Introduction
On the journey of selling your house, there can be numerous cash buyers and cash-buying offers you will come across. But how will you determine the authenticity or legitimacy of the offer?
Having know-how of the selling process as well as tips and techniques will not take you a long way but also save you time as well as resources. In this article, we will help you to learn some tips about ensuring that the cash offers or the cash buyers you are referring to are legitimate or not.
If you are an advisor to your client or as a client you are taking a decision directly to sign an agreement with an investor, you must carefully determine the pertinent facts about the investor to gauge the legitimacy of the cash bid an investor is making.
Here are a few of the facts that can help you evaluate the genuineness of your potential cash buyers.
1. Always Evaluate the Real Estate Investor Before Signing it for your client
How can you evaluate the investor before signing him for your client? That’s a tricky question. One of the easiest ways to judge the investor is to judge him by his integrity. The integrity of a person can be judged or gauged by the smallest deeds he does. So, have your investor shown integrity throughout the whole process from the start? This is a question that can be answered without conducting any research. You might be able to tell this by simply analysing the pattern or behavior of the investor or your potential buyer within the first few interactions.
Defining whether the buyer has integrity or not is important for correctly selecting your buyer. Why? If the buyer cannot even keep up with the small promises it is most likely that he will not keep up with the big ones. Like if the person does not even call you on time or does not show up on time as promised how will he make up payments on time?
Moreover, also ask the buyer a lot of questions about their purchasing process. If the answers of investors are not clear about the specifics of real estate, then the investor is not experienced or might be lacking the information regarding buying houses at all.
2. Always verify the track record of your cash buyers from the local deeds record office
It is always better to verify from the local deed record office whether the buyer has recently purchased some property for cash or not. One of the easiest ways to do this is to search for the various deeds of the current year. In most economies or countries, the deeds of the records have been now transferred online. This online presence of deeds of records makes it much easier to hunt for deeds through individual names or by company name.
You can simply start a search by employing a buyer’s company name or his name. If they are presently in the process of buying a property their name will be listed under the heading of ‘grantee’ in the deeds of records.
Following is the process through which you can carry out the search process.
- Enter your potential investor’s company name in full form on the search page. If you are not confirmed about the exact name or you do not get any results for your search, try using partial search criteria.
- Afterward, sort the results of the search by filtering them based on the date, or recent purchases the investors have made. Now if there are no recent purchases to be seen here then probably the buyer is not actively buying any property in your locality.
- As the last thing do take out the time to view each entry or every deed record. Also, the vet that the potential investor is under the ‘grantee’ title for these transactions. Also, check for any specific transactions or amounts that show cash transactions.
3. Always ask the Investor Questions Regarding his Purchasing Behavior
Another trick to gauge the seriousness of the investor is to determine if he or she has provable funds or not. Selling a house cannot be done on assumption that a buyer has funds because they are claiming to have funds and making a cash offer. You need to verify this thing before signing a contract as many investors may sign a contract and assign it to a different investor just for gaining his fee and then let that different investor make the deal. In this way not only, your trust is breached but you are at risk of a fall-through.
So, what’s the way to vet the investor to avoid such situations? One of the simplest ways to ask the investor or a buyer is to show you a print or a copy of his or her bank statement. That too should have been printed out within the past month so that it can be verified easily that all the required funds to close the deals are present in the bank account of the investor. Moreover, also verify that the name written on the contract is the same as written on the bank statement so that you know that the bank statement is owned by the same person. Lots of people taper the bank statement in a way that they arrange the statement of a person with the same initials or a matching name and the seller in carelessness overlooks this and signs the contracts. Later on, at the time of payment, the complete funds are not available and the seller has to suffer. So, it’s better to always be risk-averse rather than suffer later.
Also, note that if an investor’s name says ‘or/and assigns’ after the buyer’s name has been written then the buyer may plan to trade interest in the contract in return for a fee. Although that’s a legal thing to do as a seller you should be aware of it before signing your client.
4. Always Interact with the investor’s closing agent and inquire about the investor to be sure about him.
The investor usually resorts to the services of a similar title company, escrow officer, or closing agent to wind up the deal for them. How you can benefit from this and make this to your use?
While writing the contract there should be fields that should ask for information about the escrow officer, title company, and closing agent’s name as well as the addresses and contact information of the mentioned entities. Now you should employ this information to your use and contact one of the entities by simply calling them and vetting about the investor registered on the contract. Ask the person you contact that either the investor listed locked the deals for cash in the past at their office or not. The person probably will not have any issues while answering that question. In this way, you can easily ensure the authenticity of the investor you are closing the deal with.
5. Always ensure that all verbal Communications and Commitments are documented in the contract
Verbal communications and commitments hold no importance unless and until they are properly documented. What if you agreed upon a certain term or a condition and one of the parties tends to forget the verbal agreement or does not simply agree later on? A smooth and easy way to ensure that all matters that have been verbally communicated and agreed upon are also included in the contract. The better way is to note down everything personally and later include everything in the contract in a documented form. Afterward, when the buyer offers his final bid along with his terms that time seller has all the things noted down, and then all the verbal agreements can be simply confirmed that had been made between both of the parties earlier. Finally, when all the verbal agreements are agreed upon then they can be spelled out and documented in the form of a contract.
Concluding Remarks
So, if you keep the key points in mind, you can most probably ensure that whether your buyers offering you the cash are legit or not.
· Do notice the integrity of your potential investor/buyer as it is the key attribute to determine someone’s seriousness. Generally, if the probable investor has kept his promises like showing up at the decided time or calling you as decided then chances are that your buyer is a legit one.
· If you have the chance do some background check through a link or some common acquaintance; going through the deeds of records looking for what the buyer owns helps you to gauge that either the investor will buy your property or not
· Check with the escrow company that is associated with the investor or the closing agent to ensure that the investor is regularly involved in investments.
There is no full foolproof way to ensure that you are getting along with some real investors or dealing with some fraudulent ones but some of these points may assist you. Hence, the above take-home points can greatly help you to gauge the legitimacy of your buyer and avoid the risk of being overshadowed by fraudulent offers.