1 Comment

Selling your house to an investor

Five things you should be asking when selling your house to an investor

  1.  What is their net offer?

Many investors will make the seller pay closing costs, commissions, or even make repairs when selling your house.  These can add up to be nearly 10% of their offer.  So if they offer you $200,000, it could end up being $180,000 after these costs.  In many cases, working with this type of investor doesn’t give you any advantage over selling your house with a real estate agent.

Whenever I give a homeowner an offer, it is the NET offer.  That is, that it is after any commissions and closing costs.  This means that if I say $200,000, I mean $200,000.  The only things you have to pay are your mortgage, and their property tax proration.  The rest is yours to keep when selling your house!

  1.  Are they wholesaling the property?

There are people out there who will come to a homeowner and offer to buy their property.  They will ask for a 10 day inspection period, but instead of inspecting the property, they try and sell it to another investor for a substantial profit without telling the actual homeowner.  Sometimes it can be beneficial to everyone to have this type of arrangement, but if the investor is unable to sell the property within that 10 day timeframe, they will back out of the contract.  I have even seen situations where the investor tries to put no money down, and so if they back out of the contract after the 10 days, the homeowner can’t keep the deposit.  The homeowner is left scratching their head, wondering what happened, but the investor never planned to buy the house for themselves and doesn’t want it if they can’t sell it to someone else.

When I buy from a homeowner, I always put a good faith deposit down on the house.  I also only do short inspection periods between three and five days.  This way the seller can be sure that I’m serious about buying the house.  I never put a house under contract for which I do not have the ability to buy for myself.

  1.  How much time do I have to move out?

I am really flexible with sellers.  I can buy the house in as fast as two weeks, or I can give up to several months depending on the situation.  I want to make sure that you have somewhere to move and have enough time to remove any personal belongings.

  1.  What repairs do I have to make?

None.  Typically it’s cheaper and easier for both of us if I make any necessary repairs to the property.  For instance, if you need a new roof, or if the garage door is broken, I am able to make my offer that takes into account me having to repair these items myself.  I never nickel and dime sellers for minor repairs and having been in this business long enough, I know how much it costs to make various repairs.  That is how I determine my offer.

  1.  What won’t you buy?

Let’s begin with what I will buy.  I prefer to buy single family homes under $500,000 in Palm Beach and North Broward Counties.  I find that I can bring the most value to those homeowners.  However, I have bought townhomes, villas, and condominiums.  I will not buy in high crime areas.  Sometimes it can be difficult to buy properties in 55+ neighborhoods, but I do my best to make it happen.

No Comments

Condos Part 2

Continued – Condo

So the story continues, I was interested in purchasing the condo, but in addition to the rehab costs, I had to factor in whether I’d be able to purchase the property at all because it was in a 55+ community.  For those who don’t know, a 55+ community is a special designation for many of neighborhoods in South Florida marketed to retirees.  The regulations state that someone 55 or older must live in the house, or be on title.  Nobody under the age of 18 can live in the house as their primary residence, because there are lower taxes which don’t fund schools.  Since I’m not 55, I’ve found that some neighborhoods are OK with me buying a property in their neighborhood so long as I can give them a signed document stating I promise not to live there as my primary home, and that I promise I will only sell it to someone 55 or older.  Other neighborhoods still insist that someone 55 or older has to be on title, even if we promise not to live there which has driven a wedge into a few opportunities of mine.  For those neighborhoods, it can be more difficult to buy because I’m not 55.  I can sometimes work my way around those rules, but I’ve seen it be a deal breaker before.

For this particular situation, I was unable to get in touch with anyone on the board who could give me a definitive answer.  The property management company said no, but I never am satisfied with my first “no”, so there will be a part 3 coming very soon.

But it turned out after all that, the owner of the condo in question received an offer from another buyer and I was no longer in the running to buy the property. 

To be continued…