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Thinking of selling a home to a cash buyer, but find yourself wondering how investors buy houses?
When it comes to selling a property, homeowners want to ensure a stress and hassle-free sale. They want to be able to sell their home at the ideal asking price and walk away from closing with the ability to move on without strings attached. Unfortunately, not all home sales are quick and convenient. They often come with a long battle to please potential buyers.
Fixing up the property and hosting endless showings can become a financial burden, and emotionally overwhelming. For sellers wanting to simplify the selling process, learning how investors buy houses is essential. First, let find out why you should sell your home to investors.
Why Sell House to Investors?
Most homeowners envision their property being sold to the typical buyer: a family or young couple with the desire to live happily ever after in the home. However, individual buyers aren’t the only option when listing a property on the market.
Many house buyers are professionals with interest in the property’s potential. These real estate experts are investors, often making fair cash offers exceeding the homeowner’s expectations. But how do investors buy houses with cash? These investment companies and individuals will purchase resident homes needing renovations to eventually resell at a profit or boost their property portfolio.
Pros and Cons Of Selling Your Home To An Investor
If you’re selling your home and an investor walks in offering you all cash, you might think you’d died and gone to heaven. But before you sign that purchase agreement, think it through. Investors are not always the gifts they appear to be.
Most of the home buyers you’ll meet are individuals, couples or families looking for a place to live. They might be looking for their “forever” home or a place to raise their young kids, and they probably consider their home an investment, but they aren’t what we would call investors.
Investors are people or companies that want to purchase your home in order to make money. So negotiations will go differently (and hopefully easier) than they would if the buyer was going to live on your property. But sometimes the investor(s)’ intention should be reason enough to give you pause.
The Pros of Selling Your Home to an Investor
• As-is purchase: The investor isn’t planning on living in your home so he or she (or the company), doesn’t care if your kitchen has been updated with a vibrant backsplash or if your toilets are new. In fact, many investors look for homes that are old or outdated so they can fix them up and flip them.
• Little risk you won’t close for lack of funds: Most investors pay for properties in cash so you won’t have the uncertainty that comes with a buyer applying for a mortgage. Even when a buyer has been preapproved for a loan, the lender can decide the buyer’s credit-worthiness has changed and refuse to issue the funds needed to buy your home. Before you sign a purchase agreement you should ask the investor for proof of funds. This can come in the form of bank or money market account statements that show cash or liquid assets in an amount that exceeds the purchase price of your home.
• Quicker closing: Since most investors purchase with all cash, you can sell your property as soon as your two parties agree on the conditions of sale. The average time it takes sellers to close with an all-cash investor is two weeks. If you’re selling to a buyer who needs a mortgage, it’ll take you 60 days’ minimum.
• Potential for flexible purchase arrangements: If your home is underwater or you’d like to get out of the real estate game altogether but don’t want to move, selling your home to an investor could be the way to go. Some investors will agree to take over your mortgage and some will even rent the house back to you in what’s called a sale-leaseback transaction.
The Cons of Selling Your Home to an Investor
• You don’t always know who’s buying your property: Investors aren’t legally required to tell you who or what is actually purchasing your home. So, it could be a landlord known for shady renting practices or a developer who wants to tear down your house and turn it into apartments.
• You might not sell your home at true market value: Most investors are looking to buy homes at below-market value. Or at least at a bargain. And because they don’t have to tell you what they’ve planned for your home—like tearing it down to build lucrative apartments— you might not know its true market value.
How Investors Buy Houses
When it comes to how investors buy houses, the process is simple. If the local investor doesn’t make initial contact, a homeowner can inquire about the house buyer via an online form or obligation-free phone call. After making contact, the investor will set up a home visit to assess the property to calculate a fair price. Once the investor has considered the purchase cost, including comparing it to other homes of similar size in the neighborhood, they will submit a cash offer. There are no stipulations or contingencies involved; the investors want to buy the home as-is and provide the seller the means to move on. Once the offer is thoroughly looked over by the seller and accepted, investors ensure closing within a week or at the seller’s earliest convenience. It’s that easy.
Working with a professional investor is a hassle-free experience for homeowners interested in simplifying the selling process. The benefits far outweigh the possibility of scammers. Investors are meant to be empathetic problem solvers and experts in the housing market. They can provide cash offers that expedite the sale and free selling advice for unsure homeowners. If you want to know how investors buy houses hassle free, it comes down to their desire to guarantee a speedy sale while providing efficiency and professionalism.
How do I find an investor to buy my home?
Selling a house can be stressful and can take months or much longer to sell if sold in the conventional way.
Whereas if you sell to an investor, the process is very quick and you’ll sell your house chain free and estate agent commission free.
But there’s a catch, as often times you need to be prepared to accept a below market offer. This is the price to pay for the convenience of a quick sale. But how much will an investor pay for my house you may ask?
If you want to sell your house fast and for cash; expect to receive between 25% to 30% below its market value. But there are alternative methods to sell your house where you could achieve market value.
How much will an investor pay for my house
For a quick cash sale to an investor, expect them to pay 20 to 30% below market value for your house. But choose the right investor to get paid market price for your house. For the deal to work it has to be a win-win. Your win is you can get paid market price for your house. The investor’s win is they make money. Investors purchase property to make money, whereas people who buy home to live in don’t. Investors in property make money in a number of ways.
Let’s take a look at how this works:
• Property or house flipping: Investors buy house to renovate or improve and flip (or sell to someone else) for a profit.
• Rent the property to tenants: Investors will also buy houses to rent out to tenants to make a monthly cash flow.
• Change of use and planning permission: Investors often times will take an individual property and changes its use or obtain planing permission to create value. For example, changing a single dwelling house into flats.
What a company that buys property will be able to do with your property will depend on your property’s location and the type of property. Not all investment strategies work for every house or property.
With the above in mind and because an investor is in it to make a profit, you are often likely to be paid less than market value for your house. But this doesn’t necessarily have to be the case. Please read on to find out how you may still be able to achieve full market value for your house when you sell it to an investor.
Making a Deal
Now that you can identify the major benefits and few disadvantages to selling to an investor, it’s time to learn how to sell to house buyers. Thankfully the process is simple due to the investor’s focus on finding ideal income properties. Transforming your home in hopes of appealing to the traditional buyer can be difficult; it often means updating the property and providing curb appeal that attracts the average buyer. Investors are less picky and look for a couple key factors before making a deal.
Investors generally search for homes that need work in superb locations. Properties that are undervalued due to extensive damages are a great deal for investors willing to renovate before reselling. Homeowners that have become landlords are also ideal potential sellers; their tenant-occupied rental properties are desirable nuggets of potential profit to a serious investor. Homeowners with any of the properties described will with little problem attracting a local investor willing to make a deal.
Before finalizing the deal, it’s important as the seller to carefully look over the agreement. While most investors are professional house buyers with no intention to mislead the homeowner, some will put in substantially lower bids or change other agreed upon details. If selling an FSBO, it’s especially important to have an expert read over the contract before closing.
When Should You Sell to an Investor?
Are you unsure if selling to an investor is the best decision? Here are common reasons to sell your house to an investor:
• Foreclosure: Selling your home to an investor is ideal if you’re behind on payments and are facing foreclosure. You’ll be able to sell your home quickly and can get cash for your home.
• Inherited Home: If you inherited a home that you don’t want, selling to an investor is a great option. You don’t have to worry about that inherited property and you’re selling it quickly.
• No Financing: There may come a time when you can’t finance your property to another buyer. This can be because your home doesn’t meet permitting or safety standards. If this is the case, an investor can get your home off of your hands.
• Disrepair: Does your home require many repairs that go beyond a traditional fixer-upper? If so, it may make more sense to sell to an investor. You’ll have to spend significant funds on repairs. If you try and sell your home to a traditional buyer, they may not be interested.
• Escrow: Escrow is when you’re trying to sell your home and purchase another one at the same time, but you can only purchase a new home when your old one sells. If this is the same, selling to an investor can expedite the process.
• Need Flexibility: If you have a specific timeline to sell your home, you have more flexibility with an investor. Selling your home to a traditional buyer can be unpredictable. With the paperwork involved, this timeline can be longer than you would expect.
• Divorce: Divorce settlements require both parties to divide assets. If neither of you wants to keep your home, selling to an investor can be the best option. You can sell your home quickly and can divide the funds among each other.
• Relocating:11% of home sellers said they moved for a job relocation. If this sounds like you and you don’t have time to wait for a home buyer, you can sell your home to an investor. You’ll get cash for your home and you can sell your home quickly.
Need to Sell Your House?
Then you’ve found the right people! At Wasatch House Partners, we understand that selling your house is an emotional, and stressful process. That’s why we take extra care to work with you on a timeline that’s comfortable and convenient for you. That’s how investors buy houses. It’s as simple as sending a text! Sell your house for cash fast through us.