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  • Writer's pictureRenz Javing

Should I Sell My House to an Investor?


If you’re planning to sell your house, you probably first think of listing your home with a Realtor who will help you put it on the market. But this method can be time-consuming and more expensive than you realize. Fortunately it isn’t your only option. You could also consider selling to a home investor.


Understanding buyer intent

One of the fundamental differences between an investor and a typical home buyer is what they plan to do with your property after they buy it. A homebuyer aims to live there and make it their primary home. An investor on the other hand sees your home as a business opportunity, whether they intend to rent it out or flip it.

Investors are people or companies that want to purchase your home in order to make money. So negotiations will go differently (and hopefully easier) than they would if the buyer was going to live on your property. But sometimes the investor(s)’ intention should be reason enough to give you pause.


Advantages to selling your home to an investor


As-is purchase.

The investor isn’t planning on living in your home so he or she (or the company), doesn’t care if your kitchen has been updated with a vibrant backsplash or if your toilets are new. In fact, many investors look for homes that are old or outdated so they can fix them up and flip them.


No financing delays. 86% of recent buyers financed their home purchase, adding an extra layer of complexity to the transaction. Financing issues happen to be the most common cause of settlement delays — even if the process stays on track, it takes on average around 45 days to close a purchase loan. Real estate investors typically pay cash, meaning you can close in a matter of days and eliminate the risk of financing delays.

Quicker closing.

Since most investors purchase with all cash, you can sell your property as soon as your two parties agree on the conditions of sale. The average time it takes sellers to close with an all-cash investor is two weeks. If you’re selling to a buyer who needs a mortgage, it’ll take you 60 days’ minimum.


So what’s the downside of selling to an investor?


Although the process is faster and less complicated, selling your home to an investor isn’t always the best idea if you’re looking for top dollar.

The offer you receive from a professional investor will almost always be lower than what you would receive from a traditional buyer, especially if you’re selling in a slow real estate market. An investor will still give you a fair market value, but keep these factors in mind:


You won’t pay for prep work: The average home seller who hires professional help spends almost $5,000 getting their home ready to sell, including things like painting, staging, cleaning and lawn care. When you sell to an investor, these steps aren’t required.


The offer reflects needed repairs: If your home is already in disrepair, an investor has factored the cost of needed repairs into their offer.


Lack of emotional connection: Some investors may be able to offer you a more competitive bid than others, depending on how your property type and price range aligns with their business model and purchase history. However, they’re focused on margins and their bottom line; they won’t have any emotional attachment to the house that would drive the price up.


Is selling to an investor the right move for you?

With an understanding of who home investors are, as well as the benefits and downsides of working with them, your next thought might be, is this the right move for me? Let’s cover a few questions that can help you decide.


How urgently do you need to sell your house?

Home investors are more willing to work with your timeline than buyers on the open market. If you need to quickly settle an estate, split marital assets in a divorce, or relocate out of state quickly for a new job, you can’t always afford to wait around 45 days to close your transaction.

How much money do you have on hand for preparations and repairs?

You can expect to make money selling your home, but you also have to consider the cost of preparing the house for market, as well as the repairs a potential buyer might ask for after the home inspection process. If your home needs costly repairs you can’t afford, however, then you might have a hard time finding a traditional buyer on the open market.

Keep in mind, too, that as you compare an estimation of what you could fetch on the open market against a cash offer, you should calculate your estimated net proceeds rather than compare offers at face value.

How much time and energy do you have to get the house ready for the market?

Getting your home ready for market can take anywhere from 3 weeks to 2 months, depending on its current condition, and the amount of time you can commit to the process daily.

When getting your home ready for a traditional sale, you’ll need to:

  • Pack up and purge items from all rooms in the house

  • Landscape

  • Patch, paint, and reverse small dings and damage

  • Deep clean your entire home

  • Store items you’re keeping, and donate or store everything else

If convenience is your top priority in selling your home, then you might choose to forgo the above projects and sell to an investor.

Summary

Now that you understand the differences between selling to a home investor and selling on the traditional market, it’s time to consider your priorities in a home sale. For many, it comes down to money versus convenience. Working with an investor means less upfront work in exchange for a below market offer. However, if you’re willing to invest some time and capital, selling your home on the traditional market will likely land you a higher price.



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