Pros and Cons of Selling a House to a Real Estate Investor



Advantages and Disadvantages of Selling Your Home to an Investor

Selling your house could be a time of pressure in your daily life. Usually, selling a home has different factors that add to the nervousness, for instance; divorce, inheritance, work transfer, dispossession, and so forth.

One choice that you might want to consider when selling your home quickly is to sell it to a real estate investor. But what are the pros and cons of selling your house to a real estate investor? The first thing you need to know is that real estate investors come in all shapes and sizes.

You may have heard of some of the national franchises such as “We Buy Houses” or “We Buy Ugly Houses.” These are large well know real estate investment companies. The “We Buy Ugly Houses” is actually a trademark name for HomeVestors of America.

There are, of course, smaller local investors that are always on the lookout for the perfect home to fix and flip.

Flipping homes have become a big-time business. You have probably heard some of the late night infomercials trying to sell you a winning program on house flipping. I would also be willing to bet a few bucks that you’ve also seen some of the flyers hanging on telephone poles around your city or town – you know the ones where someone proclaims they will purchase your home.

If you’re like many other folks, you’ve probably wondered what the deal is with these companies. Selling a house to a real estate investor is something that should be given a lot of thought. While there are some significant benefits, there are also some huge drawbacks.

Let’s take a look and review each.

Pros of Selling a Home to a Real Estate Investor

Your Facing Tough Financial Times

Inability to keep up with mortgage payments for your house and experiencing dispossession can adversely affect your credit score substantially. Normally, by selling your home to an investor can help you to avoid continued financial troubles and maintain your credit rating.

You can essentially get out from under the financial burden that your home is bringing you daily.

Quick Cash in Your Pocket

If by chance you have inherited a house, selling it to an investor can be a decent decision. There might be strong memories attached to the property that you really don’t want to deal with. Maybe the property is in really tough shape, and you’re not interested in investing any time or money into it.

These are two legitimate examples of why someone might be comfortable reaching out to a real estate investor.

It will enable you to receive cash very quickly, and you don’t have the burden of having a second house. An investor will take the property off your hands almost always as quickly as you’re ready.

You Need a Fast Deal

There are numerous reasons as to why you need a quick deal on your house. Perhaps you need the cash quick? Or on the other hand, your job could be relocating you to another area of the country. No matter the reason, selling the house to an investor is the fastest way to get rid of it.

Helps You Save on Commissions

A key benefit of selling your house to a real estate investor is that you save on commission. You don’t need to involve yourself with a real estate agent.  While commissions that real estate agents charge is negotiable, most areas of the county a 5% to 6% commission to complete the transaction in your house is typical.

Just don’t assume that selling for sale by owner is saving you money. You’ll see below when we discuss the drawbacks of selling to a real estate investor that you are going to be low balled on the actual market value.

It is always advisable to receive a valuation from a real estate agent. This aids in knowing exactly how much under market value the investor is offering.

Selling to an Investor is Convenient

Additionally, you don’t need to be stressed over the state of your house before you sell it to an investor. An investor will be purchasing your home as is. They will be buying it with all the worts. Selling as is can potentially save you quite a bit of money if repairs are vital to selling the home.

Think about the time and cash you can save if you don’t repaint the walls of the house, install new carpets, and repair doors and windows! It is up to the investor to set a financial plan for the fix, so you don’t need to.

You Get Immediate Payments

Another crucial reason for selling your property to an investor is that you get cash right away. From the minute you make the first contact with your real investor to receive the money, you can save months of mortgage payments.

Cons of Selling a Home to a Real Estate Investor

Owners Are Likely to Sell Far Below Market Value

When an investor is going to purchase your home, they will not be paying anywhere close to the market value. Believe it or not, they could be discounting the value anywhere from 20-40 percent of what it is worth. That is obviously a ton of money you would be leaving on the table. It is this reason why most people don’t sell their homes to real estate investors. It just doesn’t make any fiscal sense.

Investors have their costs, which are reflected in the value they offer. They know the “quality” of a deal and the way that they “take your home how it is,” without verification.

Keep in mind an investors goal is to buy on the cheap, so they can fix up the property to turn around and sell it. This is why many real estate investors call themselves flippers.

You Will End Up Making Less Money in The Sale

All the benefit of selling to an investor come with costs. You’ve seen the advantages of selling to an investor above. So while you might be achieving some goals, you are losing out of on others. What’s more important to you – a relatively quick and stress-free sale or getting more money?

There are a Lot of Real Estate Investor Scams

An unfortunate part of the world of real estate investing is scam artists. House flipping is littered with them. A few investors will be working from one company and others as individuals.

One approach to prevent fraud is to do due diligence. Do your research online to find a reasonable investor. Use Google as a tool to make sure your home is being purchased by a legitimate investor.

Nobody wants to be in a situation where they need to sell their house quickly. In any case, there are a lot of reasons why a seller can turn to an investor to purchase their home. In today’s economy, job losses, and other monetary troubles are putting tremendous pressure on property owners to sell their house quickly.

If you are in this situation, searching for an investor to buy your house can get you out of your troubles quicker.

Final Thoughts

With regards to selling your house, there are a variety of choices accessible. When you call a real estate investor, you can make a speedy deal without making costly improvements to your home. You’ll be giving up some money in your pocket, but you’ll move on with your life quicker.

Does selling your home to a real estate investor make sense? Only you can decide!

Bill Gassett About Bill Gassett

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys writing helpful articles for buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and here at Realty Biz News. He was the #1 RE/MAX agent in Massachusetts for 2018.