There’s no shortage of options to sell your home, but there are plenty of situations where you may need to sell your home fast. This guide will walk you through everything you need to know when selling your house to an Investor.
Want to Sell Your House By Yourself? How to Sell your house without a Realtor
Reasons for Selling your house without a Realtor
Home investors like SoCal Home Buyers are professional investors that specialize in residential purchases as an investment strategy. Your home is paid for with cash up-front, so you don’t have to go through the costly and time-consuming hassle of finding a realtor, listing your property, staging it, showing it, and everything in between.
Selling your house to an investor appeals to a variety of home sellers, many of whom need to get out of home-ownership fast, including:
1. Inherited homes
Inherited properties often come unexpected from relatives, and they’re not always welcome. If you’re not living in an inherited home and don’t have time to rent it out, it’ll sit vacant, attracting thieves and vandals.
Selling an inherited home to an investor gives you cash up front, while relieving you of any financial responsibilities. An inherited home comes with capital gains taxes that can be minimized by liquidating it fast.
When you fall behind on payments, the bank forecloses on your home. It’s an experience nobody should have to go through.
Selling your house facing foreclosure to an investor saves you from the negative financial impact. It gets your house out of the red through a short sale process that’s fast enough to beat the bank’s foreclosure.
3. Major damages
Selling a house with leaky plumbing, broken air conditioning/heating, and other major problems on the MLS is difficult. Every day your house is on the market it costs you in utilities and missed opportunities for that revenue. Selling a home in poor condition to an investor relieves you of the time and cost of repairs.
4. Needs to close on a specific timeframe
Some sellers have a specific schedule they need to sell by for a variety of reasons. Playing the highs and lows of real estate is difficult when there’s a 68-day average turnaround time. Selling your house to an investor gives you full control over the sale timeline. You get things done on your schedule with cash up front that can be budgeted accordingly.
Sometimes you need to move for work. Other times, you need to leave town for personal reasons. Either way, you need to sell a house in California to move out of state.
Consumer Affairs estimates the average in-town move costs $80-100 per hour, while moves over 100 miles cost upwards of $5,000. Selling your house to an investor gives you money up front to pay for relocation expenses.
6. Facing divorce
Selling your house before or after divorce to an investor gets the process done fast and easy. You won’t list your house on the market, so people don’t need to know about your divorce until you’re ready to talk about it.
7. Unwanted rental
Selling is made worse when your property is tenant-occupied. The last thing you need is to be labeled a slumlord or get involved in sticky legal situations with Tenants.
Selling your unwanted rental property to an investor relieves you of the responsibility. You no longer need to market and maintain the property, try and collect rent, or worry about evictions. We pay you cash and handle the property and tenants.
8. Your Home is in a Bad Neighborhood
A mortgage generally lasts 30 years. A lot can happen to your neighborhood in that amount of time! Unfortunately, a lot of areas go downhill. Or, maybe you were trying to get started as a landlord on a low budget home and were forced to buy in a difficult area to get started. Now you want out of the property, but you need to sell a home that’s in a bad neighborhood.
Selling your house to an investor is the fastest, most efficient way to get cash-in-hand for your home. It doesn’t matter the condition or situation (although obviously these factors will affect the final price ).
You skip the prep work and cut out all the middlemen to get the optimal price for your home, less the expense of any repair work needed. Like anything in life, selling your house to an investor has pros and cons.
Pros of Selling Your House to an Investor
Selling your house to an investor has a lot of benefits for sellers in the situations above.
1. Faster Closing Times
There is simply no faster way to move your house through the sales process than by selling to an investor. Many properties can be sold in under a week. You don’t have to list the property, stage it, market it, wait for a buyer to make an offer or get stalled in negotiations.
Selling your house to an investor can be done within the month, no matter how difficult your personal situation is. All contractual terms are laid out up front, so there’s never any surprises. This streamlined process lets you put this house behind you and move on with your life.
2. Avoid Contingencies
Most real estate buyers have contingency clauses in their house offer contracts. These clauses essentially allow them to nullify the sale if certain conditions aren’t meant. Terms usually include the home’s condition (especially the foundation) and clearance of all legal paperwork. Sometimes the clauses come up right away, but many can come back months down the road.
Selling your house to an investor is a straight-forward process that avoids contingency offers. Instead, you’re given an offer that reflects the true value of a home in its current condition.
3. Flexible Financing Options
Many of the delays in the real estate process are caused by the banks. Because real estate involves six- and seven-figure loans (or higher), the bank has to overcome a lot of hurdles. Both your current mortgage (if you have one on the property) and the buyer’s potential to qualify for one are major factors in whether you can sell the house.
Selling your home to an investor eliminates the banks. You can choose to receive cash by wire or check. Because the investor is also acting as the bank, you can get cash in your pocket with no out-of-pocket costs.
4. Ease of Selling “As-Is”
Selling your home can take months to years of preparation before even listing. You have to fix problems, clean the house, paint, clean the landscaping, and repair everything. Then the home must be staged and secured while people tour it.
Selling to an investor skips all these expensive steps. Investors ensure you get a fair market price for your house without putting in all the time and effort. It’s an ideal way to cut any losses and start anew.
Of course, there are cons to selling to an investor you need first.
Cons of Selling Your House to an Investor
If selling to an investor were all sugar and spice, everyone would be doing it. The truth is there are bad apples in every industry, and home investors are no different. Avoiding home investor scams requires due diligence in avoiding these pitfalls.
1. Lower Sale Price
It’s true – selling to an investor will get you closer to the wholesale value of your home than retail. On paper, that’s quite the jump, but there’s obviously a reason for that. The convenience of a cash-up-front offer comes at a price that covers the investor for any backend work you’re avoiding.
Home investors bring the building up to code, fix cracked foundations, sometimes even demolish the structure and rebuild on the property. These are options that require contractors, equipment, and resources the average person doesn’t have. While you won’t be paying out of pocket for these expenses, the cost will be rolled into your cash offer.
2. Possibility of Fraud
Unfortunately, the same internet that made real estate tools like Zillow and the MLS accessible to more people also enables con artists. There are plenty of disreputable criminal organizations who would love to take legal possession of your home for free or scam you out of money. Due diligence is needed to ensure you’re dealing with reputable companies.
3. Missed Opportunities
The fact is owning real estate is a great investment – that’s why we’re in the business. Becoming a landlord can earn you a 10-15% monthly ROI that’s not dependent on the actual sale price of your house. Services like Airbnb, Craigslist, and Couchsurfing make finding tenants easier than ever.
Some people simply don’t have the time to dedicate to these income streams. While mostly passive, being a landlord involves a lot of hands-on work. Whether you don’t have time or it’s just not the right location, sometimes you miss out on a good opportunity to find a better one somewhere else.
How to Avoid Home Investment Scams
Before dealing with any home investor, be sure to look them up with the Better Business Bureau, Federal Trade Commission, and any trusted review sites online. Legitimate real estate investors have no reason to hide and often have positive online reviews on social media.
Contact these people and talk to them directly. Keep an eye out for ads or websites riddled with typos or don’t have valid business addresses, missing or bad online reviews.
How Much Will an Investor Pay for My House?
As hinted at above, the amount an investor will pay for your house will vary widely based on the investor, market conditions, and your home’s condition.
The first thing real estate investors look at is your home’s fair market value. This is the price market analysts estimate that your home should sell for based on location, the surrounding neighborhood, amenities, and other factors.
A variety of online tools help you determine your home’s fair market value. You can also perform a comparative market analysis (CMA) by checking the value of comparable homes in your neighborhood and city.
The Federal Housing Financing Agency’s house price index (HPI) calculator tracks mortgage transactions from the 1970s through today to show you market fluctuations and a variety of other factors. Just enter your address, and you’ll get a value estimate.
Of course, the most common way a home’s value is determined (whether sold on the open market or through a real estate investor) is through a professional appraiser. Professional appraisers are hired by the home’s buyer and seller to inspect vital aspects (roof, foundation, plumbing, appliances) to determine the fair market value.
Selling your house to an investor rolls the costs of repairs into the price.
Can you Negotiate the Price?
You don’t need to take the first price offered by your real estate investor. Negotiations are common in both market and investor home sales. You’re always welcome to hire your own appraiser and negotiate to perform certain repairs, etc.
Keep in mind, however, these negotiations and repairs will extend the time it takes to complete the sale of your home. Scheduling contractors, ordering parts, and organizing the work around your schedule can be a pain. That’s why only professional investors typically bother.
If you take the time to complete all the work, list your home, pay commissions to the realtors and loan closing officers, bank fees, and everything else, you’ll see it may not be worth the hassle. Just keep that in mind when negotiating the final price of your home.
How to know if you’re getting a Good Deal
When you sell a house fast for cash, you’re skipping a multi-month process and getting money deposited to your account within a month or less. Cash buyers will usually pay less than Market Value for a home, but that offer typically comes with unique advantages you wont get with a Traditional Sale.
You’ll need to view the offer you receive differently in order to determine whether or not you’re getting a good deal.
When you sell through a real estate agent, you’re usually working with a buyer who is going to secure a mortgage loan for something fairly close to the price you’re asking for your house. But some cash home buyers can wait over a month for a loan if they aren’t pre-qualified. This can stall your plans to relocate or access cash you need now.
If the offer is 20% less than what you were expecting, but it drastically expedites your time-frame, this may be worth it to you. If the home is facing code violations, is unlivable, expensive to maintain, or if you need to move urgently, you might find it worth it to take a little less than a market value offer to just be done with the entire process.
What does your local market tell you?
In slow markets or areas where people don’t want to live, homes almost never sell for their full market value. They might list for that amount, but they’ll wait around on the market for months until the seller eventually accepts an offer that was lower that what they wanted.
Don’t look at listing prices or average values.
Look at the amount that properties actually sell for in your area.
If it’s different from what the sellers were asking at first, you can expect a reasonable cash offer on your home to look closer to the final sale number.
Keep in mind that most people who sold their homes worked with a real estate agent who also took at least 5% (though sometimes more) of the final sale price as commission. This also doesn’t take into account closing costs and escrow fees.
In reality, sellers actually receive less than what it appears they made.
If homes aren’t selling at all in your area, it can be hard to determine how much would constitute a fair offer since you don’t have anything reasonable to compare it to.
When this happens, you’ll need to look at the other factors surrounding your home to make that decision such as the condition. If the market is really that bad, almost any cash offer might feel fair if it fixes your problem.
Does your home need any repairs?
If your property needs a lot of work, buyers on the regular market may not be interested at all. These people want homes that are move-in ready. They might have a hard time getting a mortgage on a property that’s in bad shape, even if they don’t mind fixing it up.
Homes that need a lot of repairs complicate the situation. Think about how much money it would take to fix your home.
Is it somewhere in the tens of thousands of dollars to completely overhaul your property?
Do you have that much money available to repair the home on your own?
The offer you receive from a cash buyer will likely deduct the cost of any repairs required.
The benefit for you is won’t need to spend that money to make the property appealing – you’ll just take the cash you would have profited anyway.
Most cash buyers will be able to explain their offers, especially if they’re professionals. It’s advised that you inquire about any cash offer you receive and how exactly those number were came about, to ensure the offer you receive is fair.
Professional investors can show you what they need to do and tell you how much it’s going to cost. In the end, it should check out. Properties that are in need of serious help are usually great options for cash buyers and sellers alike who just want the home gone!
Is a cash buyer rescuing you?
Homeowners in dire situations will turn to quick cash buyers to save them in an emergency. This is most common with foreclosure, or when foreclosure is imminent.
Since foreclosures sticks like glue to your credit report for up to seven years, and are nearly impossible to work off, homeowners try their best to avoid the foreclosure process from being completed. They do this by finding a buyer with cash who can work quickly to complete the sale before the lender auctions off the home.
In these situations, any offer that satisfies the lender and gets the seller out of jeopardy is a good offer.
You can’t profit off of the sale of your foreclosure home unfortunately. All of that money needs to go directly to the lender anyway. You really can’t lose in a situation like this.
Professional cash buyers will know how to work directly with your lender to come to an agreement about an asking price.
It’s generally advisable to take any offer that will help you meet your requirements and save yourself from foreclosure.
These kinds of emergency sales don’t look stunning on your credit report either, but they disappear much quicker and they’re far easier to work off with regular positive activity on your accounts.
Should you sell your house to a cash home buyer?
If your situation is a little offbeat, it might be worth turning to cash buyer.
Cash buyers are generally used to solve problems. If you’re not expecting the perfect sale of the perfect home in the perfect market with the perfect agent, a cash buyer might be right for you.
SoCal Home Buyers can offer you the most money for your home in Riverside, San Diego, Los Angeles, San Bernardino and Orange County in any condition than any other option. You can learn more about us here.