When most people are looking to sell a house as is for cash, they are looking for a quick answer to a problem they have with trying to sell their house. They are willing to trade some of their “fair market value” for a quick and easy solution that aids them in getting rid of their problem, whatever it may be.
When they don’t want to trade “fair market value” for quick and easy, they may look to list it and sell it on the MLS. Most real estate agents will gladly help with a situation like this. There is always that chance that the buyer requests concessions and repairs, and that’s before you factor in the time to list and sell and the time it takes to show. If you’re not living there, like after someone passed away, after a move for a better job, or even when it’s a rental property with tenants, this might be a viable option after you’ve addressed any physical distress with your home.
There are things you should know or common questions that get asked when considering to sell house as is for cash. Some question the legality of selling for cash. Some want to know what a fair cash offer is. And others want to know how much you lose for selling your house for cash. Let’s cover these and other things you should know about selling your house as is for cash.
Is It Illegal To Sell A House For Cash?
First, you should know that you won’t receive physical cash if you want to sell your house as is for cash. You will receive a check or checks from the title or escrow company. So even though it says for cash, the idea is that there won’t be financing contingencies to sell your home or that someone will have cash readily available to have wired into the title company to buy your house. This could be a line of credit or cash sitting in an account. Even investment accounts would count towards that ideal.
Now that we have that out in the open, selling your house for cash is very legal. We think that when we get asked this question, the idea behind it is that the person is wondering if they can be taken advantage of. Unfortunately, some companies and people will take advantage of a seller in a challenging situation. So, what can you do to ensure the company isn’t taking advantage of you?
How To Tell A Fake House Buyer?
Fake house buyers are a problem for everyone. They can rip off home sellers and give cash home buyers a lousy reputation. Avoiding fake house buyers is essential. It sounds a bit cliche, but the best thing to do is to see if they pass the sniff test. What can you do to ensure they pass the sniff test?
We encourage sellers to look for a few things from their buyers. The most important thing is communication. One of the biggest concerns is when a real estate wholesaler investor doesn’t communicate that they will wholesale the deal. This can cause them to look fake or leave you worried when dealing with one, even if they communicate well and have a good cash buyer list to market your property to.
Another way to tell if they are legitimate is to check out their website. You’ll look for legitimacy points like former customer testimonials, have a referral to third-party sites with reviews, and be able to provide good info that should help others in the various situations they present. One of the other most important things you can look for is third-party accreditation from places like the BBB or the Chamber of Commerce. If you don’t see a combination of these things, they are probably a fake house buyer and should be avoided.
Is It Good To Sell Your House To An Investor?
This is probably the question you have floating around in your brain. To answer if you should sell your house to an investor, though, there is some stuff you need to decide. Without knowing anything about your situation, the answer is, “It depends.” Investor cash buyers can provide a service that makes it easy to sell your house. If you’re looking for speed, saving time and energy, convenience, saving fees and commissions, or you want to do as little work to sell, an investor might be the correct answer. But let’s go over what you need to decide if selling your house to an investor is a good idea for you.
Do you need to sell fast or on your schedule?
One of the most significant advantages of selling to an investor is that they can close quickly, even in as little as 7 days. The average is closer to 10 to 14, depending on the company, but it can happen quickly if things line up well and they have a good team. With that ability, it’s easy to push back a closing, so if you don’t need to close fast but need to close on a specific timeframe, they can do that, too.
Do you have lots of repairs to make?
Most of the time, when homeowners have many repairs to make, they worry about the costs it will take to put the house on the retail market. Or they are worried that they will be lowballed by anyone looking to buy a house or they’ll fix the wrong things. By selling to an investor, they can provide the answers you need about repair costs and why their offer is precisely what it is. While it may not make you more money, it may save you time and energy by listing it publicly for sale.
Do you need the convenience of an investor?
People don’t like to be inconvenienced by showings and open houses when they sell their house. Ever since we’ve heard, “Set it and forget it,” we have wanted easy. Maybe you have a dog you have nothing to do with when a showing comes. Or maybe you have an infant and don’t want to upset their sleep schedule for convenient showing times. Or maybe you have a job making it difficult to work around so it’s easy for buyers to see your property. This is where an investor can make it easy. We can come around your schedule and don’t have to make multiple trips to see the house. That removes the difficulty of listing your house for sale on the MLS.
Do you want to make it easy to go through the sales process?
All of these things have made it easy to sell your home. With an investor, they make it easier because they take care of most of the work for you. You’ll just need to show up to close, and you can make a couple of phone calls to cancel your utilities. Most of your energy can be focused on packing and moving to your next home. We’ll handle the paperwork, title company, and other services needed to sell your property.
Do you want to save on fees and commissions?
There are fees to sell your property. Some are well-known (transfer fees), and others are made up (courier fees). The advantage of selling to an investor is that they will take care of all fees they can legally take care of. That will save you money as well. And not to mention the commission you pay for most agents, ranging from 4% to 7% for marketing and selling your home. Why should you pay for it if that’s already taken care of? If you want to save that when selling your house, it might be best to work with an investor.
If you want to see what a cash buyer can offer you or want to work through your needs and see if it makes sense, fill out the short form below. We’ll be glad to contact you and answer any questions you have.
Does A Cash Offer Make Sense?
How Much Do You Lose Selling To An Investor?
You’ll see ranges of a loss of 5% to 70% of Fair Market Value. It’s not an easy question to answer. Honestly, it will also depend significantly on the type of investor you’re dealing with and the property’s condition. You’ll typically hear real estate agents and people unfamiliar with what we do say that you’ll get 50 cents on the dollar. That’s inaccurate, but you will be trading some equity for working with an investor. It’s why we say you need to decide if you want what an investor cash buyer has to offer.
The important thing is understanding that you will be giving up some of your fair market value, according to a real estate agent, for the convenience of working with an investor. You should also know that most investors don’t base their offer on fair market value. There is a formula they use to help them figure out what to offer. And even the best ones may have a more specific formula because they know the specifics of the costs to buy and sell in the area.
Comparison Of Selling House To Investor vs Selling For Fair Market Value
The best way to demonstrate this is to show you the numbers of a deal we just purchased. This property was in a suburb nearby and was trending flat. So, we knew we had to be a little more conservative in our numbers. The property had also been listed for over 6 months and was just removed. They knew what the market had to offer them, and they fell out of contract multiple times.
Fair Market Value Minus the Costs to Sell
The property was initially listed at $170,000. We won’t talk about the philosophy of listing high to allow them to talk you down. They were getting no showings at the end of the day, so after about 2 weeks on market, they quickly dropped it to $165,000. It showed motivation, so they started to get showings. None of them brought an offer. So they dropped it after it sat for another 2 months. It went down to $158,000. Finally, the things that needed to happen happened. Showings and an offer! The offer was for $142,000. After some negotiation, they were able to agree at $148,000. After inspection, the buyer decided they didn’t want the work of a new roof, and without credit for a roof, they walked away. Armed with that info, they knew what to expect next time. So they made the buyer purchase “as is” and agreed to $146,000 this time. It sat under contract for almost 2 months. Eventually, financing fell through. They only had a couple more weeks for the listing of the house. They opted not to renew the listing and see what a cash offer from an investor would look like.
After all that, and due to the time of the year it was, and the taxes they would have paid. After all the fees, commissions, and taxes, their final closing figure would have been $134,412. Minus their mortgage due, they would have had about $15,000 in their pocket. Also, something to know: they needed to move into a rental for the time being as they had some financial issues they were starting to work through and needed to move for a better career opportunity. These are all things the buyer would not have known and been able to help with.
Cash Buyer Offer
First, I’ll address an elephant in the room. We would have never recommended listing that high based on the condition of the property. It wasn’t in bad shape, but as we said, it needed a new roof. It also needed a little work on the garage and mostly cosmetic rehab. Maybe rehab and improve one of the bathrooms. So we knew that kind of rehab was going to be around 50K. We would come back and get a scope of work to ensure our rehab budget. Houses in excellent shape were going for about $200,000. Some listed around $190,000 and others around the $200,000 sales price. Knowing that I would have recommended a listing price of $145,000. It would have probably saved 4 months of delayed contracts and fewer showings. But let’s get back to our offer.
We knew that recent rehabs were going for a little more, and with the planned upgrade to the bathroom, we should be able to get around $220,000. After reverse-engineering our offer, we knew we had to be around $130,000. We also knew that they needed a place to store all their stuff. So our offer was for the price of $127, 200. Now, you’re probably wondering why we were offering that if we knew we needed to be around $130,000.
This is where knowing they needed a place to store their belongings comes in. We were willing to set up a POD for them to store their stuff for up to a year. We would allow it to be delivered 1 time to anywhere within a 50-mile radius. And we knew we needed a little more room to negotiate. They were thrilled with the POD idea and accepted the offer. We closed in 2 weeks. We had the POD delivered to their house ASAP, and they were ready to move on. They walked away with about $9,000 and a POD for a year.
So, they didn’t walk away with the amount they had hoped for when listing it on the MLS. They got near it, with a service they never thought they needed. They saved themselves the headache of further showings, and we were able to close quickly and get them moving in the right direction financially.
We eventually spent a little more on the rehab than $50,000. With good staging, it also sold for a little over $220,000. It became a win-win for everyone. You could look at this experience this way, if they would have went right to a cash buyer, they would have lost about $6,000 from fair market value, and saved 6 months. Would that be something you’d do?
Final Thoughts About Selling Houses As Is For Cash
We know this isn’t for everyone. But if you fit the proper homeowner in need, it may be your best solution. Just remember to decide if you need what a cash buyer investor will offer. If you do, don’t hesitate to reach out and see what they can offer. And if you want to see what our cash offer is for you, fill out the short form below. Or contact us or give us a call at (708) 415-3801. We’ll be glad to get started on your cash offer ASAP.