How Selling Your Home to An Investor Works
Despite all the fluctuations and complications that the world economy has been suffering in recent years, if there is one market that remains firm and profitable, it is the real estate market.
It is no coincidence that, even in times of economic recession, investments in the sector remain unchanged, attracting companies and professionals of the most varied sizes and commercial sectors.
After all, investing money in real estate is one of the safest and most promising forms of investment. Keep reading to learn how selling your home to an investor works.
How Does “We Buy Houses” Work?
Step One: Give Us Some Details About the Home You Want to Sell
Interested in selling your home right away? Then you’ve got to give us the home address and some in-depth information about your home. You don’t have to worry about your home’s condition or its location. After our analysis, we’d take all that into consideration in our final offer.
Step Two: Reviewing your Home’s Information
Many people advertise that they’ll buy any home they find irrespective of the condition or location. Later on, they try to find a buyer for your contract and when they can’t get one, they cancel their purchase.
This is bad business and it’s not professional. The real thing to do is to look at the home and location submitted and then compare it to other ones selling around the neighborhood to determine the best price for the home.
Then, the next step is to look at the price of similar houses sold in the past in the neighborhood and location while looking at the current market price.
Step Three: Receive a Mouth-watering Offer Within 24 Hours
Once all is settled, the next step is to make a transparent transaction that will be signed and documented. A written offer to buy your home for cash will be made to you.
Once the price is agreed on, voila, your home is purchased, a deposit is made with a local title company and everyone goes home happy.
Step Four: Title Company Delivers the Money
Lastly, the title company takes care of any extra paperwork that may be required and ensure you get your money for the sale of your home. By using a title company, you’re sure of receiving your cash timely and with no hidden charges.
Sell Your Home In Any ConditionThere are no realtors, commissions, fees, and no obligation whatsoever. Start below by giving us a bit of information about your property.
Why Would a Home Seller Only Accept Cash?
One of the primary reasons sellers prefer cash is due to the fact that deals involving cash close faster. In this type of deal, you don’t need to get a lender involved.
Another reason is that there are fewer chances of payment being delayed or getting canceled when the buyer uses all cash. Here are the key reasons:
Sellers Have Nothing to Worry About Payments from Buyers
Financing issues can be a burden and it accounts for about 21% of contract delays and about 7% of canceled deals. Once a buyer is ready to pay all cash, then selling a home becomes a piece of cake because they won’t be racking their brains trying to secure some finance from lenders.
I want you to do something. Imagine yourself as a seller. You likely spent time preparing your home and getting it ready to be listed on the marketplace. You’ve made plans to get your kids out and take your pets out for a stroll to show your home to a buyer.
And you need to get a new home before it’s taken. When you get a buyer for your home, you know that you’re going to need the deal to close very fast so that you can secure a new one. Because, if it doesn’t that would mean starting all over again.
So, this is why many sellers opt for cash payments from buyers to make things easy and to close the deal as fast as possible. And the good news is that many buyers are often willing to go through this route.
Cash Buyers Can Circumvent Appraisals
In the United States, appraisal issues account for around 27% of contract delays and around 15% of canceled contracts. Here’s the top reason why appraisal matters.
If a buyer is getting a mortgage loan to get a dream home, the lender needs to ensure that the value of the home is more than enough to cover the amount they’re willing to lend out. These guys are super-smart; they don’t want to lend you $1.5m for a home that’s worth $750k.
If a buyer is paying in cash, they can now choose to forego the evaluation. They may decide that they are willing to spend more for the home than it is currently worth because they believe the property value will continue to rise. As a result, cash purchasers pose less risk for sellers.
|Selling w/ An Agent||SOLD To Guardian Home Buyers|
|Realtor Commission In Ohio:||6% on average is paid by you, the seller||NONE|
|Who Pays Closing Costs?:||2% on average is paid by you, the seller||NONE – We pay all costs|
|Inspection & Financing Contingency*:||Yes, sales can fall through||NONE|
|Appraisal Needed:||Yes, the sale is often subject to appraisal||NONE – We make cash offers|
|Average Days Until Sold:||+/- 91 Days||IMMEDIATE CASH OFFER|
|Number of Showings:||It Depends||1 (Just Us)|
|Closing Date:||30-60 +/- days after accepting buyers offer||The Date Of YOUR CHOICE|
|Who Pays For Repairs?:||Negotiated During Inspection Period||NONE – We pay for all repairs|
Listing your home in Ohio vs Selling to a cash buyer
When a Financed Offer is Better
1. Timeline: If you’re in a hurry to sell your home and move into a new one, then a speedy closing may be the best option for you. If you’re trying to buy a new home while selling, then you may need to get some extra time to do proper evaluations and analysis.
In this case, you will have enough time to compare a lot of closing dates and timelines among several offers to see the one that works out fine for you.
2. How Much Money You May Want to Forgo? According to research, individuals who sold their homes for cash were 12% lower than financed offers. The truth is, even if you’re interested in fast cash for your home, weigh your options to see the “stash” you’d be leaving at the table.
3. The Kind of Buyers You’re Dealing With: The “cash transactions are super-fast and super-easy” will work out fine if you’re dealing with a seasoned cash buyer. With a first-time buyer, the deal may not go as smoothly as you planned.
There may be contingencies. If the buyer is working solo, then that may cause a lot of problems. In this case, having a listing agent who’s very experienced with cash buyers can be a game-changer.
How Much Will an Investor Pay for My House
Many home investors will most likely give you around 50 -85 percent of your home’s market value. The average price sits at around 65% of your home’s market value. How much you can actually get depends on the following factors:
- How desirable your home is (neighborhood, security and value)
- The condition of your home. Is it premium, mint or some low quality home?
- The caliber of the investor you work with.
Nevertheless, with us in the picture, we’d send you a guaranteed offer. If it’s your first time and you’d love the escrow period option, that’s also welcomed.
How Do Investors Calculate an Offer?
Making a profit is the paramount goal for any investor. So, it is important for an investor to do a proper calculation of how much they can pay for a property, and the profit they’ll realize once sold or leased to tenants.
To ensure profitability here’s the easy method investors use to calculate their offers.
Fixed Cost Method
One of the most used and consistent methods of calculating an offer is the fixed cost method. The general idea around this method is to use the after repair value to get an estimate, then the fixed cost, rehab cost, and estimated profit are deducted. The end value is the max. offer an investor can make on your home.
The formula is
ARV – Fixed cost – Rehab Cost – Profit = Allowable offer
Here’s a practical example: If ARV is given as $200,000, fixed cost is given as $20,000, Rehab cost is given as $30,000 and the estimated profit is given as $50,000, then the Allowable offer becomes $200,000 – $20,000 – $30,000 – $50,000 = $100,000
What Do Real Estate Investors do to the Home?
Real estate investors can decide to take a second mortgage on their homes and set out down payments on more than one property.
Whether they decide to rent out the home so that the tenant pays for the mortgage or they wait for an opportunity to sell the property for a juicy ROI, they have full control of their assets, despite having paid a certain percentage of the actual value of the home.
How Do I Avoid Scams?
To avoid scams in this business, you need to be a “real estate investigator” and be very smart. Here are some tips to go about it.
1. Transaction Should be Done Between Buyer and Seller
If anyone tells you to pay money to a house buyer, know that it’s a scam, walk away. Money is supposed to flow from the buyer to the seller and not the other way round.
Legit cash buyers will never demand money from you to check out your home, neither will they charge you to provide a written offer or carry out any home inspection. The closing cost is usually paid by the buyer. If you’re asked to do otherwise, then you should walk away.
2. Smart Buyers Don’t Blindly Sign Contracts
A buyer may make an offer on a home to see if you’re on the same page. Yet, a cash buyer will never sign a contract that offers non-refundable earnest money without inspecting the home.
3. Get Reviews from Past Clients
It’s important to ask questions, seek reviews and testimonials from past clients. Legit buyers will always have good feedback and even their own website where consumers give their feedback. You can also use Yelp, or Yellow Pages to check out your intending buyer.
4. Always Trust Your Gut Instinct
If a buyer looks suspicious and shady, you may want to take a step backward to some background check and all the necessary stuff.
5. Legit Buyers Won’t Pressure You to Sell Your Home
If a buyer comes up with some kind of “pressure-like” sales tactic, you may want to slow things down or even walk away. A legit buyer will never pressure you to sign the documents, nor will they discourage you from taking time to vet them.
6. Beware of Some Kind of Juicy Offers
If an offer is too good to be true, you should walk away as well. Sometimes, a buyer may give you an overpriced offer to get under contract (which prevents you from selling to anyone else).
Later on, the same buyer may come up with some crazy excuses to beat down the price and when you refuse, the buyer walks away without any consequence. This kind of deal can cost you some real investors. So, you have to be careful about such buyers.
7. You want to get on a contact that offers greatest protection
Legit companies will most likely offer you some form of protection. However, if you’re unsure of who you’re dealing with, you need to ensure that there are no loopholes in the contract that may have some financial boomerang on you.
8. Real Buyers Have Business Presence
If you’re dealing with a legit company, then you should be able to find their business address or even their URL. They most likely will have some internet footprint on top search engines like Google or Bing.
Their website should have an About Page and contact details to reach them.
Selling a House as is in Ohio
At Guardian Home Buyers, we buy houses for cash in several neighborhoods in Ohio. If you’d love to determine for yourself if selling your home to an investor is a smart move, then we’re inviting you to send us a message today.
We’d give you the best response in less than 24 hours. No matter the condition of your home, we’re more than ready to buy them and ease you off some financial constraints. We buy fire-damaged houses all around Ohio and we have a mouth-watering realtor commission for every referral.
Fill out the form below or give us a call at (330) 207-7509 and see how much we are willing to pay for your home.