You see the bandit signs on the side of the road or ads on craigslist, “we will buy your house for cash, close in two weeks” , “sell your house for cash” or ‘we buy ugly houses”, with the promise of a quick, hassle free home sale.
There isn’t a seller on the face of the earth who wouldn’t want someone to pay cash and close in two weeks on their house and avoid taking the time to properly list and prepare their home for sale.
Wouldn’t you? Lets face it selling your home can be work and be quite inconvenient. Lets just get the job done.
We Will Buy Your House for Cash, Too good to be true?
So here is the low down. Too good to be true? Depends on where your head is at.
These ” we will buy your house for cash” ads are usually run by investors that plan on flipping your house for a profit.
Let’s break that down. An investor is in the business to make money. He needs meat on the bone. Meaning after he buys your house, does the necessary repairs and pays all the holding costs until the home is listed, the investor is looking to make a tidy little profit.
we will buy your house for cash = we will pay you (x) percent of fair market value
Yes, they will pay you a percentage of fair market value. Usually in the range of 50-80% depending on what types of margins the investor is working on. Just know that going in. You are probably not going to get anywhere near fair market value you for your home when an investor pays cash for your home.
But there are advantages to selling your home to an investor. For the right person it may be the way to go.
So Why Would I Want to Sell My House for Less to an Investor?
No hassle, no decisions and ease of selling the property.
You don’t have to prepare the property for the market place, interview REALTORS, go through months of showings etc…
It is certainly not for most home sellers. But there are times in a persons life when they are emotionally and/or financially drained and do not want to confront the challenges of traditionally selling a home. It could be an estate sale and the family doesn’t want to deal with cleaning up, it could be a messy divorce and both parties want the house sold, there could be medical reasons or any number of other scenarios.
Just realize, if you go the route of calling on one of the “we will buy your house for cash” signs that you are probably going to leave a significant amount of money on the table. And that is certainly your prerogative.
Do Yourself A favor Before Going the “WE BUY HOUSES FOR CASH” Route
Before you decide to go the route of investor, do yourself a favor and have a REALTOR or two come by and give you a price on your home as it sits and you selling your home as-is. Get a number your house is worth so you can see if the investor is dealing with you fairly.
Say you have a house that is in fairly decent shape but you know you have to replace the roof and a septic system plus some minor painting and touch-ups. Put the repairs at around $35,000. Figure they may have to carry the house for 4-6 months at about $1000 a month. Plus add closing costs and real estate commissions of $22,000, that brings their to market cost to about $57,000.
The agents said your house was worth 340,000 in as-is condition and about 380,000 fixed up. Now remember for the investor to make money he will probably offer you somewhere between $240,000 to $300,000. At least a REALTORS Compartive Market Analysis gives you a starting point for negotiations with the investor.
Also, don’t forget you can pit one investor against another. They obviously want to get the home for the least amount of money. But, they will probably also be anxious to get a deal together they can start working on and it will force them to sharpen their pencils.
Contact A Real Estate Attorney
If you do contact an investor directly to sell your home, you have no one advocating for you that has an everyday understanding of real estate, like a buyer’s agent.
In the past there have been some investors who unscrupulously pull contracts together that are one sided and put the seller in a very precarious position. While there are many good investors out there trying to treat sellers fairly there are also scams.
It is vital you hire a real estate attorney to review all the documents you will be signing to protect your interest. In your haste to get the deal done and over with do not skip this step.
Alternatives To Selling To An Investor
If you are trying to maximize your profit on your home then following up on a sign that says “cash for homes” and having an investor buy your home is probably not the way to go.
You can’t necessarily have it all.
Quick, hassle free, cash sale or maximize profits. Its a choice only you can make.
If you decide to try and maximize your profit potential call a local REALTOR and discuss:
Selling your house as-is. Meaning you will not do any work or clean up of the home. Realize a messy cluttered home does impact the price and at some point you will have to remove all debris and personal belongings before the sale is complete anyways. Buyers will usually discount repairs at a higher rate than you can get the work done for yourself. But, this allows you to get the ball started and get your home listed. This should still net you more than selling to an investor.
Properly Preparing your house for the market. A good listing agent will make suggestion of what work needs to be done to maximize the profit potential of your home. Realize preparing your home may take time and money, but it is only way to truly maximize the profit potential on the sale of your home. There are also strategies you can employ to help produce a quick sale if that is what you are looking for.
Most listing agents will also be adept at helping you get contractors and vendors you may need to get your home ready for the market if you should choose to traditionally market your home for maximized profit.
It is certainly tempting to call on the we will buy your house for cash signs with the promise of a quick, easy close. And, there is a time and a place for certain sellers to want to go that route.
But, for most home sellers I run into, they want to maximize the profit on the sale of their home and investor route probably does not make a whole lot of sense.
Additional Real Estate Resources:
- Bill Gassett- Pros and Cons of We Buy Houses Flipping Companies
- Conor MacEvilly- When Selling Your Home The Highest Offer is Not Always Your Best Offer
- Anita Clark- 5 Negotiating Mistakes Sellers Make
- Kevin Vitali- Sell Your Home Fast and For Top Dollar
- Washington Post- Quick Cash for Homes, Solution or Scam?
We Will Buy Your House for Cash, Close in Two Weeks- Too good to be true?, was written by Kevin Vitali of EXIT Group One Real Estate. Looking to get your home sold? Call me at 978-360-0422 to review my results driven marketing plan.
Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford