Popping up and crawling all over like weeds are those "We Buy Houses" signs. I see flyers on walls, signs on telephone poles, and ads in the newspapers.
What is really behind those signs and more importantly, what types of people are behind those signs? The answer varies with each sign.
For countless years, you would see Realtor signs all over the place and you still do. Realtors provide a very important service to each community. They represent a seller who wants to sell a house. Through advertising, a Realtor can create a large network of sellers and buyers and hopefully merry them both up for a commission. A realtor must take certain training and be licensed in the state they are working in.
More than often, these people behind the "We Buy Houses" ads are not Realtors. They are investors who know of some very creative ways to purchase or acquire a home from a seller and then either sell it or hold on to it depending on
how it fits in their plans.
Some are experienced and some are not so experienced. The same would hold true with a Realtor. Some are experienced and some are not, but with a Realtor, they have a Broker who helps them through the difficult situations. Some Investors, who are experienced, have the cash to work with, and are also networked to buy and sell a house very quickly. Where an Investor can be more beneficial is where the seller has little to no equity in a home, or may be facing foreclosure, or must sell a house very quickly and not want to come back.
Although Realtors are able to market a house and in a great market, they can sell it sometimes in less than a week, many times that same market may take 45-60 days to close due to the high demand for loans and appraisals. Talking to a few mortgage brokers in Fredericksburg, VA, I'm told that all appraisers are booked for at least 6 weeks, and then it may take a week to 10 days to get the results. They also said that since underwriting is all automated, all loans that go through Freddy Mac or Fanny Mae are heavily scrutinized with very little human intervention. This sometimes takes a long time to iron out as well.
An experienced real estate investor can get very creative in his/her ability to buy a sellers house. They are able to take it over and make the payments for you, they may have buyers lined up negotiate a price with you and then negotiate a price with a buyer and just "Flip" it to them whereby everyone wins.
Wait, didn't I read something that Flipping is Illegal? I would like to clear this up for everyone. "Flipping" Real Estate is NOT illegal. Fraud is illegal, which is what many have done in the past when they were flipping Real Estate. This mostly involved fraudulent appraisers, investors, and loan brokers who would buy a home, sell it at higher-than-market value to a buyer, get it appraised for that, and the loan goes through. Where this scam was uncovered is when people defaulted on these loans and the lender was unable to sell it for anywhere near the loan amount.
Some Investors know of a way to just take over your property, guarantee they will make your payments from "this moment on" and you can walk away. In some cases this is great, and sometimes you have nothing to lose. Ask for references of the Investor, even if it is from the President of an Investment club they belong to. See if they have helped others and see how it turned out. If the Investor belongs to an investment club, more than likely they are taught that integrity goes a long way, and are taught on how to invest wisely. There was a news report in Indiana where an investor was getting the deed from many sellers with the promise that they would make the payments. This investor put tenants in the property, collected the rent and would not make the payments. There are unscrupulous people all over the world in every facet of business. You should always use caution, but don't count the investor out. They have some creative ways of helping with your needs that most Real Estate agents don't know and some don't want you to know.
Remember, a Realtor makes money when they sell the house. Ever try to back out of a listing? I tried once and it is not easy. There are many ways that you can sell your home quickly to an investor. There are as many options as there are colors. You can Lease it to them with an Option to Purchase, or Sell it to them under a Land Contract, where you can collect an installment income.
One thing you must be aware of with an investor is that they are doing this to make some type of profit. If there is nothing in it for them, then they won't want to work with you, but keep in mind how much of the sales price goes to a Realtor. Typically this is 6%. You can get very creative with an investor and everything is negotiable.
I have talked to Realtors and Investors alike and both say they can "Sell Fast, Close Fast", but many won't say how fast. A closing is simply the exchange of property for some type of consideration (usually monetary). When working with an investor, you can sometimes close within 24 hours, but typically within a week. With the conventional route, considering loan applications/approval, appraisals, title checks, etc, it may take as long as 2+ months. I know of one conventional purchase that was suppose to close on April 28th, and as of this article, it still hasn't closed because of some petty information gathering that an underwriter wanted. I'm sure this could get extremely frustrating.
Most investment clubs have both investors and realtors as members. If you would like to know what type of options you have, contact a Real Estate Investment Group in your local area and you'll be incredibly surprised at your options as a seller.
Rich Blecher
President
Virginia Real Estate Investors Association
