SELLING YOUR HOUSE TO AN INVESTOR: WHAT YOU NEED TO KNOW
Out with the old, in with the gold! Will you sell your home to investors?
Probably around your neighborhood, you’ve seen signs that say things like, “Sell your house QUICK,” or “We pay CASH”. If you call the number listed on those signs, you’ll get connected with an investor. Also, you can get in touch with an investor if you list your house on the market and want to sell it. If you decide to sell your home to an investor, what should you know about them and how can you protect yourself? Here’s what you need to know.
Exactly what does a home investor do?
A home investor is an individual or company that purchases homes to make money from them. Renting out a home for a steady income, renovating the home for a profit, or holding the house until the market improves are a few options available to investors after buying a home.
Investors and traditional buyers differ in what ways?
Traditional buyers are people who want to purchase your house because they think it would make a great place to live or vacation. Your home will be valued based on what the buyer believes the fair market value is when they make an offer.
In a hot market, they may even offer above-market value if they are very serious about your home. Traditional buyer is typically not thinking about how they can make money with your home as they believe it will benefit them and their family. Your home isn’t a dream home for home investors. Rather than thinking about how long it will take them to profit from your home, they’re trying to buy it at the cheapest price possible.
What are the benefits of selling your home to an investor?
A major advantage of selling to an investor is that your home will be taken off the market quickly and hassle-free. If you sell your home to an investor, there will be no need for you to replace the roof, repair the furnace, or fix that leaky faucet that has been dripping for the past five years.
You will also benefit from a quicker close, and you are less likely to lose the deal if the buyer lacks funds. As most investors buy homes with cash, closing the sale usually takes about two weeks once a price has been agreed upon. Selling your house to a mortgage-taking buyer can take a few months.
When selling to an investor, what should you watch out for?
An investor will buy your home for cash and close it quickly without requiring any repairs. In other words, what’s the catch? It’s almost always the case that an investor will attempt to purchase your home below market value in order to make money.
The number of investor scams is also quite high. Find out as much as you can about the investor before selling your home to them online, by reading reviews, visiting the Better Business Bureau, or consulting a real estate agent.
When you sell your house for a profit, what happens?
Making a profit on your home sale means selling it for more than your mortgage owes. Remember, however, that not all of the money is yours to keep. An agent’s commission is likely to be between 5% and 6% of the sale price if you use one.
A closing cost or two will also have to be paid unless the investor agrees to cover them. In the event that you do have to pay closing costs, they will range from 1% to 3% of the purchase price. Additionally, keep in mind that you may still owe property taxes.
Conclusions
Selling to an investor may be a good option if your home needs some serious TLC or you’re looking to sell quickly. You may be better off selling to a conventional buyer in the event you own a nice home in a desirable location and you don’t mind it sitting on the market for a while.