This is an interesting article. Investor buyout. Everybody has seen the signs, “We buy ugly houses” in various competitor versions. I always think, “scam” when I see them; or the proverbial bear, taking advantage of the easy pickings in the salmon run. But dealing now as a certified distressed property expert on the Realtor side, I am seeing the value of such, to an extent.
Prior to getting my realtors license, I was buying houses for rehab investment and flipping them for a profit. Lost my tail on two in 2008 leading to a $30K plus loss that nearly led to the loss of my own house to foreclosure. Seems I was not alone in that watershed year of decline. In the process of “sucking-it-up” and “driving-on” if you recognize those military terms, I got that realtor license, some more courses on investments and a few investor friends. Things are a bit clearer now.
As a listing Realtor, I’m able to quickly put clients into a short sale situation, which stops the foreclosure action as well. If it is too close to the sheriff sale, a small fee of less than $500 to an attorney knowledgeable in such matters will stop the sale long enough to get the short sale initiated. It’s a tedious chore of working with the homeowner, bank, title company and investor behind the loan, getting all the required documents and financials faxed in or uploaded, repeatedly in many cases, the BPO, brokers price opinion or appraisal ordered by the bank or its servicer, and getting an offer approved.
This short sale business is generally a rather good deal for a buyer as they can usually get the property for around 80% of market value and not feel bad for the seller as it’s the bank, not the home owner taking the bath. The homeowner is generally going to be getting a moving assistance stipend from the bank of $1500-3000. However, it is rather time consuming. 90 days on the “short” side.
So how do these investor buyout types do it so much faster? Well I got my share of mailers and contacts from them when I was in the foreclosure salmon run myself. The short answer is “cash talks”. They do a short sale by offering a cash offer that shows the payoff of all liens, right away, instead of just listing and awaiting an offer.
If you go to the sheriff auction, you’ll find the bids start at 80% of appraised value less deferred maintenance and often, the banks wind up buying it back themselves do to the lack of such a bid at the sale. Then they have to remarket the thing and as you know, there are a lot of vacant bank owned properties that don’t even have a sign in front of them. They are overwhelmed.
So these investor buyout guys show up with liquid cash and a smooth formula, working directly with the sellers as well they stop foreclosure, even offering the sellers listing agent referral fee’s, or in some cases their full commission, and what do you expect? Banks fairly consistently yield to the investor buyout guy, with closings within weeks instead of months like the poor realtor has to work through. Rather one of those “not fair” calls you might think if you’re a realtor plowing through the paper push on these short sales as I am. One of the reasons I elected to take some more courses along that line, link up with some investors and be one myself for homeowners that wanted to move faster than the short sale system would allow in the realtor-listing format. Some of these investor buyout companies are actually highly structured franchise opportunities due to their deal structuring being so smooth, predictable and helpful to a distressed seller.
I say helpful, as although a short sale will fully recover your credit in 2 years, allowing you to repurchase, an investor buyout can sometimes restore your credit fully within a few months if structured right. If say, the investor firm is able to purchase the house subject to the sellers own loan being left in place, they will bring the loan current upon closing, and make normal payments until the house resells with their profit, typically in 3-6 months. As you well know, that means the credit issue is immediately reversed. 6 months of normal payments and it’s like nothing ever happened credit wise. The sellers move out, and go cut a deal to buy another house before the year is out. This sort of investor buyout will work best where there are multiple loans on the property that have to be dealt with. Usually the main one will be brought current and the equity loan or loans shorted as a short sale.
What’s best for you? Don’t know till we talk. But whether through traditional listing, short-sale, re-finance or investor buyout, we can stop foreclosure by some means right up the last minute, even if it means involving an attorney to make it happen. If your wanting to save the house and stay in it, I have several contacts that have been quite successful at pushing through refinance options as well. Believe me, I know the stress your facing. Been there, done that. Didn’t like it at all. Give me a call or email and we’ll get you de-stressed fairly quickly. It’s not the end of the world… yet anyway.
Legal representation or advice is recommended in all legal matters. This site and brokerage represented is not affiliated with the government. If you use our services, your lender may not agree to accept a short sale or change the terms of your loan. We do not advise you stop paying your mortgage.
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? Whats with the doggie? Well, Miss Piggy is a rescue dog taken away from an abusive home by a veterinarian after he treated her for wounds in which she lost an eye. She is now a very happy doggie and I thought, a much prettier face than mine. She escaped her bad home… as will you, escape mortgage, stop foreclosure and smile:)