This is a question I get quite frequently. People call me up and say, I have an investor who showed up at my door or sent me a mailing piece and they claimed that they can buy my property and work with my bank for me. So they come to me, somebody who has done hundreds of short sales and wants to know my take on it.
Here is the answer to that question, there’s a lot of different type of investors out there. Some of them are looking to buy properties and rent them out. These would be people that are buying and holding. Typically when that’s the case these investors are willing to pay at market value or very close to it and the banks don’t really care too much about working with those investors. The other model of investor out there is called Flipping Investors. These are the investors who come in and try to buy the property for ridiculously cheap from the bank and then turnaround and maybe fix or not even fix it and sell for profit. Banks absolutely do not like working with investors such as this.
Understand that the banks are going to do an appraisal on your home or your property. They are going to know what its worth. So why in heavens name would they accept a ridiculously low price for the property. In these instances many time san investor would do is they would come to your doors and claim to have a buyer ready for you and they want to negotiate with the bank on your behalf. Nothing could be further from the truth. They actually have no fiduciary duty to you and they are actually doing what’s in their best interest not yours. If the deal doesn’t work out and they are not able to buy the property at the ridiculously discounted price then what they do is they bail and they leave you holding the bag and possibly facing a foreclosure.
I’ve actually had discussions with CEO’s of certain very large name banks about investors and they point blank told me they hate working with investors, they are keeping track of them and names of them and they don’t like it because are essentially defrauding the banks in trying to buy these properties for ridiculously cheap.
Some of the tactics that these investors use include paying off the appraisers that the banks send out there. They may give them a couple thousand dollars to bring the value in ridiculously low so that the banks think the property is worth on 200,000 but in reality its worth 250,000. They go ahead and buy it at 200,000 then quickly turn around and sell it for 250,000.
Just understand that if you are considering working with an investor, what their business model is if they are just going to buy and rent it out or if they plan to flip it and sell it really quickly. The banks are aware of this, they are aware of all the tricks, the things that are going on out there.
We as a broker representing to hundreds of homeowners on a monthly basis on short sales, we do work with investors. Most notably the ones that are going to buy and hold and pay very close to the market value not the ones who are looking for a deep discount because those deals typically don’t work out.
If you have further questions give me a call.
Thank You very much for listening to my presentation on Do Banks Like Working With Investors?