As a homeowner looking to sell your house, there are multiple house-selling options available to choose from. Like most sellers, your first step may be to list your home with the help of a real estate agent. However, after considering factors like time, foreclosure, or repairs, you may need to look for a better option.
For many people, selling their house to an investor is the best solution. It is fast, simple, and stress-free. But for you, is selling your home to an investor a good idea?
If you are looking to sell your home and are still indecisive about the best route to take, this article provides insights into why selling your home to an investor may be the right option.
Four benefits of selling your home to an investor
Here are the reasons why you should consider selling your home to an investor.
1. Sell your house as-is
If this is not your first time selling your home, you will be familiar with the stress of making house repairs before selling. You don’t want to go through that again. The average seller spends $21,000 preparing their home for sale. That amount includes hiring a professional for projects like painting, cleaning, etc.
Unfortunately, these repairs do not guarantee a valuable ROI as many buyers will offer you prices below your expectations.
On the other hand, most investors care more about your home after repair value (ARV) than the looks. Therefore, if you are selling to an investor, you can sell your house as-is. This means you will not be required to spend a dime making repairs or improvements to your property. All you have to do is take your personal belongings and leave – it is that simple. The investor will take care of everything else.
Many investors will allow you even to leave your belongings if you don’t want them. Have you accumulated much stuff over the years that you no longer want? Don’t worry about it. A good investor will let you leave behind whatever you desire. Don’t want to clean the moldy food out of the refrigerator? A good investor will let you leave that behind too.
2. Quicker closing period
Selling your home via listing can be a very stressful and time-consuming process. The average buyer spends six months preparing their home to be sold. You will have to contact an agent to put your house up for sale and prepare your home for the market. But that is just a small part of the problem, your buyer may:
- Make unreasonable demands.
- Terminate the agreement on the last day of the due diligence deadline.
- Fail to obtain financing after 45 days of waiting.
- Demand their earnest money deposit back even though they were unable to uphold their end of the agreement.
- Make a “great offer” only for you to discover that the bank won’t approve it at the last moment because the appraisal came in too low (so the bank won’t lend the buyer the money for the purchase price)
- Terminate the agreement for arbitrary reasons, change their minds, etc. During this period, you will continue to pay for your mortgage, utilities, homeowners insurance, property taxes, etc. These are called “holding costs.”
On top of all these, you need to continually keep your home clean since potential buyers might want to visit at any time. If you have pets, you need to make arrangements to get them out of the house (along with your family) every time potential buyers walk through the home. The entire process can be very emotionally tiring. Then, there’s the open house where you also need to keep your valuables hidden. This is usually to keep them safe from who exploit open houses to look for valuables or medications (or even children) they can later burglarize.
And just when you are about to celebrate that you have finally gotten a good buyer for your home, something goes wrong right before closing, and you need to start the entire process all over again. Or, even worse, you close on the transaction only to be later sued by the buyer. Perhaps they think you knowingly omitted vital information from the seller’s property condition disclosure because they later discovered problems with the house that you didn’t even know about! Therefore if you need to sell your house fast, selling your house to an investor is the answer for you.
With an investor, you get to save yourself this lengthy and complicated process as all of the processes are simplified. The investor will assess the market value of your property, estimate the cost of repairs required to complete, and make an offer quickly. Investors use cash or special kinds of financing that are not available to conventional buyers to enable them to close in less than ten days. Thus, selling to an investor saves you the time having to list your property, or search for a buyer by yourself. This is especially vital if you urgently need a quick closing, for example, if you are moving to another city and will not have the chance to come back anytime soon.
3. To avoid foreclosure
Are you behind on your mortgage? Is your lender threatening you with foreclosure?
Then selling to an investor is the right way to go.
With your foreclosure deadline approaching, you may want to renegotiate with your lender to help you keep the house. This renegotiation may fall through, causing you to be further behind on your mortgage and increasing your foreclosure risk.
By selling to an investor, you pass the burden of this problem to a new owner. You may choose to accept the cash for house method, allowing you to get physical money to pay up your mortgage loan and have extra to settle other money-related matters. You also don’t have to worry about it affecting your credit score.
4. Flexible finance options
As most real estate loans lie in the six-figure and above region, banks need to ensure everything is in place before giving out loans. This process takes time and causes a considerable chunk of the delay buyers to face when trying to buy a home. This process can take up to 45 days or more when conventional financing is used.
Selling your home to an investor eliminates the need for banks. You can also choose to receive your payment through wire transfer or check directly from the investor or through an escrow or title company that guarantees the payment is not fraudulent. In situations when you need to sell to get some money to solve personal problems, an investor can simply adopt the cash for houses approach to pay you and close the deal in a matter of days (usually less than seven days).
Because the rigid requirements of conventional loans don’t restrict investors, they can also offer to help with other expenses, such as relocation expenses, or possibly even medical bills. A primary goal of a good investor is to help solve your problem. If selling to an investor doesn’t create a win-win situation, a good investor will steer you towards a different path.
What’s the catch of selling to an investor?
Investing in real estate is a risky business for the investor, so they will do the math to determine how they can offset the risks and the many costs involved in buying, renovating, and reselling a home. Think about it; if the investor loses money trying to sell the houses they purchased and renovated, they can go bankrupt! Also, because you can sell your house as-is to them it is common for investors to discover new problems after opening up the walls during renovation. These discoveries can result in tens of thousands of dollars of unexpected costs that must be accounted for. So, they must be able to purchase homes around 60% of the price they can sell the house for after renovating it. That may seem like a lot, but most of that difference is quickly eaten up by the costs of renovating and selling the home. Here are some of the approximate average costs that investors must be able to cover:
- Rehab, or renovation costs, depending on the condition of the house ($40,000 – $80,000 or more)
- Financing points (or upfront costs of short-term loans called “hard money loans”), usually 3% of the loan cost ($7,118)
- Hard money financing loan payments, usually around 12% interest, for six months between purchase and resale ($14,238)
- Costs of private financing for the down payment ($7668)
- Title insurance fees ($1,388)
- Realtor commissions, usually 6% of the sale price ($21,329)
- Recording fees ($500)
- Property taxes ($600)
- Liability and casualty insurance for six months ($1,566)
- Transfer & Conveyance fees ($300)
- Home warranty ($500)
- Staging costs ($1,500)
- Marketing costs ($500)
- Utilities ($1,200)
- Escrow fees ($900)
These costs don’t even include unexpected repair costs. But, when selling to an investor, these are all things the investor pays for. You don’t need to worry about any of that! All of these are things that the investor must worry about when they make an offer for your home. Due to all these costs and risks involved for the investor, investors expect to purchase homes at “wholesale” prices. Many investors won’t tell you this until the very last moment when they present you with the offer. But at Bost Redevelopment, we are transparent from the very beginning. If you are more interested in a quick and easy sale than you care about putting in all the work necessary to get every penny from your home sale, let an investor take care of all of that for you.
Are you looking to sell your house to an investor today?
Do you want to sell your house as-is to an investor today or need more information about selling your home to an investor? Please send us a message below with your contact information and let us know you are interested in allowing Bost Redevelopment to buy your home. We will assess your home within the shortest time frame and offer you a fair price for your property. We will close the deal within 5 – 10 business days.
We are a licensed member of iProRealtyNetworks in the State of Utah, members of the National Association of Realtors (NAR), and we abide by the NAR Standards of Practice. Contact us today if you’d like to talk with us to determine if having Bost Redevelopment buy your house as an investor is right for you.
Orem Utah Home | Bost Redevelopment 