If you live near a major city or even a small city I’m sure you have seen the “We Buy Houses”, “Sell Your House Fast”, “We Pay Cash for Your House” signs.
Where do these signs come from and why are there so many of them around? Before we get into that let me explain how the investor real estate market works. Actual real estate investors don’t do much advertising. They have connections with real estate agents and wholesalers. When you think of the word wholesaler you don’t really think about real estate, but if your in this profession you are well aware of that phase. A real estate wholesaler is a middleman between the home seller and the buyer. Here is an example of how it works. You inherit a house from your great uncle Eugene. One weekend you go look at the property and you realize you are in way over your head with the amount of work that the house needs. On your way home you see a sign on the side of the road “Joe Buys Houses, Fast, Cash offer”. It sounds to good to be true, but you make the call. Joe answers the phone and you schedule an appointment the following weekend to meet him at the property. Fast forward to the meeting with Joe, you walk around the property with him and he makes a bunch of comments on how much work the property needs. After he views the house he offers you $50,000 to buy it. You think it’s on the low side, but since your life is already busy you take the offer. Two weeks later you meet Joe at the title company. You sign the paperwork and they wire the $50,000 into your bank account. Now here is what really happened. As soon as Joe left the property he was on the phone with Ray who is an investor. He tells Ray he has a house for sale for $90,000. Ray goes to look at the property a couple days later and agrees to buy it for $90,000. Two weeks later as your walking out of the settlement, Ray is walking in and you don’t think twice of it because you have never met him. So how can this happen? When you signed the contract with Joe the wholesaler it stated Joe can assign the contract. All he needs to do is make another contract with Ray stating he is the new buyer. Ray signs his settlement paperwork right after you sign your paperwork and Joe walks away with $40,000 without ever paying for the property. If you are ever in this situation keep this in mind and do your research. Look at the assessed value, talk to an agent, and talk to a couple investors like Supernova Properties to make sure you are getting a fair price. If you do go with an investor you won’t be getting full market value, but they should be able to come close.
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AuthorKevin has a background in Real Estate and hails from Baltimore, MD ArchivesCategories |