HUD Articles

Let’s face it. Despite higher interest rates and increasing inventory, the price of real estate is still relatively high as compared to the pre-pandemic era. Add to that, many institutional sellers are still heavily focused on ‘owner occupant’ purchase of their special assets in an effort to promote home ownership. All of this makes it tough for investors to find properties at a low enough price to fix and flip and have a return on investment.  As a result, many investors are widening their scope and going out of state to find inventory.  As an agent, how can you help your investor buyers from out of state?  One important thing is to educate them on the process, especially as it pertains to your market.  Here are a few things to pass on to them:

Have Realistic Expectations

Some investors who may thrive in a market with higher values on average than yours may feel that coming into a new market that has lower values relative to their home market means they can offer much lower prices than asking, even submitting lowball offers.  Help your out of state buyers understand that what exists in your market is basically the same as theirs:  sellers are trying to sell for as a high as they can so reasonable negotiations must be made. To have an air of thought that lesser values mean desperate sellers is a big mistake.

Have the Local Team Ready Beforehand 

Before making an offer, help your out of state investors by putting together a team of professionals that are familiar with the local market. This may include attorneys, contractors, title, home inspectors, etc. So often, out of state buyers will want to make the offer first because of the price, then if their offer is accepted, they scramble to put the ‘team’ together after the fact, and then end up losing the deal. Preparing the team members beforehand can save a lot of time and money.

Make Reasonable Offer Terms

Sometimes, out of state investors make unreasonable offer terms, largely based on the fact that they are not there to see the property in person.  The remedy to this problem lies between you as the agent and the points mentioned in the previous topic.  You as an agent must help them to see that most sellers are not going to agree to a 10 day ‘inspection’ period after making a blind offer. They will see this as the out of state investor wanting an out if their contractor deems repair costs too high after actually seeing the property.  By both you as the agent and the contractor seeing the property beforehand, this can help you to make a reasonable offer with reasonable terms.

Yes, working with out of state buyers can be challenging, but a well-prepared agent offering realistic expectations, preparing local professionals beforehand, as well as helping their out of state investor clients make reasonable offers can go a long way in having a successful, and profitable, relationship with an out of state investor.