Benefits and Cautions of Selling Your Home to a Real Estate Investor

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May 21st, 2021
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If you’re looking to sell your home, you’re probably realizing how much time and effort is required to bring everything together. A long list of things to do, from deep cleaning to completing repairs or upgrades both inside and out to the decluttering and staging process for showings and open houses. It’s a lot of work, time, money, and effort to prep a home to go on the market, which leaves many homeowners feeling overwhelmed just thinking about it.

 

Like many homeowners looking to sell, you may be unsure or struggling with how to find or choose a real estate agent that works for you. Perhaps after doing some research, you’re feeling stressed about the potential time constraints of the sale, or you’re worried about the costs associated with selling your home. It’s okay. You’re not alone as this is common when selling what is most likely your biggest asset. Maybe you’d prefer not to use an agent at all to avoid commissions, so you consider using the For Sale by Owner approach. But that still requires all the work to prepare for showings. This option takes even more time and planning, including learning how to list on MLS, coordinating your own open houses, and ultimately taking on the risks of negotiating and signing a contract without the help of a professional.

 

If neither of those seem like the right fit, luckily, there’s another option! You might consider working with a real estate investor. We will first go over some of the basics to familiarize you with some common terms you may have heard before.

 

What Is a Real Estate Investor?

 

They come in many forms, from independent investors to large real estate companies. They also come with risksÑwhich we’ll cover more in depth in this articleÑlike fliers in the mail, TV commercials, and online with messages like “Sell your home for cash,” “I want to buy your home,” and “Promises of guaranteed cash offers.” These messages are often intended to attract potential home sellers and can oftentimes be misleading as they draw attention and are appealing on the surface but are not well defined. Let’s take a closer look.

 

What Does “Cash Offer” or “Guaranteed Cash Offer” Really Mean?

 

Most commonly, this means there is no contingency, or brokers who don’t have funds readily available make an offer but the small print allows them to back out in case they can’t find a buyer. There are legitimate investors and there are others who are smooth talkers looking to simply make a quick profit. It can be challenging to tell the difference, but we’ll give you some helpful tips telling the difference.

Read on to dive in to all the benefits, common situations, and best practices for selling your home for cash to a real estate investor.

 

Benefits of Selling Your House to a Real Estate Investor

 

  • No Prep Work. With a traditional home sale, you’ll have to do a lot of preparing before you list, from cleaning and decluttering to taking listing photos and staging. Typically, this includes hiring a professional for projects like painting, staging, house and carpet cleaning, and lawn care. Most investors care more about financials and less about your home aesthetics. After all, they’re planning on renovating and reselling your home anyway once the deal is closed.
  • Quick “Waiting” Period. Unlike in a traditional sale, where a buyer will typically require a 45-day “waiting period” otherwise known as an “escrow period” to allow enough time for inspections, appraisals, and mortgage approval contingencies, a real estate investor can close in less than a month sometimes even faster.
  • Simplified Transaction. With your home being sold as-is, you won’t need to worry about making any repairs before or after closing; however, it’s common for traditional buyers to request repairs as part of their home inspection contingency. Additionally, you may also be able to leave stuff behind that you don’t want, which isn’t an option in a traditional sale.
  • All Cash Offer. Real estate investors usually buy in cash, so there’s no danger in a buyer’s appraisal coming in below the offer price and squashing the deal. Essentially, the seller won’t need to worry about financing contingencies when selling to a real estate investor compared to a traditional buyer.
  • Flexible Timeline. When selling to a traditional buyer, you have to agree upon a closing date that works for both parties; however, often the buyer calls the shots. That means you have to be out of the house on the closing date no exceptions. Investors are more flexible with the close date than a traditional buyer.

 

Common Situations Where Homeowners Most Often Sell to a Real Estate Investor

 

While many people choose to sell their home the traditional way, there are plenty of situations when selling to an investor might make the most sense.

  • Inherited Home. If you’ve inherited a property from a family member and you don’t plan to live in the home, selling to a real estate investor would get you off the hook for repairs and maintenance the home may require in order to sell traditionally.
  • Need Timeline Flexibility. If you’re selling on a very specific timeline, you usually have more control over the close date with an investor, since they’re not timing a move-in date the same way a traditional buyer is.
  • Currently in Escrow. If you’re trying to time a sale and a purchase at the same time and your new purchase is contingent on your old home selling, going with an investor offer can speed up the process.
  • Downsizing. Whether you’ve become an empty nester or the strain of your home’s upkeep is becoming too much, downsizing and selling to an investor could be a quick and hassle-free option for you.
  • Relocating for Work. Often a job relocation requires a faster-than-average timeline. Selling to an investor can be faster than waiting or searching for the perfect buyer.
  • Divorce. Divorce settlements require both parties to divide the assets. Selling fast and splitting proceeds can often be an easier way to go.

Potential Cautions to Consider with Real Estate Investors

 

Unlike real estate agents, who must be licensed to represent buyers and sellers, investors don’t need any credentials to buy property. This lack of licensing or any sort of professional affiliation leaves sellers susceptible to home investors who may utilize the terms “We buy houses for cash” or “Sell your house for cash” in a deceptive way. Always be sure to do your background research when you’re considering working with a real estate investor to protect yourself from any costly surprises. There are plenty of companies and individuals that buy houses. Make sure to use a reputable one.

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