Pros and Cons of Selling to a Home Investor

Did you know that the average American moves 11 times in the course of his or her lifespan? Whether you're putting your first or tenth house on the market, selling property represents a severe financial and emotional commitment.

Selling to home investors for cash has several pros and cons to consider. Let's get into what you need to know to make the best decision!

Before You Sell Your Home

Before choosing to sell, you need to research your options. What will be the financial advantages and consequences of selling your home? What other expenses do you anticipate encountering?

Assess your next mortgage options. Are you planning to downsize your home? Or buy a more expensive property?

What is your house worth? What have comparable homes in the neighborhood been selling for? If you price your house right, it will sell. It's just a matter of knowing the best price for your property.

Finally, how is the current market?  It's impossible to predict the real estate market with complete accuracy, but you ideally want to time your selling with your buying.

Most people can't afford to own two properties at one time. As a result, you probably will need to hold off on purchasing a new home until your current one sells.

Pros Of Selling To Home Investors

There are many advantages to selling your home to home investors. It's important to consider each of these benefits before going this route.

You'll Save Time!

Time may be the most tremendous asset when selling your home. When you list your home with a conventional realtor, you have to go through a lengthy and tedious process that could take over six months.

Furthermore, a variety of variables may impact the promptness of the sale including:

• pricing issues
  
• poor location
  
• real estate market
  
• home condition
  
• real estate agent's competence

You Won't Have To Pay Commission Fees

Real estate agents don't work for free. Instead, they work with either a flat rate fee or a commission percentage hovering around 6%.

For a $250,000 property, that means the agent makes approximately $15,000 from the sale. This price applies no matter how involved the agent was in the process.

At best, your agent will be attentive and hands-on with your sale. At its worst, however, you may have an overworked or disinterested agent who doesn't nearly put in the effort you need.

Simplify Inherited Property Sales

Did you recently inherit a house? Not sure what to do with the property? Inheriting a home can certainly be a blessing, but it can also be a difficult conundrum.

After all, what if you don't intend to live in the home? What if you don't have the time or effort to remodel it appropriately? Or, what if you just want to sell it quickly and get the process over with?

Unoccupied homes face several risks. For one, they may be more susceptible to theft, damage, and related vandalism. Two, they risk market fluctuations that can lower their value.

Both of these scenarios can seriously impact depreciation. This ultimately harms your ability to sell. Thus, you may have more on your hands being stuck with the property.

Home investors can purchase the home quickly. You don't have to worry about depreciation or damage. You can sell the home and move on.

You Don't Need to Put Additional Money Into Fixing The Home

Homeowners, on average, spend over $60,000 on home renovations. And let's be real. Most buyers want to look at homes in tip-top shape before signing contracts.

As a seller, this means you're responsible for planning remodels and renovations. Such labor and materials can quickly become premium expenses. Furthermore, the process also includes several, other costs like deep cleans and home staging.

On the other hand, when you sell to a home investor, you don't need to worry about giving the home a facelift. Instead, you sell the property "as is." No need for fancy updates or remodels.

No need to get the house immaculately clean. Instead, you can list what you have without lifting a finger.

You Avoid Foreclosure Problems

According to the Mortgage Bankers Association, 1 out of every 200 homes is foreclosed. Unfortunately, you can have the best intentions, but a bout of bad luck can quickly deplete your financial health.

If you fall behind on your mortgage payments, the lender can threaten to foreclose your property. This undoubtedly leads to tremendous stress for you and your family.

It may be possible to collaborate and negotiate different loan terms. However, there's no guarantee the lender will approve your request. Furthermore, you have to wait for the request- which will cause you to be even further behind on payments.

Selling your home immediately mitigates the risk for such foreclosure. It also provides you with the cash you need for your next move.

You Can Get Paid In Cash (Quickly)

If you need cash immediately, selling through a home investor is one of the best ways to do it. After all, who doesn't love the idea of a large sum of cash?

Sometimes, you just need to get rid of the house. You need a lot of cash- and you need it as fast as possible.

Selling your home to an investor makes that possible. Some transactions can be completed in as little as a week. When you compare that to the several months it takes to sell a home traditionally, this option becomes significantly more attractive.

However, cash isn't the only option for selling. Some investors provide various payment methods including pre-scheduled payments and certified funds.

Cons of Selling To Home Investors

Like with any large, financial decision, there are some disadvantages to consider before selling to home investors. Let's review the major red flags to evaluate.

There's A Risk Of Being Scammed

Your home is probably the most expensive asset you'll ever own. That said, the industry has plenty of sketchy scam artists to avoid.

There are plenty of fraudulent criminals posing as home investors that will rip you off and put your financial well-being in jeopardy.

You must be an informed consumer if you opt to take this route. Spend your due diligence engaging in appropriate research. Get the name of the investor and scope them out. If you have a listing agent, use him or her to help you with research.

Always make sure the buyer provides proof of funds. This can include copies of bank statements or paystubs. You want to typically make sure the closing date is less than two weeks away.

• Check to see if they are registered with the Better Business Bureau or have any complaints.
  
• Check out their website. Is their name on it? Why would they be scared to put their name on their website.
  
• Google the owner to see if they are or have ever been associated with any questionable situations.
  
• Ask questions, and most importantly
  
• Read your contract and make sure you understand it.

Investors Don't Need A License

As mentioned, scam artists can be rampant in this industry. While some investors are part of corporations, others may just be individuals interested in real estate.

Of course, this raises flags for concern. Why does the seller want to purchase the house? Are they intending to flip it and resell for significantly more profit?

This may not affect you in any negative way, but it's something to consider before going this route.

Remember that a reputable individual will happily share their experience and credentials. Furthermore, he or she will be happy to discuss how the process works should you have any questions.

You May Not Receive As Much Money

Home investors are responsible for paying several fees like closing costs, repairs, and back taxes. They are also responsible for the associated risk of buying a fixer-upper.

As a result, they will typically offer a price that's lower than market value. This is the sacrifice you'll need to consider if you want to sell quickly.

IT MUST BE A TRUE WIN-WIN SITUATION

Obviously, even a legitimate ethical ‘We buy houses’ company is not going to pay full price for a house. They are in the business to make a profit just like everyone else. Now that said …keep in mind that a negotiation is only successful if both parties feel that they got a fair deal. Our Easy Home Buyer investors pride themselves in offering the highest payouts for homes. Period!

When you list your home with an agent or even a for sale by owner you incur costs than can include minor or major repairs, marketing fees, you pay commissions and you are in a waiting game not knowing when or if it will sell.