Home Buying Companies
Sell fast ... but at a cost!
Home buying companies will buy your home at a discount then resell it to make a profit. Their profit is the price you pay for selling fast. Companies who buy houses make fast offers and close quickly. Many of them buy houses “as is,” so you won’t have to worry about making home improvements or repairs. Again, the downside, you might not get as much as you’d hoped for your home. Our recommendation is to call several of these companies and get their "net price". Then list on the MLS for a Flat Fee and see what you can get for your home. Most likely you will make way more by listing and selling.
The process with companies that buy your house
As a seller, you’ll be happy to know that there are plenty of companies clamoring for your business. Whether local or nationwide, the typical iBuyers have a few things in common:
- They ask questions pertaining to the condition of your home. Based on your answers, they’ll make a cash offer on your home, usually well below market value. You’ll sell your home faster, but likely for a lower amount.
- They provide a short time window in which you can accept or reject their offer.
- If you accept, they’ll schedule a home inspection to determine whether there are any repairs that might impact the offer. Depending on company policy, you may have the option of making repairs yourself to avoid lowering the offer price, or they may employ an in-house or third-party repair company.
- The company will charge a fee for selling your home, usually 6% to 10% of the offer price.
- Once you accept the offer, closing is usually quick and takes between 7 and 90 days.
Thinking About Selling
Tips for selling a house to real estate investors
Investors vary by location, and you’ll need to do a little digging to find options in your area. Legitimate homebuying companies should have verified credentials. Check to see if they are recognized with the Better Business Bureau. If a realtor or broker owns the company, ask for their realtor license number and verify their qualifications through the Association of Real Estate License Law Officials (ARELLO) database . Finally, ask for the company’s Nationwide Mortgage Licensing System (NMLS) number and use their consumer access website to ensure the company you’re working with is authorized to provide financial services in your state.
Pros of homebuying companies
Selling your property to a homebuying company isn’t the norm, but is it better? A few perks include:
Homebuying companies offer cash to ensure fast closings. As the seller, offloading your home this way means that you don’t have to wade through traditional financing concerns, inspections and other factors that can cause delays.
According to Harold Trinh Moore, a mortgage broker and owner of JH Moore, Inc. , a quick closing process can be beneficial under the right circumstances. “A homebuyer might want to consider this option because they need to move quickly if the job is out of town, they might not want to work with a realtor, and they might be facing foreclosure,” he said. You also don’t need to bother with home staging, open houses and other traditional aspects that can take weeks or months.
No need for repairs
In traditional real estate deals, a home inspection can bring up surprise repairs and costly expenses for the sellers, two things you’ll avoid while working with companies that buy houses for cash. “Some houses are so worn out, it would take tens of thousands to bring a property up to snuff to get full retail,” Norris said. “Many homeowners don’t have the time, treasure or talent to get a full rehab through the finish line. An investor is an expert at this.”
Cons of companies that buy houses for cash
Companies that buy houses offer fast and easy sales , but there are a few downsides.
No market competition
Traditional home sellers enjoyed an average price gain of $61,000 in 2018, representing a 12-year high, according to ATTOM Data Solutions report. While you can avoid all the tedious things about selling by choosing a homebuying company, you’ll also miss out on market forces and competing offers that could yield a greater profit.
A lower sale price
Speaking of profits, selling to a homebuying company usually means settling for less. “They will research the market price and usually offer less,” Moore said of companies that buy houses. In some cases, “they also will send out someone to inspect the home to see if they need to take away from the price due to repairs to the house.”
How to choose a company that buys houses
Not all selling options are created equal. Besides verifying credentials through ARELLO and NMLS, keep a few points in mind as you choose a homebuying company.
Commissions and fees
Companies that buy houses are taking a risk, so they typically offer less money than traditional selling and charge higher commissions. Get the full picture by making a list of the costs associated with selling and what they cover and compare the numbers to listing your house the old-fashioned way.
Many homebuying companies provide as-is selling options , but making repairs yourself could be a more frugal option. Ask whether you have the choice of hiring your own repair team or going the DIY route.
Consider companies that provide reviews through a third-party website like Yelp, Angie’s List, BBB or Google.
The traditional method of home selling has its merits, but may not always serve owners dealing with unusual circumstances. List your priorities to weigh them against each option. The best way to sell is using a good flat fee realtor. You will save a lot of your hard earned equity.