In a previous post (check it out Here), I mentioned the real estate investors that advertise with the "We Buy Houses" type ads.  You usually see these ads in your local papers and on signs posted through out the area.  In that article, I said that if you are needing to sell quickly, that calling a local real estate investor may be an option, but there are some things you need to know before calling.

#1: A Real Estate Investor is Looking for a Deal

If your house is worth $100,000 and you're wanting $95,000 out of it, you're not going to get it from a real estate investor.  Investors need to buy houses at a significant discount in order to make their profit margins.  The range may vary a bit depending on price and area and condition, but a general rule of thumb is no more than 70% of true value.  If you are behind on payments and/or facing foreclosure, an investor still may be able to help via a short sale on your property, but you're not going to receive any money for selling.

#2: The Real Estate Investor does not represent you or your interests

Most investors will tell you that they are there to help you and that they'll guide you through the process, etc.  The truth is that the investor is the potential buyer of your property and their end goal is to get that property at the best deal possible for them.  Yes, they may have all of the documents ready for you and they'll definitely guide you through the process, but they do not have to tell you anything (like that the true value of your property) to actually help you make a decision.  You represent yourself.  They represent themselves.  Don't be fooled into a false sense of security.

#3:  Not All Real Estate Investors are created equal

It's a simple truth, there are bad apples in every bunch.  While most investors are really there to help you through a bad time (but at a profit to them, of course), there are some that will simply try to screw you out of the property.  Sorry for the harshness there, but it's the truth.  Read #2 again.  Also, there are many more, that while well-meaning, simply are too new to the business to actually know what to do.  They may tell you that they'll buy, sign contracts and everything, but at the end, not be able to close.  You may have wasted months on them when you could have pursued other options.

#4: Trend Carefully with "Creative" Deals

The investor may not use this term exactly when speaking with the seller, but "creative" deals are anything but a conventional purchase.  Again, a creative deal in and of itself may not be a bad thing and may be your best deal at getting out of the home.  Still, you need to be careful.  It's more important than ever to research the investor before committing to such a deal.  Some possible creative deals are: Subject to transactions (you sign over the deed, they make your payments, but YOU'RE still on the mortgage and responsible for it), Lease Option, Straight Option, Land Trust (be especially wary of this one depending on your state), Contract for Deed/Land Contract.

One of the best things that you can do if you're considering selling to an investor is to contact an agent, like me, that specializes in dealing with investors.  That way, you can get professional Realtor representation and a list of investors that may be able to help you.  Truly the best of both worlds.  If you're near my area call me or visit my website for more information.  If you can't find an agent in your area, contact me and I'll help you find one.