What are the Cons of Selling My Home to an Investor?

(June 4, 2012)

There are definitely some things to think about and know about when selling your home to an investor.selling to an investor

And by "investor", I mean a real estate investor, like myself. There are many unethical people in the world. And unfortunately, there are quite a few in my business. I hear the horror stories from sellers. And I have my own stories of bad dealings with these guys.

So, What Are the Cons of Selling my Home to an Investor?

1. Real Estate Investors aren't licensed to buy real estate.

So, how do you know anything about the person offering to buy your home? Most likely, you don't. Some real estate investors are also real estate agents, and so they will have their real estate license and be registered with the California DRE. Some sellers wonder about an investor who is also an agent. Do they want to buy my home or list my home?

2. Real Estate Investors may have "pro-investor purchase agreements".


Who is paying for escrow fees? Usually, buyer and seller each pay their own (50/50). In my transactions, I pay for yours and mine to make it very transparent.

Is the house being sold AS-IS? It should, isn't that why you are selling to an investor?

When will the escrow close? This should be a date that YOU want to close. Make sure you agree on a date, don't leave it open-ended.

Are there any contingencies? There should be NO contingencies.

Who is the buyer on the contract? Does it say "And/or assigns" after the buyer's name? If it does, the buyer can then sell the contract to someone else.

Are there termite fumigation and repairs on the agreement? If you are selling AS-IS, you should not have to pay for this or have it done before close of escrow. It can cost anywhere from $2,000 to $5,000. I waive all termite fumigation/repairs.

3. Real Estate Investors can be Scam Artists.

You know the saying, "Trust Your Gut?" Well, listen to your gut here. Why potentially lose it all by not feeling comfortable with the investor. And you absolutely need to find out online and on the phone.

Look online for the investor's name. Google it. Find out what you can. If this peson is a real estate agent, look up their license info.

Ask for references. There should be sellers who have good things to say about the investor. Verify the person you are speaking with is actually a seller, too. Ask when they sold their house and for how much, then look on zillow and verify the information.

Look at the Better Business Bureau's website. The investor or their company should have a rating with the BBB and hopefully some reviews.

I hope this helps you as you sell your house for cash to an investor. I am proud to say that you can "google" me, you can call sellers and buyers with whom I have worked, you can search the Better Business Bureau and see the "A" rating and reviews, too. Remember, your house is probably your biggest source of equity.

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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.

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