When It Comes to Your Home, Seller Beware

Article submitted by Ken D'Angelo, founder of HomeVestors of America, Inc.
For more information, visit their website: www.Homevestors.com.

Want to sell your house quickly? Don't want to make necessary repairs? On almost any street corner you can find homemade signs planted by someone willing to "buy your house for cash." Even the Internet will render quick cash offers for your house. Sounds tempting, doesn't it?

Be careful before you place that call, or respond to an Internet offer, however. In recent months, real estate investment fraud has become front-page news. Much of this is due to marketplace pressures. Relocations, layoffs and other issues often pressure people to sell their homes, sometimes in the face of foreclosure. At HomeVestors of America, we buy thousands of properties each year, and we know that in today's market, it is easy to get victimized. Here are a few points to take into consideration when you want to sell a house quickly.

• In most states professional homebuyers or investors are not required to be licensed. This means they represent only themselves in the transaction. Even if they are licensed, they cannot represent you, as they will be buying your property for their own account.
   
• Get educated about the value of your property before you contact investors. Most investors will offer the convenience of a quick and simple closing for a discounted offer. The amount of the discount can vary depending on the investor's interests and needs. Unless you are familiar with your property's value, you will not understand the amount of the discount offered, even though it may be a fair offer. Hire a certified appraiser to value your property, unless you are certain you know the value.
   
• Understand discounting, because that's the kind of offer you will get from investors. That's how they make a profit. They buy your property at a discount and they sell it for more money, sometimes after making repairs. But how much of a discount is fair? If your property is worth $100,000 on the retail market, and an investor offers you $50,000, that may not be practical, but it depends on the amount of repairs the property needs. A more likely discounted offer would be in the range of $65,000 to $70,000, with the investor willing to pay all closing costs.

Let's say you repaired the house yourself and then put it on the market with a realtor. Once you pay commissions and closing costs, let's assume your net will be $92,000 from the sale of your property. That looks better than $70,000 from an investor. Or does it?

It depends on how much you spent to repair the property, and insure it, before you could sell it. How much time did you spend hassling with contractors, selecting a good real estate agent, and negotiating with potential buyers? How long until you finally closed on the property? You may have spent many thousands of dollars and waited more than six months to sell your property.

Now you decide. The difference between your discounted price and the net amount you received selling the house retail is $22,000. Many people understand that it would cost them more than the difference to repair the property and get it sold, and so they are happy to accept a discounted offer.

Before you accept a discounted offer, know who you are selling to. What's the investor's reputation? Does he or she keep commitments? Can the investor close on time? Today's market is flooded with many would-be investors who are inspired by weekend real estate seminars that supposedly teach them how to buy properties at a discount. However, many of these people have never purchased a property before, and they don't know what's all involved. Be careful!

If you call an investor off a road sign, the Internet, or an advertisement, what assurances do you have that you will be dealing with a reputable person, one who will treat you fairly and ethically? After more than 30 years in the real estate industry, I can tell you that most investors are honest and they do great things for communities by buying, rehabbing and recycling housing units. But you've got to know the good guys from the bad guys.

Before you do business with an investors, ask to meet him or her at their office. Most professional investors will have an office. Ask for credentials that show they are members of the Better Business Bureau, or similar organizations. Ask to see any newspaper articles that may have been written about them, or their company. Also, ask for a list of references, both customers and financial references. And you might also ask to see a house that they recently purchased and rehabbed to examine the quality of their work.

At HomeVestors, we believe so strongly in treating the seller and the buyer fairly, honestly, and respectfully, that we have been at the forefront of helping to establish a national accreditation process through the National Association of Responsible Home Rebuilders and Investors. Such a program would help consumers identify honest and reliable home buyers and rehabbers.

Everyday in the United States there are people who need to sell their homes quickly. In those cases, it is important for sellers to be confident that they are dealing with a company or an investor that will treat them fairly and professionally.