September 2, 2020

Opportunists or just Plain Strategists: Which side are you on?

Real Estate IQ breaks the myth and decides whether real estate investors are good or bad for humanity.

Real Estate IQ weighs the balance and exposes all sides of real estate investors; the good, the bad and the ugly (if there’s any). In this blog, we will try to revisit if real estate investing is really making a difference, touching people’s lives and making a change to better the world.

Is it immoral, unethical, or corrupt to buy real estate at a severely discounted price from a motivated seller?

Come to think of it? Think about it – a lot of the times that real estate investors are intentionally targeting people who are struggling in life, the ones who are in desperate need, willing and able to make desperate decisions – so we can capitalize on the situation and get a deeply discounted property.

Don’t you ever wonder if this is wrong?

Are real estate investors like sharks in the ocean taking advantage of people’s dire circumstances to survive? Are we really turning a blind eye as some of us  see these habits as bad and cruel? Can’t we do something about a culture forced upon them by such a very formidable industry?

Real estate professionals may sometimes be perceived as  guilty of acting like vultures in an all-time high swag to go on a scavenger hunt, but many accounts will prove otherwise.

People may sometimes wonder whether these investors are playing devil’s advocates or simply angels in disguise. Are they real-life opportunists or just experienced strategists practicing their professional trick of the trade to make their way up in their career ladder? 

The Tale of Two Couples

Let’s say a real estate investor met a needy couple trying to sell their house at the soonest possible time. Distressed as they may seem, the couple urgently needed money so time was of the essence. The house which was now for sale, though requiring some renovations and upgrading, seemed to be a very attractive one. The real estate investor analyzed the condition of the house and offered to pay the distressed couple a decent  amount to take it off their hands.

To the couple selling the house away, this was a huge value because instead of simply getting a small amount of money due to lesser knowledge of the trade, they got an ample amount of money they urgently needed at that moment in time.

Now, let’s say that the same real estate agent had some knowledge on how to do fix and flip strategy, had some investing experiences so he made contact with his established real estate network of professionals and made the house look modern and trendy again.

After fixing, making it a true eye-candy for any real estate market, he conveniently found a newly –married couple who was just starting their new life together. As motivated as they can get, they  just so happened to be in desperate need of a new house. Luckily, the newly-renovated house fitted the requirements of the couple:  a trendy, modernly-designed property located in the heart of a metro area at a very reasonable price.

They had allocated a huge amount of budget since they have been saving a lot for their dream house ever since. They initially wanted a brand new home with their specific aesthetics but upon seeing the charm of the renovated property that translated their specifications, they became open to the idea of settling for just an upgraded one where they can potentially save some amount of money. The real estate agent offered them a somewhat costly rate, almost doubled as compared to the amount that the agent bought the house from the first couple, but still within the newlywed’s original budget. The couple was thrilled because they got a great, brand-new looking house and saved 30% off their allocated budget.

Many scenarios like this that happen every day, where these kinds of business transactions are a win-win for everybody. Real estate investors are no strangers to this scenario and can provide a very similar value to the world as the story of this couple (not to mention that usually the deals are with much larger numbers behind them).

Real Estate Investors with a Purpose

Yes, they do have a purpose and it’s not all about the money.

Ethics, honesty and integrity are just some of the common core values that make up these real estate professionals.  For a motivated seller, liquidating their property is a solution, or at the very least, it’s an aid to a painful problem in their life.

You might be far out of your element when it comes to reviewing and understanding the multiple documents 

involved in a real estate deal, and you should have a thorough understanding of understanding of what you’re getting into regardless of whether you’re buying or selling.

Luckily, your agent will be far more familiar with all this paperwork than you are. Consider this if you’re still thinking about saving money: Some mistakes or omissions in these documents can cost you as much as that commission you were trying to avoid paying—or even far more.

Real estate investors offer these motivated sellers the ability to free up thousands of dollars for themselves (and in many cases, this money would otherwise be lost), even when the offer is deeply discounted.

Your real estate agent has your back whether you’re a buyer or a seller. Agents have what’s known as a “fiduciary” responsibility to their clients. They are legally obligated to put their clients’ best interests first.

If a motivated seller has a property that is in desperate need of repair and they don’t have the skill set to fix it – a lot of the time, they’ll be stuck paying taxes on a property they can’t use.

So the real estate investors offer some pretty big value when we’re able to purchase these troublesome properties and take away the headache of dealing with them.

An agent can hand over a good amount of researched, current, and reputable data regarding a neighborhood’s demographics, crime rates, schools, and other important factors. That’s a lot of time-consuming research to do on your own, particularly if you don’t know where to start. But your agent will be alert for issues that might not cross your mind, such as furnace issues, leaks, roofing problems, and mold and insect issues. An agent will recognize the telltale signs of these problems and know how to best approach them. Agents can even do comparative market analyses in their sleep. Again, this experience and knowledge can end up saving you thousands down the road.

You might not be a negotiation shark if you don’t happen to be an attorney, mediator, union rep or a real estate agent. Remember that fiduciary responsibility your agent has to you. It’s your agent’s job to get you the best possible price for your home, or to see to it that you get the best possible deal on the property you want to buy.

Agents are trained to negotiate well, if only from experience. They know what normally works and what does not.

You, on the other hand, might be willing to come up with $10,000 more to purchase that to-die-for home, never realizing that it’s really not necessary because you possess certain bargaining chips. It’s just more money saved if you have an agent who prevents you from taking an unnecessary financial plunge.

Henry Ford once said that it proves that you’re smarter than they are when you hire people who are smarter than you. The trick is to recognize when you need help and to where to find the right person.

At the end of the day, real estate investors are just truly providing a noble service to people amidst their dire situations, allowing them to quickly cash-out their property. There is great value in this service, for the right person, in the right circumstance.

Real Estate Investors Can also do Bad Things…but they won’t!

Now of course, in the narrative of the couple and real estate agent, if he had ill-intentions and somehow blindsided or tricked them, lied to the seller or used some manipulative tactic to convince them their house could never be sold to anyone else for a higher price… then,  that would be unethical.

When it comes to motivated sellers, agents are usually very intentional to disclose that they are real estate investors and say openly that they can’t pay full-market value for any property they buy.

They then proceed to tell them that even though this is the case, they are all-cash buyers and close very quickly and that for the right people, they can provide a great value… but also disclaim that they may not be the right fit for everyone.

Not to mention, most realtors won’t even touch distressed properties because they require a lot of effort to move and ultimately sell cheaply, which means the realtor won’t get much of a commission for their efforts.

With this kind of transparent approach, they can honestly tell you that they don’t have any problems finding deals in their business.

Confidently Strategic with a Heart

It is therefore just logical to think that the whole issue of ethics boils down to the intent. If you’re legitimately trying to rip people off for one reason or another, then you need to get that sorted out – it’s never a good idea to intentionally hurt people for your own benefit.

But as long as you keep at the forefront of your mind that your goal is to create win-win situations for people you don’t even know,  and you strive for that every day, you’re actually

serving the world with a noble cause for the common good. You are showing the world an act of random kindness just this this time, in a business as usual tone. 

This leads us to maybe thinking about strong necessity for professionalism, entrepreneurship and capitalism. Perhaps, if it’s done with the right heart and the right reasons, everybody wins.

Everybody has unique characteristics and abilities. It is up to us whether to use it in whichever way we wanted. We are our own decision-makers. But the reality is, it is not our abilities that define who we are as people, it is our choices.  We set the line between left and right…good or bad…light or dark.

At the end of the day, as real estate investors, we get to decide which side we are really on. The time always comes to a point for us to decide whether to do what is right or what is easy. Do you want to be seen as an opportunist preying on others’ weaknesses or just a plain, dignified strategist trying to lend a helping hand to people in need? Ultimately, we all get to decide how we can achieve and fulfill that one sublime factor called…PURPOSE.

The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.