I started my career right out of high school at 19 years old with no college degree, no family name and little understanding of the real estate industry. I lacked a lot of things many took for granted, but what I did have is an entrepreneurial spirit and a good amount of street smarts.
For the first few years, few were willing to entrust the largest purchase they will ever make, for most, to an inexperienced kid. I struggled, but I was too hungry and determined to quit.
By my early 20s, I found a niche that I was exceedingly interested in and good at: foreclosures.
It was the early 90s, and the REO market was less than 2 percent of the overall market in my area. But no one was specializing in it, and I recognized an opportunity. I decided to become the local expert, developed a team (before teams were a thing), and off we went.
In such a fast-moving corner of the market, I quickly learned the value of my time, and therefore, how important it was to qualify a “cash” buyer.
The truth is that there are many pretenders, who come in all styles and will gladly waste your time driving them around, writing silly offers and dangling carrots of multiple transactions in hopes that something will stick.
Learn from my early in experience. Here are just a few of the catch phrases to look out for, and how to respond when you hear them (because you definitely will):
Situation 1
Cash buyer: “I have several pending closings out of state and haven’t set up my local bank relationships yet.”
Agent: “Can you give me your agent’s contact information so that I can get copies of those agreements? Sellers here will want to see that those contracts are through the due diligence period before taking there own properties off the market. The least amount of questions to your qualifications, the stronger your offers will be.”
Situation 2
Cash buyer: “I have access to unlimited funds from a prominent investment group who wishes to stay confidential.”
(Translation: After you, the agent, provide me with cost estimates, CMAs and projections on as many deals as possible, I will submit them to this unnamed group in hopes that they will provide the funding.)
Agent: “Unfortunately, the sellers will require me to submit documentation in the name of the entity purchasing. We can look at properties as soon as I receive it.”
Situation 3
Cash buyer: “I don’t give out my personal information, but trust me, I have more than enough money.”
Agent: “I don’t need to see all of your financial information, but I do need at least one statement from one of your accounts that shows enough cash to cover the cost of your new investment/property.”
Situation 4
Cash buyer: “I have a wealthy business partner who is too busy to look at the property. I handle all the details for him/her, and he/she will provide the money.”
Agent: “All I need is a investment statement, with the account information blacked out is fine, that is in his/her name and a copy of your partnership agreement that shows you as a managing member.”
A bit of street smarts can be priceless and save you a lot of wasted time. Most people do have the right intention, but it can be difficult for them to discuss a creative form of funding, or personal circumstances they feel may make their offer appear less strong.
In some cases though, they are simply trying to project themselves in a way they think will give them a position of strength.
That doesn’t mean we should cultivate cynicism or make negative assumptions about potential buyers. It simply behooves us all to be smart and thorough.
An old Russian proverb frequently quoted by President Reagan puts my advice for these types of situations into perfect context: “Trust, but verify.”
Jack Gross is the president and CEO of Better Homes and Gardens Real Estate Cassidon Realty in Pennsylvania. Follow him on Facebook or Twitter.
