August 12, 2017
We Buy Houses for Cash – Is It for Real?
Response to post Updated 11/6/2016 authored by Elizabeth Weintraub, DRE # 00697006, Associate-Broker @ Lyon Real Estate in Sacramento, California
While the above post was updated November 6, 2016, it is on the internet so this article keeps coming up and may influence those that are contemplating sale of their property to “We Buy Houses for Cash” guys.
While I understand some Realtor’s need to bash the Real Estate Investment community that may or may not use a licensed Realtor to buy and sell their properties, I think Ms Weintraub’s attack comes with limited knowledge and a distinct prejudice which has allowed her to broad brush an assessment of all those who participate in this business.
First, the Real Estate Investors who advertise cash purchases, whether in the mail, nailed to a traffic post or advertised on TV, regardless of the bright colors, bold type and cluttered copy, are serious buyers of real estate and offer a service alternative to using a licensed Realtor to sell your home fast and for cash.
So let’s test the “smart” person litmus test:
If you are in a bind, and many of us found ourselves in real trouble (no pun intended) when the market crashed for home owners in 2008-2009, which caused financial hardships for many, the back lash developed into money strapped owners that could not pay their mortgages and keep their homes repaired or updated because of that burden. The choices were few and it was either pay the mortgage and forget the upkeep or abandon the property and let the bank take it back. Even though the banks were complicit in the crash by selling mortgages to those that could not afford to pay, the homeowner, was left with the burden. Let me assure all those reading this article, the banks were not prepared to deal with all the foreclosures they encountered and whether you believe it or not, there are still many homes (ghost homes) that have been abandoned which the banks have not acknowledged on their books. Stay tuned for an article soon to come revealing this issue….
During this timeframe, there were conglomerate investors that bought homes for less than a quarter of its initial value and waited out the resurgence of the market to resale these homes. It was a risky investment as there was no telling how long the recovery would take, but there were many sharing in that risk so they waited it out. These properties were later sold to investors that would purchase and rehab the home in order to resell. Admittedly, not all rehabbers do the right thing. Some were in it to turn a quick profit instead of ‘truly’ rehabbing the home and only applied the minimal cost to make it look presentable. Literally all of the investors, regardless of their approach to rehabbing a property, had to complete the process of title insurance in order to even begin the process of rehabilitation. That is the law. If it isn’t yours, you cannot fix it or resell it.
Today, Investors who buy, rehab and resell properties must be very selective in their purchases. They do look for foreclosures, homes that do not sell when listed by Realtors, people who are facing financial difficulties and those who have homes they need to get rid of due to job changes or loss, health issues and loss of loved ones who have left them with property they do not want or cannot afford. They do NOT “prey” on the home owners. They offer an alternative option to the standard fix it up, clean it up list with a Realtor, wait for it sell and pay the cost of selling including the commission. What you need to ask yourself is:
Let’s address each one of these points
LET SOMEONE ELSE PAY FOR THE REPAIR:
IS THERE ENOUGH EQUITY TO PAY THE COMMISSION AND CLOSING COSTS?
CAN YOU AFFORD TO SPEND THE TIME AND MONEY TO FIX UP THE HOME TO A SALEABLE CONDITION?
WHAT AN INVESTOR HAS TO CONSIDER BEFORE TAKING THE RISK ON YOUR HOME:
Keep in mind that Investors also have to sell the finished, rehabilitated property. They often use licensed Realtors to do this for them. So honestly, the Realtor does not lose a commission, albeit it may be delayed a little but could net them a better commission in the process.
One more correction, the Investor cannot take title “subject to” an existing loan anymore. That factor has been a dead issue for quite a long time. Virtually few or no mortgages are assumable these days and I don’t know of a bank that would transfer title to a property on a sale subject to. The risk to the Investor is way too high.
AN INVESTOR SALE IS ANOTHER OPTION TO CONSIDER.
Bottom line, there is room in this industry to support the Investors and the Realtors. I think each individual’s circumstance will determine which option to choose for the sale of their home.
DO YOUR HOMEWORK BEFORE YOU CHOOSE WHO TO DO BUSINESS WITH.
Just make sure you choose who you do business with is honorable, trustworthy, and committed to giving you the best deal for your home and courageous enough to tell you the truth from the outset of your relationship.
Glenda L. Schreiner
True Patriot Homes, LLC ,
a Real Estate Investor in Goodyear, Arizona.