Selling your house to home investors can be very different than selling in a traditional real estate transaction. In many ways, things are similar – but in several important ways, selling to an investor is much easier and faster.
Depending on your situation, selling to investors may be right for you.
Things to Know #1: You Will Receive a Cash Payment for Your House
When you sell your home to an investor, they will likely have their own plans for the property, and they are usually ready to buy immediately. You should never take any “cash buyer” seriously, if they ask for upfront fees or payments – they should be ready to pay you in cash! This type of transaction simplifies the whole process of selling – you don’t have to go through mortgage approval and financing negotiations. All you have to do is sign paperwork.
Things to Know #2: You Should Receive a Fair Value for Your House
What do we mean by “fair value”? Well, if you owe a certain amount of money on your mortgage, you may consider it fair to receive the amount due on your mortgage, so that you can walk away from property ownership without any future burdens or obligations.
No cash buyer should offer you less than you owe on your house. If a home investor is not offering you at least what the remaining balance of your mortgage is – they are not worth your time.
If you already own your house in full, you should receive a reasonably fair market value for comparable properties. In traditional real estate, this is generally determined by a fair-market appraisal. Bringing in an appraiser can cost, and you may discover expensive updates that need to be performed in order for you to put your house on the market.
So how do you determine a fair value for a house you own outright?
This will vary in each market. Some states have laws that regulate the way that property values are determined. Check into the specifics of your local real estate law, and be prepared before you talk to home investors. They will know the specifics and valuation, so you should too. Of course, one thing to keep in mind when determining value is if there is any debt or liens against your property. You will want to include the amounts owed against the property in your calculation of the value.
Things to Know #3: You Can Sell As-Is
Perhaps your home is older and in need of some upgrades or repairs. Perhaps you’ve inherited or come into a property that you’re not quite sure what it needs, but you don’t really want to invest a lot of time and money to find out. In a cash buyer sale, where you sell directly to home investors, you can typically sell your home As-Is.
Before placing a home on the open real estate market, the house must pass public inspections and be brought up to safety codes. Or the buyer must be made aware and compensated for any lingering dangers and costly repairs needed to the property. However, in a sale with a cash buyer, you and the buyer agree that the property has not been inspected and specific safety details haven’t been reviewed. The buyer will not be able to sue or otherwise act against you if they find a problem at the property later, and if the buyer wants to sell it in the future, it will be their responsibility to repair and upgrade.
Things to Know #4: Cash Sales Are Faster
You never know how long it can take to sell your home on your local real estate market. Some homes – if they are in high-demand neighborhoods or have unique features – may sell the same day they’re listed. Other homes – most homes – can sit on the market for weeks or months at a time.
What if you don’t have that kind of time?
If you need to sell quickly, you should know that sales with home investors tend to close much faster. Because there are no inspections and the home is sold as-is, there is far less prep work and paperwork that has to take place. Once you and the home investors have reached an agreement, you can literally sign the closing paperwork that same day, if everything goes well.