Don’t Be Caught Off Guard When Working with a Real Estate Investor
First of all, what is a real estate investor? A real estate investor is anyone who invests in properties, either directly or indirectly. A direct or active investor buys houses. They may flip them, fix them, and sell them. Or they may keep the property and let it grow in value, depending on the market. An indirect or passive investor may simply hire someone else to look over the property while they decide what they want to do with it, taking a passive approach to the investment.
So how does this help you? Flash Realty Solutions is an active real estate investor. We purchase homes for cash with the intent to fix them and either resell or rent them. We work directly with you, and do not hire a third party which means there is no additional expense or fee taken out of your cash offer.
This may sound scary. How could an investor possibly be looking after your best interest if they just want to make money? We address that later on, but rest assured that any real estate investor at Flash Realty Solutions works for you. At Flash, we will discuss all your options and help you choose the best solution for your specific home, situation, timeline and goals. Whether that means selling the house as-is for cash, spending a little to list it on market, or completing additional repairs to sell for a premium, our job is to make your life easier.
Investors v. Wholesalers: What’s the Difference?
Think of a wholesaler as a middle men or broker. Wholesalers find properties and individuals looking to sell their home and contract the property. But instead of closing on the contract, and doing the work themselves, they find a third party, usually an investor, to close on the contract. The difference between what they purchase the home for from you, the seller, and what they sell it to an investor for is their profit for putting the deal together.
Generally speaking, the goal for a wholesaler is to find a home in distress and then connect them to an end buyer willing to pay more than what they contracted the property for, meaning the seller loses out. But more importantly, wholesaling requires no capital investment and a real estate license is not needed making the barrier to entry very low, if not non-existent. What does that mean for you? It means that an individual who makes an offer on your home may not fully understand the market, or have the right contacts to fulfil their promise. This could result in a renegotiation of price downward, so that they can still make a profit, a pushed closing costing you time you may not have, or the deal may fall apart all together.
Now it is fair to mention that not all wholesalers are bad. Those who are licensed agents with a firm grasp on the real estate market in your city and who have a large network may very well be able to perform. In this instance, the wholesaler does offer a true service by connecting the seller to a much larger network to sell their home quickly and without too much hassle,
Why Should I Avoid Wholesalers?
The biggest issue we see with wholesalers is that they are not upfront and honest with their intentions. Which can end up costing the seller both time they don’t have and money they need or are counting on. Simply put, what you see, may not be what you get, Let’s break it down.
You want to sell a home that you paid $300,000 when you bought it 20 years ago. You contract a buyer who happens to be a wholesaler who determines that the area you are in has appreciated and the home is worth close to $400,000 all fixed up. They inspect the home and offer you $275,000 based on needed repairs as a result of repeated wear and tear over two decades and necessary maintenance to several big ticket items. You know the home needs work and the two of you decide this number is fair so you sign a contract.
The contract likely has verbiage that allows the wholesaler to either back out during an option period or renegotiate the offer price. If the wholesaler finds a buyer, say at $300,000, they pocket the $25,000 and you get the agreed upon $275,000. That said, if they cannot find a buyer they may reduce your offer to say $250,000 and sell it at $275,000 so that they still make their desired commission. Meaning that while a buyer did in fact purchase your home for $275,000, you will only receive the $250,000 renegotiated.
Worst case scenario, the wholesaler will kick the can down the road looking for an end buyer and will terminate the contract if they cannot find one. If you need to sell your home fast, this may cost you valuable time. If you suspect an individual is planning to wholesale your house look for an options period or the ability to pull out of the contract. Require them to put down earnest money or better yet, give Flash Realty Solutions a call.
But Is A Real Estate Investor Really That Much Better?
Real Estate Investors shoot straight, and they don’t involve any third parties. A reputable investor will come to your home, tell you what they believe it is worth, and give you a cash offer right then and there. A good real estate investor will even give you a handful options that you can choose from, tailored to your specific situation.
The difference? You get the full sale amount. No one is pocketing any additional money made except for you. I don’t know about you, but I don’t like giving my money away, especially when I didn’t even know it was mine to begin with.
When Working With A Real Estate Investor, Should I Stay Local?
Remember when you were planning that vacation you never got to go on because of a little thing known as a global pandemic? Remember trying to make your itinerary, and struggling to find the right places to stay, eat and see, because you just didn’t know enough about the area to know what you needed to try?
What was the problem? You didn’t spend much time there, so you didn’t even know where to start.
Now imagine selling your home to someone who has never stepped foot in your town. Crazy right?
This is the main problem with selling to a virtual or long distance real estate investor. They don’t know your market or your situation, so chances are they can’t give you an accurate quote you can trust. At Flash Realty Solutions, our agents only buy homes in areas they know and trust, so they can give you a fair and accurate deal.
Yes, We Really Want to Help!
Okay, so you have the highlights. Wholesalers are risky and selling to a robot online is probably a bad idea. But how do I know I’m not being taken advantage of? Don’t real estate investors just want to make a profit?
Like other businesses, we get cost breaks for economies of scale, which means that we don’t need to rip you off to make a profit. That means that when you sell us your home, we spend a fraction of the cost on materials and labor because we get so much at once. So our profit comes from decreased cost rather than increased revenue.
Yes, we want you to sell us your home at a fair price. But offer a hassle free sales process in return. We cover closing costs, do not charge commission, and do not require any time or expense go into preparing the home for sale. No fancy pictures, no cleaning and certainly no staging. Helping you sell your home quickly and hassle free is our priority, everything else comes second.
Time to Take the Plunge
If you’re ready to sell your home for a fair price, contact Flash Realty Solutions today to get your quote. We will evaluate your home and let you know what we believe is the best course of action. Maybe we buy it, maybe we recommend some repairs that will allow you to list your home at market price. Call us to see how we can help you today.