How do I avoid falling out of escrow with an Investor? 3 Important Tips

(May 22, 2012)

selling to a real estate investorSelling Your House to An Investor

There are pro's and con's to selling your house to a cash buyer, particularly an investor. It can be a quick and easy "cash sale" or it can be just as much of a headache as selling to regular buyers. There are things you can do to avoid the headache and to protect yourself.

How often do cash investors fall out of escrow?

I would say that it is slightly less often than a regular buyer falling out of escrow. I don't have exact numbers. But I can tell you that 8 times out of 10, when I meet someone who is interested in selling their house to me, they have already fallen out of escrow with a cash buyer!

How do I avoid falling out of escrow with a cash buyer?

You can do 3 things to minimize the chances of falling out of escrow:

1) Read the contract carefully.

Is the buyer really the end-buyer? Or is he going to "assign the contract" to another investor? Look for the words "and/or assigns" or similar language. Is there an exact close date? What happens if the buyer doesn't perform? Is there a contingency clause that lets the buyer out of the contract? The language in the contract will tell you how seriously the buyer is about closing escrow and whether he is going to sell the contract to another investor (which can delay closing escrow by weeks or months).

2) Is the buyer putting down a "non-refundable" deposit?

If your buyer is serious about buying your house, then he should be willing to provide a sizable "non-refundable" deposit to escrow.

3) Has the buyer shown you his "Proof of Funds?"

Your cash buyer should have a recent bank statement to show you that he can pay cash for your house. It only makes sense that he has the cash ready before you sign the contract, right?

When you are selling your house for cash, you should ask for these things from your buyer. It will give you the proof you need that the escrow will close. You should have the comfort of knowing that your house will be sold.

Start an Offer

Jennifer Shenbaum

Written by Jennifer Shenbaum

Jennifer Shenbaum is a real estate investor based in Southern California. She is a veteran of the housing market crash of 2007. Best of all, she offers free remodeling ideas to all who ask.

Post a Comment