What to Know About Selling Your Home to a Real Estate Investor

Want to sell your house in a hurry? You may think that an offer from a "We Buy Houses for Cash" investor or business may be a good solution. Whether it is a real estate business or a selling to investor speculator, is it really a good idea? We take a look at why this is something you may want to avoid. Selling a home to a real estate investor means you will net far less money in your pocket than if you list it for sale with a real estate agent.

For some people, that's acceptable because they are desperate for a quick sale. They are willing to forgo tens of thousands of dollars with the intent of getting out from under significant debt. There are certainly pros and cons of selling a house to an investor.

The Benefits of Taking the Cash Offer

Doing a deal with this type of business has a couple of clear benefits over the often drawn-out real estate process:

Quick cash offers - they may be able to give you an offer for your property in just a few days. Easier to sell "difficult" houses - if your home isn't in the best condition or located on the right side of town, you may find this a better option to release the equity in your home. More often than not the properties that a real estate investor will purchase are considered a fixer-upper house. There could be substantial home inspection issues that a traditional buyer could have issues with. The real estate investor won't care - in fact, they probably welcome it.

You may find yourself in a situation where these benefits seem very attractive. However, the downsides of such an offer are normally going to out-weigh the quick sale potential.

The Downsides of We Buy Houses for Cash

Naturally, there are some problems with trying to sell your house this way. The most obvious of these is the price you will get for your home. If you are selling to investors they are only going to be interested if they are making a profit. This means that they will offer you less, often a lot less, than you would get by selling the normal way.

A cash buyer will look to pay 30 to 50 percent less than the market value of the property. This will allow them to quickly flip the house for a substantial profit. Seeing your house being sold for 50 percent more than you sold it for, just a few months later, isn't going to feel very good.

It is for this reason, that We Buy Houses for Cash businesses and investors like to find desperate sellers so that they can make more money. People who are going through troubling times, including relationship breakups and bankruptcy, are prime targets for this sort of opportunistic organization.

Obviously, selling your home to a real estate investor significantly under market value is a distinct disadvantage!

Corners Cut

To entice more desperate sellers into agreeing to a lower selling price, some of these We Buy Houses for Cash businesses promise no commissions on sales. On occasion, this is because they partner with real estate agents who act on behalf of both the seller and buyer.

This really isn't good for the sellers, since the agent isn't going to be representing their best interests ahead of the cash buyer. The We Buy Houses company will be paying the real estate agent money and will always put their interests first as a result.

Other times they are just buying direct so there is no commission. Unfortunately, even with the commission savings, you will still be netting far less than if you sold it on the open market, regardless of the condition.

Some of these investment companies often deal with the sales paperwork in-house. This saves them money instead of using a title company allowing them to increase profits. They will do whatever they can and cut any corners to increase their bottom line.

While these companies don't have the same considerations when buying a fixer-upper that a traditional buyer would such as condition, neighborhood, and schools, is it going to be worth it taking so much less for your property?

If We Buy Houses for Cash Businesses are so Bad, How are They Legal?

While these companies seem like they are scamming people, they are actually legal. What they are doing may seem amoral, with their focus on desperate people to line their pockets. However, it isn't illegal.

The homeowner can sell their house for whatever amount they want. There is no law to say that houses must be sold at the market value.

While what they are doing is legal, they will often employ underhanded tactics to attain higher profits. They will have their salespeople and agents focused and incentivized to pressurize desperate sellers into signing on the dotted line, taking a big hit on the value of the property.

You Have Other Options

If you do find yourself in a desperate situation and you need to sell your home quickly, there are far better options available. It is far better for your financial future to avoid the low-ball cash offers which come from the We Buy Houses for Cash sector.

You can employ the services of the best-rated real estate agent, and adopt an aggressive pricing strategy. An exceptional real estate agent will have a strong marketing plan that is designed for a quick sale. While hiring a real estate agent will entail paying them a commission, your bottom line will be far better. It will also be far more beneficial to your neighbors than taking the low offer from an investor.

You can still make it clear that you're selling your property "as is." The buyer will be informed up-front that you will not be making any repairs found from the home inspection.

Nobody wants to see homes surrounding their property selling for less than fair market value, which is exactly what happens when you sell to a real estate investor.

Unless you have absolutely no other choice, it is far better to avoid selling your house to cash buyers offering below market value.

Other Valuable Realty Times Real Estate Content

See more helpful real estate advice from Realty Times below:

• How do down payments and earnest money differ - one of the more confusing things for buyers is understanding the difference between earnest money and down payment funds. They are two completely different things. Whether you are buying or selling a house, it is essential to understand how they are different.
• Questions to ask when buying a fixer-upper - when buying a home that needs a substantial amount of work there are things you should investigate before moving forward. See some of the most important considerations when buying a fixer-upper property.

Use these additional resources to make excellent decisions when buying or selling your next home.