspapers write articles about 'corrupt' practices of those who provide the bulk of their advetising dollars. What Mr. Buzi is doing is offering a service to sellers who are under no obligation to accept. That isn't corrupt anymore than newspaper advertising.

Like this comment
Posted by Watcher
a resident of Adobe-Meadow
on Jun 7, 2014 at 8:21 am

Several of the local news stations are saying that he is the one hiding cash around San Francisco and San Jose. Here is a link in case you are interested in reading what they are saying Web Link

I have no idea of the validity, just passing on the info.

5 people like this
Posted by David B
a resident of Los Altos
on Jun 9, 2014 at 11:02 am

David B is a registered user.

As Scott correctly points out, it is not illegal to to buy or sell real estate without a broker. It is an opportunity to avoid real estate commissions, but at what cost. If you are a home seller and live along the Peninsula and want to sell off market or directly to an individual who leaves a flyer on your doorstep, you are taking money directly out of your pocket and putting it directly into the investor's pocket. If you are comfortable with that, then go for it. Or if you are like most homeowner's who want to maximize the sale of your home and net the highest amount of money for yourself and you heirs, you will want to have as many qualified buyers see your home. The more qualified buyers who see your home the higher the sales price. Remember, it is a seller's market out there, but selling directly, you take away the benefits of it being a seller's market.

There is some inconvenience involved with selling your home. But again if you want to maximize your profit, you will want to go through this inconvenience. Depending on your home's condition, you may want to do some upgrading of its condition. But that must be weighed against the time, cost, and inconvenience of doing so. I just sold a home that was in original shape (built in the 1950's with no major upgrades). In discussion with the estate, we decided that we would only get inspections done on the property. No repairs or remodeling was done. The total cost of all these "expensive and time consuming" things that Scott says agent's demand...less than $1,000. and two days of actual inspection time.

After exposing it to the entire buyer community, we received 6 offers. Note: the property was bid up far above what we had hoped for and more than two of the offers were all cash. After weighing the pros and cons of each offer, the trustee for the estate chose to go with an offer that had a loan but 35% cash down. We could have negotiated the best all cash deal up to a higher price, but the trustee was comfortable with the qualifications of the buyer's offer they chose. There were no issues with the financing and we closed in 23 days (including the 3 day holiday). The buyer did not come back and nickel and dime us because, as is the case with a large percentage of sales done locally, the buyer came in with no contingencies (i.e. legal reasons to back out of the deal without penalty). So my seller received true fair market value for their home (6 offers) because it was exposed to the market and were quite happy. This is just one of many true life examples that selling a home that is fully exposed to the market makes the most sense for the seller.

After paying the real estate commissions and closing costs, the estate netted much more above the last sale in the neighborhood. So even by paying real estate commissions, they made a substantial profit above and beyond the last "comps" in the neighborhood.

If you are an investor like Mr. Buzi or Scott, you want to buy real estate at the lowest possible price and by purchasing directly from the homeowner, you are buying it at the lowest possible price. No buyer competition and when buyers compete for properties, prices go up.

One question you might ask a real estate investor is how do they sell the properties that they have invested in? My guess is when they sell, they want to have their investments shown to the most amount of qualified buyers....But that is just a guess.

By the way, I have nothing against real estate investors buying off market. If they can do it, more power to them. What I do have issues with is that it is somehow done to the benefit of the seller.

Sorry, but further commenting on this topic has been closed.

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