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Beware of Novice Real Estate Investors

If you’re in a complex situation with your home or need to sell it fast, selling to a professional real estate investor can be a great choice. Reputable, experienced real estate investors can give you a fair offer and make selling your house quick and easy. But buyer beware: Not every real estate investment company is created equal. 

While many real estate investors are trustworthy, novice or dishonest investors can leave you in a difficult situation. Some so-called investors promise a great price but don’t have the funds to back it up, wasting months of your time and money. Here are some questions to ask yourself to make sure you’re getting a fair deal.  

Is this a genuine, physical company?

Real estate investing doesn’t require a license. That means anyone could call themselves an investor, even if they have no previous experience. Be cautious about individuals who claim to be investors but do not have a legitimate, registered business behind their claims. They may not have the know-how or funds to actually close the deal.

If the company is online-only, do your research too. Some companies simply gather your information with no intention of buying your house. They then give your information to another real estate investment company for a price.

How are they advertising?

You may have seen signs on the side of the road claiming to buy houses. Often, online real estate investment classes will tell their students to use these tactics for advertising. However, in many places, these signs aren’t even legal. If there’s no company name and just a phone number, that can be a red flag.  

Reputable real estate investment companies will put money into legitimate branding and advertising. Look for a company name, website, and other online marketing, like social media. 

What do people say about them? 

You can learn a lot about a company with a quick online search. If you’re dealing with an experienced investor, you should be able to find testimonials or reviews from past sellers. These reviews will help you have confidence that others have successfully sold their house with the investor.

Often, companies will have reviews for you to read on their websites. But see what people say about them on other sites too. Most commonly, you’ll find honest reviews on places like Google or the company’s Facebook page. 

Are there a lot of conditions you don’t understand?

While real estate can be complex, you shouldn’t feel pressured into signing something you don’t understand. Professional real estate investors know the business. They partner with you to make sure the terms of the sale are clear and a win-win for both parties. 

Unfortunately, some less-than-honest investors will take advantage of your urgent need to sell. They may offer you one price but leave it open so they can lower the price later on. Or they may add on fees or hidden costs. When they switch the deal at the last minute, it can leave you in a hard spot with fewer choices than before.

Is the offer so good it’s hard to believe? 

In the end, deals that are “too good to be true” probably are. If you receive an offer that’s significantly higher than another investor, be sure you understand the terms. Even if they aren’t intentionally dishonest, novice investors may make promises they can’t keep due to inexperience. Then, you end up months down the line having to start over because they are unable to close on your house. If something just doesn’t feel right, trust your instincts.

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