Is full disclosure necessary in Real Estate Investor dealings?
Is full disclosure necessary in Real Estate Investor dealings? When it comes to the real estate business the end goal of any property seller is to have the property sold as fast as possible. In most cases, the property sellers are really never interested in whether you will be buying the property yourself or whether another person will be buying it. When it comes to disposing of property, there are majorly two ways through which an investor may approach this; they may decide to sell it themselves or they may decide to get a buyer who has the ability to buy it. A real estate wholesaler is a person who in some cases is really not capable of buying your house for their own use; rather, they are seeking to make a profit margin from the sale by buying and selling it at a higher price. This is usually done in two ways, a good wholesaler may use their own money to buy the property as their own and then sell it off to another buyer at a higher price or they may just decide to get a ready buyer who is willing to pay a higher price than what the seller is asking for. The difference in the amounts is usually the margin that they take. In most cases, a real estate wholesaler just buys the property from you, does some little improvements here and there then they sell the property off.
On the other hand, there are those who may want to buy their property for their own use. With such, the deal is usually clear from the start. In most cases, they will try to find faults with the house as they will need to do the repairs themselves. So, in most cases, such a deal will be more involving in trying to agree on the sale price. Is full disclosure necessary? The main question that arises in such a deal is whether as a real estate wholesaler you need to disclose to the seller what your real intentions are. In most cases, people are rarely willing to let the seller know what they intend to do with the property. While most sellers have no problem with this, problems usually arise in instances where the real estate wholesaler is unable to get a buyer for the property before the window of the contract expires. When dealing as a real estate wholesaler, you will also need to get the consent from the seller to advertise the house in your name. You might not be able to do this if you haven’t disclosed to them that you are seeking to sell the house. If you, therefore, go behind their backs and advertise the house without their knowledge, they might be very cross with you. You might also find yourself at loggerheads with the law for purporting to be the owner of a property and advertising it in your name. Each client is unique As a real estate investor, it is also good to keep in mind that each client is unique in their own way. For instance, there are those clients that may state categorically in the sale agreement that they don’t want their property to fall into a certain group of people. If you, therefore, sell the property to the said class of people, for instance, casino owners. While you may not be culpable before the law, you may lose face before such a client and ruin your chances of getting a similar deal in future from the client or others like him. Full disclosure is the best option Therefore if you are a real estate agent, you may decide to have full disclosure or not. However, in the event that you decide to not disclose what your true intentions are, you will need to ensure that you have a ready cash buyer of the property who is ready and willing to buy the property at the agreed price or you have the cash to buy the property yourself. If this is not the case, it is always recommended that you disclose to the seller what you intend to do so that if they are not okay with it, you may decide on new terms of sale. Full disclosure, especially in instances where you foresee possible difficulties in closing a sale is important because it helps avoid instances of investor-seller mistrust. Again it will let the seller decide if they are okay dealing with you or not. The foundation of good real estate business is built on trust and clean deals. When a seller trusts you as an investor, chances are that they will be willing to work with you in future or give you referrals. When you are known in the real estate business as a trusted investor, more people will be willing to work with you. Avoiding full disclosure in deals that you fill the client might back off from is a sure way of ensuring that you close on a deal but n the long run, such tricks will catch up with you. If for instance, a seller feels that they were cheated, in terms of the pricing of the property or in any other way, they may file for misrepresentation in the contract which may lead to court battles. Even if their claims may amount to nothing, as a real estate investor, you would not want to be involved in court battles with your clients. Like aforementioned above, all that the seller wants is to have the property off their hands at the end of the day, and in most cases, as quickly as possible. It is therefore important that as a property buyer, whether or not you are doing this for a profit, you ensure this is done. It would be quite unfair to delay the closure of a deal for a seller who has really entrusted you with the deal just because you haven’t managed to get a ready buyer. For the above reasons, it is important to carefully consider what you fail to disclose to the client and the impact it might have on you business-wise and as a person.