We get many questions about what we do and how we do it. The topics vary greatly. At SILT Real Estate and Investments, LLC, we are cash home buyers who buy houses all around Illinois, no matter the condition. We understand that the process can be stressful and confusing. Here are 5 of the most common questions we get. We’ll cover things like:
- What’s the difference between our fair cash offer and a fair market value?
- Can you negotiate with an investor cash home buyer?
- How fast can you close?
- How do you know a legitimate cash buyer?
- Can we buy something other than a house?
So, let’s get started on some of our top frequently asked questions!
What’s The Difference Between A Fair Cash Offer And Fair Market Value?
Let’s clarify that selling your house to a cash buyer isn’t like selling on the MLS. Cash buyers make it easy to sell and provide lots of convenience! You don’t have to worry about making repairs, they can close quickly or even on your schedule, and you don’t have to pay any fees or commissions.
So now that we have that established, what is fair market value?
Fair market value is the price a buyer will pay for your property in an open market. An open market guarantees competition and the best way to create competition is by putting it on the MLS. A fair cash offer may not be put on the MLS. There are things to consider if you want to list on the MLS.
Listing On The MLS
When you list it on the MLS, you’ll have to know that it takes time to sell the property. Not only will you have to prep it to get ready to sell, but there will also be open houses, showings, fees, and commissions that will need to be paid. Prepping it to sell will take time and costs before you even put the house on the market. You’ll have the inconvenience of leaving your house for showings and open houses. On average, it can also take 45 to 60 days to close a property once it’s been listed. And to top it off, you’ll lose around 10% just to sell the house.
Once listed on the MLS and under contract, buyers will have contingencies built in to protect them from staying under contract if the property doesn’t make it through due diligence. Contingencies like an inspection contingency or even financing contingencies. You may even have to wait for financing approval, including appraisers and a final clearance to close once they’ve combed through your buyer’s finances. If all that doesn’t get approved, then you start all over.
That will create the most significant competition and give you the most for your property. Remember that the 10% will eat into your profit from the sale of your house. As we talk about a fair cash offer vs. fair market value, it means 90% of the fair market value.
Understanding How Cash Buyers Determine Their Offer
To get a fair cash offer from a buyer, you should know that most cash home buyers use a similar formula. There will be 2 things that will make a big difference in the offer amount. Let’s look at the formula and then cover the 2 biggest variables.
The 2 biggest variables are the After Repair Value (ARV) and the rehab costs when you need to sell my house in poor condition. After repair value is the amount assigned to a property by a cash buyer after it has been completely rehabbed and compared to other properties on the open market. Cash buyers don’t use fair market value to assign an ARV. They project future value. This is how you can create one of the variables. Each cash buyer will assign a future value based on different comparable properties. And there are numerous ways that they can go about it.
The second biggest variable is rehab costs. Rehab costs are pretty straightforward. It’s the cost assigned to projects improving the property. This can include major things like mechanicals like the HVAC, roof, plumbing or electrical. You can completely gut a house to rehab it. Or you can do more of a cosmetic rehab, like replacing the flooring and painting walls. Those costs can vary greatly and each cash home buyer investor will want to do something different to get the house into its best, or most likely, ARV. With costs ranging from thousands to hundreds of thousands, it can be a huge variable to determining a fair cash offer.
Lastly, most cash home buyers will be looking to make a profit on the sale of the property they have just rehabbed. There is no set amount that an investor will be looking for, but it can be somewhat variable. Some investors may say they look to make between 10% and 20% on each rehab. Just remember that the more the property is, that would mean the greater the profit. It may not be realistic to expect 20% on a $2,000,000 dollar home, and that can mean a little higher cash offer when you hope to get a fair price for your home.
Can You Negotiate With An Investor Cash Home Buyer?
Most sellers don’t know that you can actually negotiate with an investor cash home buyer. Most cash home buyers near me don’t want you to do it either. So, how do you actually go about negotiating?
Let’s start by going over a typical negotiating process. Typically, you’ll contact a cash home buyer via phone or a web form on their website. They’ll reach out to you and try to determine the likelihood of selling your property, your financial needs, and what you’re looking for as far as price. They’ll also want to know about the condition and timeframe you’re looking to sell by. It’s very important to be honest about any conditions that may be rushing you to sell your property, like a foreclosure or divorce. They will find out, but being honest about everything up front may encourage them to help you a little more in your situation.
Once you have talked about needs and wants, they will want to verify both the physical condition and the financials on the property. This would include any debts, liens, or encumbrances to the property. They will need to know this to know if they can even offer you a cash offer. Sometimes, they may need to have a creative solution to help you out of your situation. The more straightforward the situation, the more likely you can get a cash purchase for your property.
Getting An Offer From A Cash Buyer
Once all the info is gathered, an offer is made. To ensure a good offer, there are things to consider about the price you want for your house. Your condition of the house and other comparable properties in the area are a good place to start to determine your desired price. Your cash buyer will make an offer now. If your price is within an area they can purchase, they may just meet you at your price. If they can’t or want to lowball you, this is your time to negotiate. Knowing how they come up with their offer is important too.
You could just accept their offer. Or you ask for details with how they came up with their offer. A good cash buyer will be glad to explain why their offer is that low which may include the expenses they expect to pay as well as the costs to rehab the property. They should even show you the properties in the area that are similar and explain why the offer is different.
The Time To Negotiate
Now that you have all the details you need and what they are using to negotiate, you can decide if you want to negotiate. Having a price in mind is not a strong reason to continue to negotiate. It would make both sides angry and could lead to you missing out on a strong offer and not being able to get a fair price for your home.
Your best leverage to negotiate is using the expenses and comparable properties they are using to determine the best price they can pay. Talk through the process with your cash buyer. You may only get one shot to get them to come up higher on a price, so consider countering with a price you would be willing to accept. Your best bet to negotiate is by ensuring that your price is fair from the beginning by learning how to sell a house in poor condition. And lastly, remember that you can walk away if you don’t like the offer. You don’t have an agreed upon contract so there is no obligation to accept and sell your house.
How Fast Can You Close?
Some fash cash buyers will tell you they can close in one day. Even if you automate everything and everything goes exactly like it should, selling in one day is almost impossible. If you are closing in one day, it might not be as clear and legal as possible. You should be using a title company, and to do that, they will need to open escrow. They must verify title ownership, liens, and no additional deed claims or encumbrances. Now that we have that established let’s review how fast someone can close.
How Fast Can You Close On My Property?
On average, closing can occur in 7 to 10 days.
You’re probably thinking, but it’s a cash sale. Why does it take so long? So, let’s review the timeline.
Let’s assume you enter information today on a website to sell your house fast or to a We Buy Houses website. You guys talk, determine that it’s possible to sell your house for the price you’re looking for, and get it under contract. That will probably be day one. Getting the contract to a title company so they can start escrow is day 2. When that happens, a fast cash buyer will likely submit earnest money. That ensures escrow will open and the title company can start working on the title process and the insurance for a sale. This concludes day 2.
A good title company takes little time to ensure proper title and no additional liens or encumbrances are on the property and can provide title insurance. The average is around 3 days, though. And that brings the total to 5 days.
Most cash buyers will still want to inspect the house and ensure what you’ve stated about the property’s condition. Some will do it now, as you can ask for an inspection period in Illinois. Some cash buyers will want to do it before they submit an offer to you. If they do it before they submit an offer, you can add at least a day to the time frame. No matter what, a cash home buyer may want to have their contractor take a look and verify rehab estimates. Sometimes, they may even want to do a full scope of work. That will add a day. So now you’re already looking at the possibility of 7 days. That’s before we even schedule closing.
Depending on your state, you may have an attorney representing you and/or the sell my house fast company. Even if everything looks great and there’s been no renegotiating, you’re likely not to schedule the next day as there are too many moving parts. The title or escrow company will likely have difficulty scheduling the next day. Even if they do, you’re looking at a minimum of 6 days, and that’s if everything goes perfectly. If you add in all the other possibilities, you’re looking at around 10 days. So, planning to close in 7 days is what we would advise you to aim for. It’s always better to underpromise and overdeliver.
How Do You Know A Legitimate Cash Home Buyer?
It feels like there is a different meaning behind this question: “How do I know you’re a legitimate cash buyer?” That’s a fair question, though. So let’s start with we’re local to the Chicagoland area. We buy properties in and around Chicago and use local contractors and other businesses to fix up the property. You can tell by looking at our 708 area code phone number and our address in La Grange, Illinois.
Second, we’re accredited with the BBB. This tells you that we’ve taken the time to get accreditation and displays the details the Better Business Bureau collects, like the length of time we’ve been in business and all relevant info about the business. This is again where you see our phone number, website, and reviews the BBB has collected from clients we have served.
Thirdly, you can see if it’s a company that provides helpful information to people with unique situations. They could be facing foreclosure and don’t need to sell fast. Or they could have bad tenants and don’t want to continue dealing with them. Or they could have a fire-damaged house and not sure how to sell it.
They will use a legal and reputable process to buy your house. This means using either state-approved contacts or ones drawn up by an attorney. We’ve heard stories of companies who use some “contract” written on a single sheet of paper at your kitchen table. They will file any agreement to purchase with a title or escrow company. Some states will allow you to have an attorney; if allowed, we encourage it. Attorneys help guarantee a legal process and help you ensure everything is transferred appropriately.
Lastly, they will provide earnest money appropriate to the purchase price of your house. I know some companies will only put down a dollar, and that’s their standard practice. It seems a little crazy to me that you would think that buying a house for $100,000 would allow them to put $1 down for the house to hold the contract. We encourage you to ask about the earnest money because any reputable cash buyer will have no problem putting the money down in an escrow account toward purchasing the house.
Can You Buy Something Other Than A House?
This usually comes as, “Can you buy my (insert different property other than single-family home)?” Like a condo, townhouse, or multifamily property. Yes, we can buy those as well. There are a couple of caveats with that, though. It has nothing to do with our ability to purchase.
What Stops You From Buying A Condo Or Townhouse?
Most condos or townhouses have an HOA (Home Owners Association) that can regulate the sales and purchases of property they govern. This may stop us from buying your property or at the very least, delay it as we need their approval.
This may also change the formula we use to buy the property. It will be dependent on whether your HOA allows rental units or not. If so, no adjustment is needed. If they do not, then we may have to adjust the after repair value to accommodate for that. Remember, it’s one of the two biggest variables when you get a fair cash offer from a sell your house fast company.
What Changes On A Multi-Family Property?
When you’re selling to an investor on a multi-family property, they don’t plan to live in it. That automatically takes away comparable sales. It will be based solely on the rent that the property provides. When you get an offer to buy your multi-family property, the other thing to consider is that you may have multiple units that need repair. This part is one of the other biggest variables in a fair cash offer.
If you need to sell a property, we can help. Sometimes if it’s something that’s outside of our wheel house, we may bring on a partner. That is good news for you because it’s someone that knows the particular property you’re trying to sell and can offer you a fair price for it. Because it’s something we may not be comfortable with, we may not have offered as much as they would have.
Maybe your question wasn’t answered here. Contact us or call us at (708) 415-3801 to let us know if you have another question we didn’t answer. We’ll be glad to try. If you want to start getting a fair cash offer for your house now, fill out the short form below. We’ll be glad to get started on an offer for you.
