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What is a Real Estate Investor?

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You have probably seen television shows and advertisements, but what exactly is a real estate investor?

The better question is not what, but who is a real estate investor. Although an investor may represent a corporation, most of the ‘House Buying’ companies you might come across are small businesses owned by a local hard-working entrepreneur. Like any small business owner, they intend to provide for their family and positively contribute to the community in which they live.

What Exactly Do Investors Do?

As you have likely surmised, real estate investors work with the homeowner directly to purchase their property. This direct connection eliminates the need to place your house on the market, make repairs, or hire a real estate agent.

Although there are several different types of real estate investors, which we will discuss shortly, they all tend to offer the homeowner the same incentives: a fast cash offer, an easy escrow, an ‘As-Is’ purchase, and a closing timeline that suits the seller.

How Does It Work?

Every legitimate investor aims to create a win-win situation with the homeowner. For the investor, this most often translates into a reduced purchase price on the property. For the property owner, this could mean:

  • Peace of mind of knowing their property is sold,
  • Not having to make repairs,
  • Being able to avoid caravans of traditional buyers walk through their house,
  • Not having to worry about a bank or lender as the reason their property falls out of escrow,
  • Not paying 5% to 6% of the house pricing to an agent,
  • And, unlike with a traditional sale, the owner can move on the date most convenient for them (be it in a week or a year) without having to worry about the buyer backing out.

Most sellers agree that the slightly higher price they may have gotten for their house on the open market is more than compensated for by the ease and stress-free experience of selling to a professional investor. Not all investors have the same end goal for your property; however, it is worth knowing the differences.

The Two Primary Types of Investor You are Likely to Meet

  • Fix and Flip… aka Flippers

Thanks to popular home-improvement TV shows, the Flipper is probably the best-known type of investor. These investors, who are often contractors or work closely with one, look for houses that need some TLC or have untapped potential. By remodeling or renovating, Flippers can raise the property’s value and (hopefully) sell for a profit. 

Despite what is so often portrayed on television, fixing and flipping a house, as a rule, is stressful rather than glamorous. Even with the most careful planning, construction costs always come in over budget. Issues arise with city permits and inspectors, and the renovation takes far longer than planned due to unforeseen complications. The housing market may dip. And every Flipper’s worst nightmare, the house sells for far less than projected. Meaning that the investor takes a financial loss of thousands to hundreds of thousands of dollars. For these reasons, flipping is a high-risk endeavor that is not for the faint of heart. 

  • The Buy and Hold… aka Rental Owners

Buy and Hold investors, similar to Flippers, often purchase properties in need of renovation. But rather than fixing the property to sell it, these investors renovate the property to turn it into a rental. This is a long-term investment technique since each property requires years of steady rent before the investor makes their money. And, as with trying to fix and flip a home, there is never any guarantee of success.

As any homeowner knows, a house requires constant upkeep and maintenance. Even with proper care, things go wrong. The furnace breaks, the bathtub overflows and damages the flooring and subflooring, the dishwasher stops working, and so on. Such expenses are part of owning property but add in tenants who fail to pay rent and/or intentionally damage the property, and the investor can kiss their revenue goodbye. Nothing is risk-free, and the investor knows this going in.

Finding the Right Investor

95% of real estate investors are local hard-working professionals who will take care of you every step of the way. As with every industry, however, there are going to be a few bad apples. These bad apples typically represent 5% or less of the industry, but you still have to watch out for them. And with so many investors out there, it can be hard to know who to trust. 

This is why SolidOffers.com works exclusively with a trusted network of real estate investors located throughout the country. These investors come with a proven track record and are thoroughly vetted to ensure they are experienced, professional, and the right fit for you. If selling your house through a local investor is an option you have considered, or would like to explore a little further, then reach out, or use the platform provided by SolidOffers, to find a trusted investor in your area.

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How to Avoid Foreclosure and a House Auction

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Life is full of ups and downs. Sometimes the job market is great, and other times we are left scrambling to make ends meet. For many homeowners, a downturn can mean coming face to face with pre-foreclosure and even foreclosure.

The good news for the distressed homeowner is that there are options. Before we can discuss which options are viable for you, you will first need to determine precisely how much you owe on the property and if any assistance is available from either the government or the mortgage provider.

Contact Your Lender

The best time to call your lender is before you start missing payments. This puts you in a much better position, and the mortgage provider may be able to offer you payment deferral or other assistance. At the very least, you will be able to establish precisely how much you owe and when you have to pay it. Collecting the facts is the first step towards resolution. 

Are you already in Pre-Foreclosure?

The term pre-foreclosure frightens many folks, but it does not mean your home is being taken away or sold out from under you. At least not yet. Pre-foreclosure means that you are behind on your mortgage payments and have received, or should have received, a Notice of Default for lack of payment. During pre-foreclosure, the lender will initiate the legal proceedings to repossess the property eventually. As long as you can pay what is owed during the pre-foreclosure period, then all legal proceedings cease, and you never have to face foreclosure. 

Even if you are unable to afford the back payments, there are many ways to avoid foreclosure. And, believe me, you want to avert foreclosure if at all possible. I’ll explain why before we delve into the various options available to you.

What a Foreclosure means for the Homeowner

Without taking evasive action, a house in pre-foreclosure will inevitably end in foreclosure. Here is what that means.

  • A court ruling gives the lender full ownership of the property.
  • The occupants of the property will be forcibly evicted from the premises.
  • The lender will sell the property, generally at auction, and keep all proceeds of the sale.

Unfortunately, the consequences do not end there.

  • The foreclosure will go on your permanent record.
  • You will be unable to qualify for a loan even years after.
  • Your credit score will plummet.
  • You will be ineligible for relocation assistance.
  • The foreclosure will turn up on rental and employment background checks.

For these reasons, not to mention the stress and psychological trauma, foreclosure and the house sale at auction are a very last resort. Thankfully, there are ways to avoid it.

Option A: Find the Funds and Make the Payments

This is, by far, the best outcome. It certainly won’t be easy, but there are ways to raise the money necessary to stave off foreclosure. Doing so will enable you to retain ownership and residency of your property while protecting your credit and generating equity.

Here are a few methods to consider (the more you can apply, the better):

  • Delve into your budget and cut out any non-essentials. 
  • Consider getting a second job or renting out any unused bedrooms for supplementary income.
  • Investigate a loan modification to lower your monthly payments.
  • Some lenders will offer forbearance, meaning you won’t have to make mortgage payments (or at least not all of it) for an agreed-upon time. This can provide the time needed to get back on your feet and save up money to make the back payments.

These options are great for those going through a temporary rough patch and need some time to catch back up. If, however, you see no chance of alleviating your financial difficulty in the near future, other options may serve you better.

Option B: Equity in Your House? Sell Quickly

Why quickly? Because, depending on what stage of the foreclosure process you are in, you may not have much time before the lender takes ownership of the property, and you are left with nothing. 

This option works best if you have equity in your house, meaning your mortgage is less than the property is worth. Selling your house under these circumstances will enable you to pay off the mortgage (thereby avoiding foreclosure), save your credit score, keep a foreclosure off your record, and let you keep any money left over from the sale to start fresh.  

Here are your two best options to sell and walk away with cash in your pocket:

  1. Hire a Real Estate Agent. Although you may net a little more this way, a traditional sale typically takes months. This time factor makes it risky since that is time you may not have. Not to mention the house’s risk falling out of escrow, the expenses involved while the house is on the market (taxes, insurance, utilities, etc.), or the money that is so often needed for required repairs during a traditional sale, money you may not have.
  2. Sell quickly to an investor for cash. By using a trusted network of investors, such as offered by SolidOffers.com, you can have a cash offer on your house within 24 hours. A cash buy also means a fast close (usually within 7-14 days, so the bank won’t have a chance to foreclose). You won’t have to pay any real estate commissions, you can pick your moving day, and a cash buyer will often cover all the closing costs. You may not net as much this way, but you will be able to walk away with money in your pocket (instead of in the lender’s) while avoiding the long-term consequence of a foreclosure. 

If you are pressed for time, selling your house quickly to a cash buyer is often your best route in avoiding foreclosure. Not everyone has equity in their property, though. So, what to do if you owe more on the mortgage than your house is currently worth?

Option C: Money out of Pocket

Of course, you could sell your house for less than the mortgage amount and then make up the difference yourself. This, of course, only works if you have the funds to do so. Even then, it is a reluctant option. Nobody wants to pay the bank out of pocket and receiving nothing from the sale of their house, but the consequences are far less severe than a foreclosure. For some, it may be their only option.

Option D: Short Sale

If you are upside down on your mortgage, you may want to consider a short sale. A short sale allows you to sell your house for less than you owe on it and, usually, walk away without debt. But there’s a catch. 

Since your lender will receive less than the mortgage balance, they first have to agree to a short sale. Not all lenders will, and those that do will have the final say on any offers. Your credit score may still dip, but not nearly as much as with a foreclosure. There are some other drawbacks too.

Since the lender is involved in the selling process, the escrow period can take months or years once a buyer is found. And there are no guarantees with a short sale. If the best offer is well below the mortgage balance, the lender may refuse the sale or try to hold you responsible for the difference (depending on the laws in your area).

A foreclosure is never easy, but fast action can save you time, money, and grief. Your best option is to make up your payments.

Your second-best option, if you have equity in your property, is a quick cash sale. Doing so will avert foreclosure while putting the remaining proceeds in your pocket instead of the lenders. And that, we can all agree, is where your money belongs.

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What’s the Process of Selling a House for Cash – Part 1/2

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Not everyone can come up with all that cash to buy your house. Still, several individuals and companies, typically investors, have both the experience and expertise to do exactly that.

Who buys houses for cash?

Most house buying investors fall into one of two categories (though there certainly may be overlap).

  • The investor may be looking to Buy and Hold. This type of purchase is especially popular amongst those investors who buy properties to rent them out to suitable tenants.
  • The second type of investor is known as a House Flipper. This is the kind of investor you may have seen on a TV show. As the name suggests, he or she will purchase your house at a discount, make repairs or remodel completely, and then sell the property in the hopes of making a profit. 

Depending on the investor and your particular selling needs, the buying/selling process will vary. There are, however, several steps that tend to remain the same and which you can expect, no matter who the cash buyer is and what your selling needs are.

Finding your Cash Buyer

Selling your house is a big deal, and you want to sell it to somebody you can trust. Here are a few great ways to help you find the right cash buyer for your property.

  • Network of Trusted Buyers: One of the best ways to guarantee you are dealing with a reliable buyer is staying with a trusted network. SolidOffer.com provides a simple online form to match you and your property with a trusted local cash buyer. Each buyer has been thoroughly evaluated to ensure they have the qualifications and experience necessary to purchase your house. There are absolutely no obligations on your end, and the best part is that it takes mere minutes to find you the perfect match.
  • Google/Yahoo/Your favorite search engine: It will take some work and research, but you can find cash buyers by searching online. Not all, but most investors will have a website where you can find out more about them. However, having a website doesn’t make them trustworthy. Be sure to look for legitimate reviews on each company before calling them.
  • Ask Around: This may sound old fashioned, but sometimes the best way of finding a cash buyer for your house is by talking to friends and neighbors. If someone you know and trust has had a positive experience with a local cash buyer, then the odds are good that they’ll be a good fit for you as well.

Once you find your cash buyer, whether through a trusted network or a friend, you’re going to want to review the next steps of the process carefully.

Meeting your Buyer

Once you contact your buyer(s), they will want to know more about your property. They may want to schedule a visit or ask for photos. This generally happens within 48 hours, though most investors are happy to work around your schedule.

Don’t worry about the condition of your property. Investors are accustomed to dealing with all kinds of properties, whether lovingly care for, needing repairs, or rented out to tenants from hell. Typically, the buyer will walk around the property, ask you a few questions, and make an offer on the spot.

Remember, just because they make an offer on the spot doesn’t mean you have to accept it. 

The next step is Evaluating Your offer. Continue reading in part two of this article.