Working with an Ethical Investor

Working with an Ethical Investor

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There are still some banks that do not allow homeowners to short sale their own properties. Unfortunately, I can’t give you a list of those banks because it changes every day. As an individual homeowner or an investor with upside‐down properties, you may have to find an investor to work with you. You should make sure to work with someone who is very ethical because you are in a very vulnerable state right now and it would be easy for someone to take advantage of you.

Here’s the weird part—it’s common to teach investors how to find distressed sellers and how to make sure the homeowner does not take advantage of the investor, but it goes both ways. Now we are teaching homeowners how to qualify investors—something investors are not used to. Investors are used to qualifying homeowners, not the other way round. There is nothing worse than working on a deal for two months and then the homeowners decide to work with your competitor instead of you because the other investor offered the homeowners more money. Remember—if other investors will cut us out, why would they pay you? You will get cut out, but only after it is too late.

Unfortunately, there are plenty of unethical players in this business. Every business in the world has its fair share of them. The number one thing to remember is to make sure investors put everything in writing and that the investors do not ask you to deed your property to them. Once you give up the deed, you have given up all your rights. Deeding your house to someone is a very big decision and should not be taken lightly. Many investors will tell you to deed the property to them so that they can negotiate with the bank. No one needs a deed to negotiate with a bank. All the bank needs is an “Authorization to Release Information” form signed by you … that’s it.

What Should an Investor Do for Me?

It is important to remember that investors do not work for free. Just like you, investors have bills to pay. We think investors should get paid a fair wage for what they do, without going overboard. An investor has to:

  • Find the distressed seller.
  • Do all the paperwork necessary to create a short sale package.
  • Negotiate with the bank on your behalf.
  • Find a buyer or arrange funds to purchase the property themselves.
  • Find a title company.
  • Close on the property before you lose it at the sheriff’s sale.
  • Rehab the property or flip it to a rehabber or landlord.
  • Possibly put it back on the market and try to sell it for a profit and much more behind‐the‐scenes work.

The investor does not get paid a dime unless the sale is accepted and the deal is closed. Many investors work on properties for three or four months only to have the bank say “no” and lose the deal. Do not work with an investor who wants money up‐front in order to work with you.

If you are looking for an ethical investor to help you sell your home, we can help! Contact us today to learn more.

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