How to Spot a Fake Real Estate Investor

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A lot of people get into real estate with the motivation to help others.

In wholesaling, you’re helping distressed sellers out of a stressful situation. Rehabbers are taking a property, updating it while improving the curb appeal of the neighborhood. They’re a lot of ways to do impactful things through real estate investing.

Much like other things in life, not everyone has the best intentions of others in mind.

For instance, sometimes real estate investors have to be wary of who they add to their list. Specifically, if an investor/ buyer says they are able to pay cash for your properties and they want to be on your list, there’s a chance they could be an impostor or what we call a speculator.

Somehow, this new breed of investing has become very popular. What most of them do is stick your property on their website, or on a bunch of other websites, and pass it off like their own. Most do not even have their own buyer’s list or funds to close. This shows us that they are not really an investor, but instead, they are impostor investors who will waste your precious time with no ability of closing on deals.

Although, there is nothing wrong with someone trying to wholesale your property, there is a professional protocol that should be followed.

Here are a couple of signs that any new buyer you’re speaking with has no intention or ability of actually buying your house:

1. They refuse to give you an earnest money deposit.

Any “buyer” who refuses to give you a deposit is not a buyer. This type of buyer will tie up your property while they take weeks trying to find his buyer or funds to close. In the end, they probably will not close. A lot of investors ask for a $2k deposit, but that will vary depending on the purchase price of the property.

If someone claims that they can pay cash for your property, they shouldn’t have a problem parting with $2k for a deposit.

2. They want to buy sight-unseen.

If a buyer wants to buy your property sight-unseen and just asks for your paperwork, they are either inexperienced or a fake buyer. They will usually make an offer to purchase, and then upon inspection, they come back with a low-ball offer. At times, they tie up the property and can’t find a buyer and backs out.

Any investor paying a lot of cash for an investment is going to want to see the property before making an offer, especially if they say they’re a rehabber.

Once you have established a relationship with a buyer and they have done several deals with you, then you can loosen up your guidelines on this rule.

So, what do you do if you think someone is a speculator?

Well, just explain that you don’t have a problem if they offer your property to their buyers, but you can’t allow him to tie up your property while they do this. They will also need to give you a nonrefundable deposit. Or, you can make them a deal either a percentage split or have them mark up the selling price.

Don’t be afraid to put your foot down, you don’t have to say yes to everything. Real estate is at it’s best when everyone can walk away with a win but remember to protect yourself and your business as well.

So take this knowledge and apply it. You can be one of the good ones and help others through real estate investing. Don’t let others bad intentions stop you.

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