Home Business Understanding the Process of Selling Your House to an Investor

Understanding the Process of Selling Your House to an Investor

by Olufisayo
Selling Your House to an Investor

Approximately 5.46 million homes are slated to go on sale by the end of 2020.

Home investors (who bought one in every five houses in the bottom third price range in 2018 alone) are increasing their residential property purchases. For homeowners who need to conclude a sale outside of the traditional process, selling your house to an investor can be a compelling option.

Here is a look at what selling to a house investor means, to help you make the right choice.

Who Is a Home Investor?

A home investor is a professional who purchases residential houses as part of their business strategy. Home investors can be individuals or companies.

A home investor can choose to purchase a house and hold on to it until the prices go up. Such a move is popular with corporate investors, while individual investors typically tend to buy and rent as they await a profitable sale.

Aside from buying and holding, investors can also choose to flip. Here, an individual or company can buy a home at a lower price and invest in repairing it. To turn a profit, the selling price has to be higher than the total cost of buying and fixing the property.

Other home investors choose to be wholesale buyers. They purchase a property below market value and quickly sell it to other investors at a markup. Wholesale home investors typically have a pipeline of buyers beforehand for fast sales.

How Home Investors Determine the Price

When assessing property, a home investor never plans to pay above market price. Doing so can end up thinning their margins as they are in the business for profit, not to buy a house to live in.

An investor will use real estate comparable listings (comps) to determine how much they ought to pay for your house. With comps, an investor looks at other homes similar to yours and what they have sold for in the current market climate. With such information in hand, the investor has an estimate with which to work with.

Once the investor sees that the estimates are promising, they then conduct a paid appraisal of your home. The appraiser will look at how old your house is, its location, and square footage, among other things.

Using the information from the appraisal, a property investor will determine whether to buy your house or not.

Note that for investors, the information from appraisals is essential, but they use their costing methods to determine profitability. So do not expect to get an offer matching what an appraisal might state your home is worth.

Why Should You Consider Selling Your House to an Investor?

When you want to put your house on the market, you should consider pitching it to investors. Here’s why selling homes to investors can be attractive.

1. Fast Sale

Are you in a bind and need to offload your home as soon as possible? A sale to an investor might be the most advantageous option for you.

Selling your house via a realtor takes more time as there are several steps to the process. An average listing can take you up to six months. When you do find a private buyer, they have to apply for financing, which takes more time.

Additionally, a private buyer will also make buying your home contingent on an inspection. That adds to the time your transaction can take.

Real estate investors, on the other hand, are cash buyers and ted to close the deal quickly when they find a house they like. You can expect a no-obligation offer on your house within 24 hours and the money within a few days if you make the ale.

2. Selling ‘As Is’

A big draw to selling your home to an investor is that you do so on an ‘as is’ basis. Since such an investor has experience in these types of transactions, they know how to profit from them.

Thus, an investor can buy a home that is in a condition in which a private buyer may not be willing to purchase.

What this means for you is that you do not have to invest a significant sum in getting your house ready for sale. Through this, you can escape a potential situation whereby you fail to recoup the investment you made in getting the property ready for sale if the price is not favorable.

3. Flexibility

When a private buyer purchases your home, you have to agree on a closing date that both of you can work with. Typically, the buyer usually has more bargaining power and determines the date.

When this date rolls around, you will be expected to have vacated the house no matter what. Furthermore, there should be nothing left in the house by the time the buyer comes to close.

Selling to investors can give you flexibility on the closing date if you need time to get some things in order. Since the seller determines the closing date (within reason), you can time it just right for your needs. If you have items you do not want to take with you, you can leave them behind, making a move more manageable for you.

How to Avoid Falling for Cons When Selling to an Investor

When dealing with home investors, you need to ensure that you only consider legitimate offers.

For starters, when you identify a potential home investor, call the listed office number and request for a list of the homes they bought recently. You can go a step further and look up the former owners, and talk to them to understand what their experience was when dealing with the investor.

Another essential way to detect a potential con is by asking a home investor for their website. If they do not have any, request them to give you other material supporting their claim to be a property investor.

You can also check with your local Better Business Bureau outpost for any warnings on the investor.

Sell to the Right House Investor

Sometimes you need to sell your property without going through the traditional process, and home investors come in handy. Selling your house to an investor takes less time, and you don’t have to spend on fixing your property up. However, it would be best if you did your research to know what kind of pricing to expect and how not to be vulnerable to fraud.

Hungry for more information about the real estate business? Check out the rest of our content for impactful business tips and insights.

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