“Cash Buyer” is an encompassing term that often refers to most real estate investors. The differences can be vast and many different aspects of a cash buyer need further definition for a seller to really understand who they are discussing their potential home sale with. Many sellers get caught up in hearing they are selling for cash and just focus on the sales price. Here are some things to ask any potential buyer if you are working directly with them.
1. Wholesaling vs. Buying Many times sellers will meet with wholesalers and actual buyers but not know the difference until well into the deal with one of them. “Wholesalers” often try to negotiate a price but can be quicker to agree to get the deal done. This is because wholesalers act as a middle-man. You sign an “assignable” contract with them. Usually the wholesaler does not plan to close on the deal themselves and often lack the financing to do so. Once you agree to sell to a wholesaler, they’ll take pictures of your property and market it as if they are a real estate agent. Wholesalers keep the difference of what your contract price is and what they are able to mark it up to other buyers. Sellers loose control here and have to open their property up to many inspections from other potential buyers. These deals often need to be renegotiated and/or fall apart. If you are working with someone that is an actual direct buyer, know that you are working with the person or company that will actually be taking ownership of your house after closing. Usually it can close faster and has less hoops to jump through to get to closing. These deals are less likely to fall apart and is certainly more predictable for the seller. 2. Local vs. National Is your buyer from a national buying company or franchise? Or, are they local and know your areas and city/village requirements to close? National companies that buy all over may market better and are more likely to be seen by a seller. Sometimes these national companies refer or sell the lead to a local investor that’s actually in-town and able to meet you at the property. Local buyers are often smaller and have more flexibility to meet you at a time that works for you. They also are more likely to make the process easy on the seller since they've closed deals in your area before. 3. Financing “Cash Buyer” doesn’t always mean that the buyer will be paying with cash. Many investors call themselves cash buyers but what they will tell you is that they waive contingencies like someone actually paying with cash would. When selling ask your buyer, “Are you paying with cash in your account or will a mortgage need to be recorded at closing from a 3rd party lender?” If you don’t get a straight answer to this or they tell you they need to borrow money, keep in mind that this is one way your deal can fall through and slow it down. 4. Respect The industry doesn’t always have the best reputation. There are plenty of reputable investors that buy houses and do a good job and have happy customers (sellers). At Direct Property Buyer, we want every seller to do what is best for themselves and their situation—this may include working with us or not. However, many others play games with sellers by changing terms, treating them with disrespect, not returning phone calls, and simply not following through on doing what they say they will when a seller signs a contract. If you don’t have a good feeling about the person or company you’re working with it might be best to keep shopping for someone that is a good fit.
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AuthorEric Strung and Direct Property Buyer Team Archives
January 2024
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*Members of Direct Property Buyer have real estate licenses held by Spartan Residential.
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