Finding the right home buyer for your house can be time-consuming and challenging, especially if your property has some undesirable qualities or the market is slow.
A possible solution is to sell your home to a cash investor. These professionals specialize in purchasing properties and reselling them for profit.
Read on to learn more about selling to a cash buyer and determine if this option is right for you.
Selling Your Home to an Investor
These professionals use cash funds to purchase homes and make a profit by selling or renting the property.
Some investors run wholesale businesses. They’re looking to buy homes in varied conditions, invest in renovating them, and resell them. Among this group, you’ll find iBuyer companies that operate online.
There is also an increasing number of house flippers. These individuals use a mix of financing and cash funds to purchase homes as is and use their own skills to remodel.
Some property investors are landlords. These investors are looking to purchase properties, make a few improvements, and turn them into rentals.
What You Need to Know
The Nebraska housing market is going through some changes. High mortgage rates are making things difficult for traditional buyers.
It’s no surprise that more homeowners are selling to investors. In 2021, a quarter of all sales went to home investors.
As this open market grows, there are more options than ever if you want to sell a house fast in Papillion or another area. However, not all investors are the same.
It’s important to conduct due diligence and ensure you are dealing with a legitimate company, especially if you’re considering selling to a new company or a foreign investor.
Another thing to keep in mind is that investors will look at the after-repair value of your home and at their potential profit. In most cases, you’ll get a cash offer below the fair market value so the investor can earn a profit, even if your home is in good condition.
Pros of Selling Your Home to an Investor
Why are more home sellers turning to cash investors? There are several advantages.
A Fast Process
A traditional sale can be time-consuming. You’ll have to list your home on the market, schedule open houses, and vet buyers.
Once you accept an offer from a homebuyer, you’ll have to wait for them to secure financing. They might have to sell their current home or wait for their bank’s underwriting team to review their mortgage application.
Even if the buyer obtained a mortgage pre-approval, this process can take a month or two.
If you’re looking for a quick sale so you can relocate, avoid foreclosure, or settle an estate, going through an investment company is your best option.
Even though it’s common for traditional buyers to put money in escrow to prove they’re making the offer in good faith, sales can fall through for a number of reasons.
The bank can deny financing, or an inspection can reveal too many issues the buyer can’t fix. Some buyers simply get cold feet.
The sale process entails fewer risks when going through a reputable investor. You’re dealing with professionals who are making a business decision.
No Closing Costs
Typically, the buyers will cover the closing costs. However, they can ask the seller for a concession. It’s common for sellers to offer concessions when the market is slow.
Since investors don’t rely on traditional financing, the closing costs are much lower and it’s very unlikely that you’ll have to cover any of them.
Selling the House As Is
Selling a home with extensive needed repairs or cosmetic issues can take time. Your house won’t attract the average buyer, and you might have to reduce your asking price as your house sits on the market.
You might run into additional issues once you find a buyer. If your buyer uses FHA financing, a home in poor condition might not pass the required FHA inspection.
Some potential buyers won’t mind a few home improvement projects if the price is right, but it’s much easier to sell to an investor if your home needs some repairs.
Plus, you won’t have to stage your home or prep it for sale with cleaning and other small projects.
No Real Estate Commissions
Selling to an investor saves you the hassle of finding a reputable realtor. Since there is no need to put your home on the market or schedule visits and open houses, you can skip hiring a real estate agent.
You’ll save time and won’t have to pay agent commissions. Commission fees typically account for 5 or 6% of the home selling price.
Cons of Selling Your Home to an Investor
There are a few drawbacks associated with selling your home to an investor.
The Selling Price
Investors are in the business of making money, whether they plan on reselling your home or turning it into a rental property.
An investor’s offer will typically be below market value, as the investor needs a profit margin.
Settling for a lower purchase price is a necessity if your home needs extensive repairs.
However, if your home is in good condition, you need to ask yourself if accepting an offer below market price is worth it in light of the advantages investors offer.
Plus, seeing an investor resell your home for a higher price can be difficult. You might feel that you missed out on an opportunity to sell for more.
Unfortunately, the real estate investing industry is attracting scammers. Some criminals pose as investors to steal your personal information.
Take the time to do some research, for instance by asking for referrals or checking online reviews.
We all get attached to the places where we live. Moving isn’t always easy, but knowing that a young couple will buy your home to fund a family can make things easier.
One of the downsides of selling to an investor is that you don’t know what will happen to your home. The investor might completely remodel the house or even rezone the property.
Differences Between a Home Investor and Homebuyer
There are some fundamental differences between home investors and traditional buyers.
What They Look For
A traditional homebuyer is looking for a place to live. They will typically look for a home that matches their lifestyle and personal preferences, but they will also consider the area, schools, and job opportunities.
Investors aren’t making personal decisions. They’re conducting business and will make an offer that reflects what your home is worth to them. They will consider the amount of work that goes into the project and what they can get when they resell.
The majority of buyers obtain a mortgage through a lender. A few might earn enough from the sale of their current home to make a cash offer, but this is not the norm.
On the other hand, investors have access to cash resources. Many will pay a lump sum that reflects the sale price, but you can also find investors who offer monthly payments.
If you contact an investor to get an offer, a professional will visit the property and make you an offer within a day or two. Some iBuyers even give you an offer price without visiting the home in person.
You can accept or refuse the offer. If you accept, the closing date is typically within seven to ten days.
The sale process is extremely different with a traditional buyer since they need to obtain financing. They will also conduct a thorough due diligence process to learn more about the properties and look for flaws you didn’t disclose.
You can expect a closing or move-in date one or two months after accepting an offer from a traditional buyer.
Alternatives to Selling a Home to an Investor
If you don’t think selling to an investor is the right option for you, there are a few alternatives to consider:
- You can list your home ‘as is’ and look for a buyer who is willing to undertake repairs and renovations.
- You can also invest in fixing your property to increase your home value and make a profit when you sell.
- Keeping the home as a rental is another possibility. If you want a passive income, there are turnkey services available that manage long-term and vacation rentals for you.
While selling your home to a real estate investor isn’t suitable for everyone, investors offer several advantages. They will make an offer right away, pay with cash, and purchase homes as is. It’s often your best option for selling a home in need of repairs, selling before foreclosure, or avoiding a drawn-out selling process for a house you inherited.
Our goal is to offer a transparent experience and facilitate the process of selling your home. Once you request a quote from us, we can visit your home or review pictures.
We’ll then make a fair cash offer that you can accept or refuse. There are no obligations. If you accept, we’ll guide you through the entire sale process and work with you to find a closing date that works for you.
We’d like to invite you to take a look at this case study to get a better idea of how selling to an investor works and how much you can expect to get for your property.