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The Number 1 problem when dealing with real estate investors

During the course of my real estate career, I have worked with many ethical real estate investors.  True gentlemen/women, the type where a handshake is as good as a signed contract. But it in today’s real estate climate there is a new breed of real estate investor in town. These “investors” tie up a piece of property and then shop it to their investors.  This has happened to me on two different listings in the last several years.

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The investor buyer acknowledges receipt of disclosures, inspections, etc. We negotiate a selling price and open escrow. Often their earnest money deposit  never makes it to escrow. When pushed to honor the terms of the Real Estate Purchase Agreement and get their money to escrow, there is a request for a price renegotiation.  After they have shopped the property to their investor pool and by the time they collect their finder’s fee their initial offered price was too high to make the deal work.

Each time this occurred, it resulted in a cancelled escrow and sadly unnecessary stress for my client. A great real estate agent learns from her mistakes.  Now when I list a fixer upper, I address the investor dilemma with my client. Typically the manner in which my clients decide to handle this situation is that an offer from an investor will not be considered without a cashier’s check and a non-contingent offer.

Seems harsh? Of course, not all investors can be painted with the same brush, but if I am not familiar with them, then I must remember the adage:  Fool me once shame on you, fool me twice shame on me.

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