It seems like it has been an eternity since I last blogged. I sincerely apologize, but there are times when every project needs attention at the same time. I have been so busy making sure that my business goals are on target, that it becomes difficult to do everything on my list every day. I want to let you know that if like me on Facebook, You will get information on a more regular basis, so if you are tired of waiting for the full blog, be sure to check out my Facebook entries which are short, but much more up-to-the-minute about what I am doing. I did try to write a blog while driving down the expressway at 70 miles an hour. I thought that this was the main purpose of the “cruise control” button. The kind police officer explained to me that the law against texting also applies to writing blogs while you drive. I also discovered that if you get into an accident, like hitting the median, the air bag pops at such a tremendous force that the keyboard stuck to my face. I have one button still on my face, the “delete”, which I think would have been gone already, but my wife, upon hearing about my accident, keeps pushing it every chance she gets, but I am still here!
Seriously though, I wanted to blog so that if you are in need of help, you will know what to expect when you sell your property to investors like me. There are many different strategies that investors use, so I am just going to tell you about mine. I regularly buy houses for more than they are worth. This means that a seller can escape a bad situation, without having to do a “short sale” and the many hassles associated with foreclosure or other types of sales that the company decides to try. The recession has shown us that banks, in general, do not care about their customers. The number of foreclosures has grown astronomically and millions of people, expecting to have their home for the rest of their lives, have now lost, or are about to lose the most precious financial asset they expected to have for the rest of their lives. Fortunately, as I have written before there are some avenues that have been created to offer help. I am a private investor, so I am here to let you leave with your dignity intact.
So you make the decision to sell me your property and you are unsure of what to expect, since it is very different from traditional methods. The benefits to you are:
- It is very quick
- You can be relieved of many of your responsibilities (and be able to sleep again)
- It is possible that you may get some financial benefits
In a “short sale”, since the bank gets less money than is owed to them, they are unwilling to allow you to receive any profit or benefit.
The situation could not be more embarrassing for you. The moment of realization that you have lost your property is devastating. Banks want the money that is owed to them or the property, so it is rare that you can find a loan officer who cares about anything but the bottom line. When I step in as an investor, you must understand that unless you win the lottery or have inherited enough money to pay what is owed, your property, in any case, is gone. You will need to prepare yourself emotionally that you will give up control of the property, which may take some time to come to grips with your situation. Whether it is myself or a bank, you will no longer own the home and do not get to make the decisions about the sale or the mortgage.
So let’s talk about the differences
The other things that are particularly different are:
- The down payment
- The closing
- The future relationship with the buyer
The cause for these differences really centers on what expectation each party has from the other. In an ordinary sale you would expect the buyer to enter the closing with a down payment and a secured loan from a bank. The closing of the transaction would occur at a Title Company and they would take possession immediately while the escrowed money from the bank and the down payment pays off your mortgage company completely. You can move on and never interact with the buyer again, in most cases.
In the investor transaction there might not be a down payment. Your mortgage will not be paid off completely so there is no need for the ordinary escrow closing. Possession is then negotiated between the investor and the seller.
The investor, in this case, will take over your loan payment for you. It gives me the opportunity to buy the house for the value of the loan, even if the loan is higher than the value of the house.
There will be no traditional down payment, because I, the investor, will not get any value for the money I would have to pay. You, however, will get the value for what would have been your equity if you were able to live in your house and make regular payments. Occasionally, there may be things an investor will do for you such as paying your moving expenses, or if necessary, paying the legal fees for you to declare bankruptcy. If the rental income from the house will justify it, the investor may offer you a participation in the profits. This is rare, but it can be a point to negotiate.
The bottom line is that you get rid of a big headache and the investor takes it over! You may have contact with the investor later, particularly if your bank has already begun a foreclosure proceeding. Sometimes you will need to call the investor regarding a bill that was routed the wrong way or maybe some general business regarding the property. It is not an adversarial relationship, and if you need to make a call you can generally get the investor right away instead of listening to boring records and constantly being switched from one person to the other.
I am guessing that you have figured out that I was not being serious about the car accident. It would be nice if some people came with a delete button, but I am not an inventor so I will stick with what I know, Real Estate Investing. This business allows me to assist families in trouble and I can help to take away some of the financial responsibilities that weigh so heavily on all our minds as the country struggles to pull itself out of a recession.