Companies That Buy Houses for Cash
There are many reasons a property owner would want to sell their house to a cash buyer. Selling your house the traditional way is not the best way for everybody. Selling a house can be too stressful for some. If you have pets, kids, timing issues, or just want to avoid people constantly in and out of your home, you might be a perfect candidate for one of those cash buyer companies. Skilled and well-experienced licensed real estate agents will have a vault of cash buyers.
The Pros & Cons of Selling to We Buy Houses for Cash Companies
There are clear pros and cons for companies that buy houses for cash.
Faster speed. Cash buyers can close quickly when they buy houses. This means you can buy your next house with more piece of mind or pay off anything stressful that is causing you to perhaps sell.
Higher certainty. If you need to know your home is truly sold so that you can make moves that require your home to be sold, a cash buyer brings increased certainty. There are times even one of those companies that buy houses for cash does not close on the home they are buying. When they do not close on them, usually there is an unknown surprise discovered while in escrow.
High Convenience. If you live a fast lifestyle or juggle kids or pets or other things at your home, then going through the showings of a traditional sale won’t be able to deliver you the convenience that you might be seeking. This is when one of those companies that buy houses for cash makes great sense to increase your convenience.
No Repairs. Regardless of the condition of the home, those companies that buy houses for cash typically do not want you to do repairs. Believe it or not, some do ask for repairs, but will also give you an option to do a concession for the repairs. We usually see iBuyers giving property owners the option to either fix it or provide a credit for in lieu of fixing repairs.
Lower price. Most of the companies that buy houses for cash have to offer less net for you on the house than a traditional path. They talk about avoiding commissions etc, but the truth is they offset it by making lower offers and even adding convenience fees, so do not buy into the idea that you are saving money and making the same net amount by not paying commissions.
Predatory tactics. This means some of them looking to buy houses from property owners in a stressful situation without the support of others like real estate agents to protect them. Now with this said, not all cash buyers function this way. iBuyers and the ones who buy for turning them into rentals do not.
Having a licensed real estate agent involved from point one and having a very open and transparent conversation with a licensed real estate agent will help them understand how quickly you need to sell. Then they will be able to help you sell your home the right way for your unique needs-which includes if using one of the cash buyer companies is the best option for you or not. Either way, your licensed real estate agent will be able to walk and guide you thru the entire process.
What is the Process of Those We Buy Houses for Cash Companies?
The first step is to get with an independent licensed real estate agent who has nothing to do with any of the cash buyers, so they can give you recommendations that are not tied to a cash buyer. These companies that buy houses for cash represent themselves or their real estate investors. This is why it is important you get your representation from a licensed real estate agent who is independent of the cash offer companies.
Typically the next step will be to have your licensed real estate agent video tape the house inside and outside like an inspection and take detailed photos of your home as well. Then your agent would be able to show your home to all of the cash buyers in their database to see if it fits any of the boxes for those potential buyers to see if it is something they will want to buy. Note that this will typically require some paperwork to give permission to your agent to solicit your home for sale to the cash buyers in their database.
When is Selling your House to a Cash Buyer a Good Idea?
There are many times where it is a good idea for seeking a cash offer from companies that buy houses for cash. If you cannot handle the stress of selling a home, you are super busy, you have pets, you have kids, or whatever your situation might be, selling your home the more convenient way may be a better option for you. Other times would be that you need to sell fast due to financial reasons. The final reason would be if your house has a lot of deferred maintenance and needs a lot of work, and you do not want to fix it because you do not have the time nor the financial resources to do so.
How Much Money Can you Make From One of Those We Buy Houses for Cash Companies?
This is an interesting question, but a valid one. I would rather look at it from a perspective of, what are the cost differences between selling it to one of those companies that buy houses vs the MLS or some other way. With this being said, there is no one shoe that fits all. We have seen many wholesalers buy homes for about 30% below their opinion of value. If you have a house worth roughly $200,000, you could see something around a $140,000 offer. Then if your house needed $25,000 in repairs due to age of the high dollar items or lack of upgrades, you would expect to see an adjusted offer by $25,000, putting the offer somewhere near $115,000. Then if you went with an iBuyer, you would see something higher, but the home needs to be pretty close to resell ready because they are just going to resell it for a profit. The other two cash offers include in the MLS and get a cash offer and a landlord cash company. These two are typically closing to market value. Each cash offer attracts different sellers based on their needs and the condition of the house.
What are iBuyers?
There are multiple companies that buy houses for cash that are called iBuyers. iBuyers will provide you a cash offer and usually offer you money for your house than a wholesaler. Yet, most iBuyers do not want homes that need very much in repairs, because they need to turn the houses over fast. iBuyers are cash buyers who want to buy and resell the house quickly. Typically they will offer you somewhere near fair market value minus fees. One of the fees is called a convenience fee. They can have market condition fees, repair fees, and some of them own their own title companies.
What are Wholesalers?
Wholesalers buy ugly houses for cash–and they do not just buy ugly houses. They are typically more friendly to purchase a house that needs more work than other cash buyers. When looking for companies that buy houses for cash, save these ones for homes that need to be fixed up to sell, because there are other buyers who will pay more money for the same home.
What About Selling to a Landlord Company?
There are landlord companies that buy houses for cash to turn them into rentals or lease purchases. They are less worried about the house value and more worried about rental value. This means many times you have a better chance of getting a higher cash offer from one of them. This is a convenient option especially if you have a tenant already inside the property with a lease already in place. This way the tenant does not have to be disturbed for showings, etc.
What About Selling to a Cash Buyer Thru a Real Estate Auction Service?
Real estate auctions do not always guarantee cash offers. However, if you must have a cash offer, you can make it clear the auction is only looking at cash offers. Some real estate agents offer real estate auction services with their portfolio of real estate services to homeowners. Typically they will place them in the MLS for one week, tie the home to an auction website that shows everybody their bids, and then have some ending steps to motivate the buyers to bid up the price at the end. Then once the bidding ends, and if the seller likes an offer, they will either accept it or counter it to clean it up.
Wrapping it Up
These companies that buy houses for cash can truly offer a great option for many property owners looking to sell their houses. Selling your home to a cash buyer or a real estate investor does not mean selling it below market value. These companies can buy houses fast. If your house is distressed, there are wholesalers who buy ugly houses. Depending on your situation, I would always recommend sitting down with a skilled licensed real estate agent and talk about your options and help you decide which option may be best for you when looking at selling your home to a cash buyer.