Everywhere we turn, we are faced with some kind of decision that needs to be made and selling your house is one of the big ones. During the best of times, we’ll take our time finding the best real estate agent to help with that – 89% of sellers go this route. But, sometimes first-time home sellers are in such a hurry to sell for one reason or another that they’re sucked in by the “we buy houses for cash” sites or signs posted on telephone poles.
Before you decide that this is the way you’d like to go, take some time and do your research – starting with this guide!
What are “we buy houses for cash” companies?
“We buy houses for cash” companies deal directly with the homeowner – no real estate agent is involved. When you’re going through one of these companies, your home will get sold faster and generally a little less stressful, too.
There are four kinds of house-buying companies:
- A house flipper is usually an individual or small group of investors who will purchase a property and renovate it. They’ll then put it on the market and they could stand to make 36.7% in profits (on average).
- A buy-and-hold company buys the property and they’ll turn it into a rental property. These companies are usually small property management companies, but there are some larger companies who will do this as well.
- An iBuyer company relies on technology and market data to make an offer on a property they want to buy – typically sight unseen. These companies tend to charge the seller a fee to sell and market the house, but they may also charge for any significant repairs that need to be made as well.
- A trade-in company will make an offer where they’ll help you buy a new house and use your existing home as collateral. In some cases, these companies will even allow you to live in your new house as a renter until your previous home is sold.
What is the selling process like with these companies?
When you begin the process of selling your house with one of these companies, it’s helpful to have a general idea of how it all works. Here’s what you can expect (to some degree):
- The seller will contact the “we buy your house for cash” company and give them the requested information about the property.
- The company may make an appointment to see the property and get an estimate of the repairs (if any) need to be made.
- The company will go back and run the numbers to determine the fair market value of the home. If repairs need to be made, they’ll also get the “after-repair-value”.
- The company will make an offer, provide you with their terms of sale and an estimated closing date.
- Negotiations will start and once both parties are satisfied, a closing date will be solidified.
What are the pros and cons of selling this way?
Does all of this sound appealing to you? If so, you should be aware of the pros and cons about selling this way.
Selling your house with one of these companies will speed up the sale. When you sell your house the traditional way (using a realtor), it could be several weeks for the transaction to be complete. With one of these companies, your house could be sold within a week!
If your home needs repairs, that’s okay. Usually these companies are willing to buy houses in as-is condition. That means you don’t have to rush about the house making minor repairs, staging to make the house look pretty or even cleaning up clutter! This also means the home inspection process may be quicker and more relaxed.
The downside of selling your house this way is that you may not get top value for your home. So, even if you were to use a home value estimator to get a rough idea of what an offer may look like, chances are the homes for cash companies will not offer as much as you hoped.
Another downside of these companies is that you could be dealing with a backdoor buyer. This means the company purchases your house because they have a buyer already lined up. If the buyer backs out of the sale, your sale could fall through.
It’s also worth noting that there will also be the possibility of getting scammed. Unfortunately there are some shady companies/investors who will take advantage of desperate people. But, don’t let that scare you because the majority of these companies are legit. It would behoove you to do your research prior to signing any contracts.
Should you sell your house with a “we buy houses for cash” site?
Everyone has their own reasons for selling their home but when you’re in a pinch, selling your house for cash through one of these companies may seem like a no-brainer. While we can’t give you a definitive answer, we do hope this information will help you make an informed decision. As with any other decision, you need to think about it carefully and determine whether or not it would be more beneficial if you hired a real estate agent. Only after weighing all your options should you make that monumental decision.