As a Los Angeles area Realtor for 15 years, I would like to help investors find owners who need to sell. At the risk of sounding like a dumb-dumb, I must ask: Why would a homeowner sell to an investor, knowing that he/she will be selling at a discount, rather than listing with a Realtor who will probably get the highest price the market will bear?
Typically investors do not use realtors to acquire residential 1-4 unit property wholesale!
Investors do not want a seller to have to include realtor fees in a wholesale price!
Sellers motivation can be diverse as it includes varies reasons to get out of a property, inheritance, neglect, divorce, pending bankruptcy, location, expense to repair, code violations, partnership dissolution, limited time, military, live overseas, unwanted, need for quick cash, quick closing, etc.
Stigmas unfortunately carry a lot of weight. Of course many are untrue, but people still believe in them which hurts everyone. Both investors and realtors
There is a stigma that working with a Realtor is a bad experience, because there are some realtors out there that aren’t good, and now the word realtor comes with a bad rep sometimes.
There is a stigma that listing on the market takes forever and is a huge, long, drawn out process. It can be, but not always!
I wish ALL of these stigmas will change over time, because they don’t benefit anyone in the industry.
There are times when it makes sense for a homeowner to sell directly to an investor. I have bought houses where the owners lived in really bad conditions and didn’t want to have pictures posted online or the neighbors walking through the property.
Some people just can’t be bothered to clean up the house and hold open houses etc. They prefer just selling the house As-Is to an investor for cash and a fast sale. It is similar to when you buy a new car and trade your old one in with the dealer. Everyone knows that they could get more money if they sold it themselves but don’t care because it is convenient to drive in with one car and drive out with the other.
Sometimes the home owner is facing issues like foreclosure and needs to sell the house super fast. They can’t afford to mess around and put the house on the market and hope it sells.
I also buy a lot of houses from home owners who are upside down on their mortgage (or sometimes the value is about what they owe but when you take out commissions and closing costs they need to bring money to the closing). An investor who can use creative strategies like short sales or buying subject to the existing financing is needed to get a deal done.
There are lots of reasons a home owner will sell their house to an investor but for 95% of the population the right strategy is using a realtor. It just depends on the circumstances.
As an investor I buy most of my houses direct from home owners because these are normally the deals I can add value to. That being said I do buy off realtors as well and think they are really important part of the market. When I do a flip I almost always list it with an agent once I have done the rehab.
Sometimes people just want out of the headache. Not everyone is driven by money, the property could be a problem property and they just don’t want to deal with it anymore.
Some people are in foreclosure or need quick cash to pay for something else.
Every situation is different but I feel that the hard part to understand is that not every needs or wants a bunch of money. For some getting 100k vs 150k is enough for them to be done with the property.
Potential for flexible purchase arrangements. If your home is underwater or you’d like to get out of the real estate game altogether but don’t want to move, selling your home to an investor could be the way to go. Some investors will agree to take over your mortgage and some will even rent the house back to you in what’s called a sale-leaseback transaction.