You’ve seen those signs around town – “We Buy Ugly Houses!” with a phone number. But what does that mean? Does it mean your house has to be like, literally ugly to sell to them? Does it mean that your house has to have a bad paint job or be poorly decorated or something? Why would they want to buy “ugly” houses?
Buying & Selling Distressed Properties
Some of the best-looking houses on the market can actually have some severe problems. And some of the houses that look really beat up, lived in, worn down, have great foundations and are in excellent locations to be highly valuable real estate. So what does that mean?
Home buyers, who often purchase with cash, can look at buying properties that most other people don’t buy. Most people want a house that’s “live-in ready.” They don’t want an “ugly” house that needs a lot of work before they can live in it, and they don’t want a house that looks great but they can’t live in for safety reasons.
So, cash homebuyers buy ugly houses to help out those people who have homes they need to sell, but which are less than perfect.
Selling a Distressed Property
If you have an “ugly” house that’s in need of repairs, you’ll likely have a hard time listing it on the open market. Unless you can make some of the needed repairs before people come to see the property – called a “showing” – after you list it, many buyers will likely be turned away. There are some places where you can get an estimate for the repairs for the damage and include that with the listing, along with pictures and details of the needed repairs, and you’ll still have interested buyers. But you should know that it will greatly reduce the sales price of the house.
However, if you need to sell quickly, this won’t be the way to go. It can take months – perhaps even years – if you let a distressed property sit on the real estate market. Until the “right buyer” comes along.
Sell to a Cash Buyer
A cash buyer will be interested in buying the property immediately, no matter how “ugly” the property is. Cash buyers don’t worry about inspections or appraisals most of the time, but are happy to discuss with you whatever you know about the needed repairs.
Why They Buy Ugly Houses
Every cash homebuyer has their own plan when they buy an ugly house. Depending on the person, they may tell you if you ask them.
Commonly, cash homebuyers will “flip” the house and complete the repairs themselves, then once the repairs are completed they will list the house on the open real estate market. This can be a risky investment, because the repairs can always take longer or cost more than expected, and they may not get the money back that they put into the house in the long run.
Some cash homebuyers will hold onto the houses they purchase and make the repairs to them, then list them as rentals. Especially in cities where there is a lot of active military or student traffic and the rental market is hot, many homes that are listed for rent are owned by cash buyers.
Less commonly, especially depending on where your house is located, the cash buyer who purchases your house may be interested in it for the land it sits on. At times, houses are purchased by cash buyers so that the land can be rezoned and the new owner can demolish the property (if it’s condemned or very distressed) or convert the property into apartments or condos, a park or commercial area, or some other function.
Someone’s Got to Buy Ugly Houses
Cash homebuyers help people who are stuck with a property they can’t afford to repair and they don’t want to keep. While some homes simply become outdated, need to be converted, or have been damaged by weather or poor maintenance, other homes may be severely distressed because of fire, flood, or extreme conditions. These properties will remain until they collapse, unless someone can afford to clear away the ugly house to make room for something new and beautiful. Cash homebuyers clear out the underbrush of real estate so that the whole market can grow.