Selling a home isn’t the most stress-free activity. In fact, it’s one of our least favorite things to do. The amount of time and effort it takes to sell your home the “traditional” way is excruciating.
Part of what makes it such a pain is there aren’t many nuisances like you’d run into with a “buyer’s market” like real estate. When you’re selling stuff in your garage, people are buying left and right … and there’s still the “quick sale” route if you don’t want to mess around. Trying to sell real estate is like trying to ship a crate of Molotov cocktails to Hell for tailgating!
Pros and Cons of Selling to House Buying Companies
Trading with house buying companies can look easy for house owners looking for a fast sale because:
- the buying company can close quickly
- the buyer does not need to make the house look good for an open house
- the buyer does not need to worry about the high cost of getting the house ready for sale
If ‘fast and easy’ is the most important thing to you, and not a high price, then you can stop reading here. Can you guess why?
What Are House Buying Companies?
House buying companies have popped up all over the place. It looks pretty nice on the outside, at first glance. I mean, who wouldn’t want a quick, cash offer for their home? It eliminates all the unnecessary waiting (and stress) while your home sits on the market. You also don’t even have to renovate to get top dollar or list with a real estate agent. It definitely sounds like a great resource if you have a house you need to get rid of fast (for relocation, financial trouble, or various other “get out now” reasons).
How Much Do House Buying Companies Offer?
Different factors may affect the offers made by house buying companies, including:
- The condition of the property—this is the main factor. Just as with a “normal” house sale, if the property is in good condition, more often than not, you will receive a higher cash offer as there is less that the house buying company needs to do immediately (and therefore, less for them to invest). If the house is run down, you may receive a lower cash offer to account for the costs the company needs to put in to put the house right again.
- Location—a house in a “desirable” or high-demand area may mean you get a higher cash offer; also, being near a good school, other amenities, and/or good transport links. Once you understand these factors, you can think more realistically about what you might do when you get an offer.
Cash Offers vs. Traditional Sales
Home sellers undoubtedly get a lot of perks when they work with house buying companies that pay in cash. Instead of waiting for a buyer to get approved for a loan—which delays the sale of your home by several weeks—you can close the sale in just a few short days! In situations where you are dealing with financial trouble, this is a terrific option. It can also be great for cases in which you need to move out of state as soon as possible.
So, is a cash offer all glitter and no gruff? Not necessarily. Before you decide to work with anyone, it’s important to know that the offer you’re going to get on your house is probably going to be lower than most initial asking prices. You might be getting a bird in your hand, but at what cost? The buyer holds most of the power in that situation, so it’s up to you to determine if a bird in your hand is more important than potentially getting a little bit of a higher return on other channels.
Understanding Market Value and Below Market Offers
“Market value” is a term you will come across often when dealing in real estate. It connotates the price at which your house will sell on the open market, with no one (buyer or seller) under any unusual pressure. Many things affect the market value of a property, such as:
- Location
- Property condition -\tMarket direction (whether it’s a “buyer’s” or “seller’s” market)
Whether you’re a buyer or a seller, knowing the market value of a house (or having a pretty good estimate of it) is critical to being well-informed and making good decisions during the transaction.
Many companies that buy your house for cash operate differently from “retail” buyers (someone [typically] buying the home for themselves) and often offer you something less than market value for your home. How much less is always important. Some of the “usual factors” come into play here, however. Just because the offer is less doesn’t necessarily make it worse. Some of these other factors can be things such as:
- Speed
- “Ease of transaction”
- Fewer associated “selling costs”
If you are a seller, you have to weigh the gain in “speed and convenience” of a sale versus loss of equity, so understanding some of the dynamics on that is important to consider.”
Cash for Houses: What to Expect
If you want to avoid the potential hassles and potential pitfalls of traditional real estate buyers, an alternative to consider are cash home buyers.
They have the cash readily available, which means most home sales are quicker to end. These Property buyers also operate under strictly different conditions than a standard buyer. There are no worries about loan approvals or homes needing to get an appraisal for a title to be given. These factors play heavily into a buyer’s ability to enjoy a “clean” transaction with no future worries.
So, what’s “the catch”? Understand that a buyer is not waltzing in, offering you loads of money whether you need it for a foreclosure, whether you’re selling because of the threat of foreclosure, a divorce, a property that needs a boatload of repairs, or…
…heck, having a house that’s sat vacant, rolling up back taxes, with a possible lien attached, for a decade. A seller must adjust their expectations accordingly.
It takes a lot of footwork to sell a house via traditional methods or methods related to bank financing. A cash buyer is taking the place of that time and spending it on their efforts, instead. In many cases, without outright trouble, that buyer will provide some expected equity for taking on the “headaches” that come with the territory.
Once again, it is a matter of what the seller should expect in this type of agreement.
If you’re a homeowner thinking about selling your home fast, it’s important to understand the offers you’re getting from house buying companies. Many of these businesses will make you a cash offer. That’s much faster than the traditional way of having to sell a house. But you do have to be careful. Not all offers are the same. A lot depends on the real estate company’s opinion of your house, the conditions of the house market, and the way they do business.
I always recommend that you get at least four or five bids. This way, you can be sure that you’re getting a fair price for your home. Looking at a long list of companies and getting offers from multiple companies isn’t easy—but it will get you the best price. Do your homework. This is your best chance to avoid seller’s regret. Getting offers from multiple businesses forces you to compare prices. This makes the general price much easier for homeowners to calculate. Get a recommendation on a seller’s price from different businesses. Then, you can decide on the price. Take your time to make the sale. Sleep on it.