What strategy is this investor using?

Question

I recently saw on a real estate investor's website the following claim: 
"The low equity situation is the most common we run across.
You don't have to give away your equity
to a real estate agent, no matter how small it is!
We purchase homes with little equity and in many cases are able to return much of that hard earned equity to the homeowner who deserves it the most. "

This is from a lead generation site that is looking for motivated sellers.  I assumed they would have to be talking about doing a short sale given that they are targeting those with little or no equity.  But then how are they sometimes able to "return much of that hard earned equity to the homeowner who deserves it the most."

If it is a short sale, I haven't seen the claim made that equity would be returned to you, since I didn't think the seller was allowed to get any money out of a short sale.

Any ideas?

Jon Holdman · Answer

True, selling to an investor will avoid RE commissions.  False, IMHO, than any investor is going to give you a better deal than selling retail and paying a commission.  This ad implies that if you have 6% equity that the investor would pay you retail for the property and allow you to keep the 6%.  I don't buy that.  Investors, well at least successful ones, want to buy at a significant discount.

Robert Mayo · Answer

I doubt he's referring to a short sale, I think he's just suggesting they avoid realtors because of the commission.  If your equity is 7% of the value and you pay 6% to a realtor you are almost wiped out; selling to an investor can avoid that.

Jim Wineinger · Answer

A short sale, by defination, is selling the property for less than what is owed, therefore there can be no equity is such a deal.

It may just be a tactic to bring in customers who think they should get something, but in the end can not recieve anything because of no equity.

Such a tactic will backfire as far as reputation goes.