We Buy Houses For Cash: Is This Legit?

By
Real Estate Agent with RE/MAX Executive Realty 91362

Selling a Home to a Real Estate Investor

If you need to sell your home in a hurry, the We Buy Houses for Cash businesses can seem a good idea. You don't have to worry about repairing or decorating your house to attract a buyer, instead, you get a cash offer, and the deal is done fast.

These businesses are often known as "opportunity investors" and are looking to make offers on properties where the seller is in an awkward financial position. They act in an opportunistic way to grab themselves a bargain property, which they can quickly sell for a profit.

For this reason, selling your house to a real estate investor should be a quick transaction, closing in 30 days or less. These are almost always cash transactions.

If you find yourself in a desperate situation and need to sell quickly, they can seem like a great solution. There are, however, numerous pros and cons for selling a home to a real estate investor. Knowing the upsides and downsides is vital.

Understanding how we buy houses for cash companies' work is essential. Never go in blind, not knowing who you are dealing with.

Before you collect a home deposit, the company you are contemplating entering into a business relationship with should be vetted. It would be advisable to have a local real estate attorney involved. Signing any kind of contract with a real estate investor before someone looks it over on your behalf would be a huge mistake.

Targeting Sellers

Companies like We Buy Ugly Houses are upfront about the sellers they target. They set out to attract homeowners who are going through severe life changes like:

  • Divorce
  • Bankruptcy
  • Bereavement
  • Job transfer

They also look to people with homes which aren't in ideal circumstances, including:

  • Being in a poor state of repair
  • Having structural problems
  • Located in a less than desirable neighborhood
  • In need of decoration

In other words, the ideal property is a fixer-upper. Targeting sellers who are dealing with these sorts of issues gives the opportunity investors the best chance of making a significant profit.

Reduced Costs

When selling to an investor, they will emphasize that you won't need to pay commissions to real estate agents. They may even pay some of the closing costs as well to sweeten the deal. But despite this, it is more likely that a seller will see more money for their house when using an agent.

A real estate agent can often get a price that is at or above the fair market value, something which is never going to be offered by a "We Buy Houses" investor.

How Much Will We Buy Houses Investors Offer?

Naturally, they want to offer the lowest amount they think you will accept. This will often be somewhere between 60 and 70 percent of the fair market value. When you close, expect to see the house back on the market for much more than you were paid.

When you make contact with a "cash for homes" business, they will arrange to visit your property. This will be used for them to not only view your property but also learn as much as they can about your situation.

They will want to find out how much you owe on your mortgage. This information will give them an idea of what the minimum amount you will accept is, and that is what they will offer. This figure may only be a little more than the balance of the loan and could put you in a difficult position.

The Positive Things About Selling to an Investor

You will get a quick cash offer from an investor, but the downsides of the deal could cause more problems in the long run. It won't be the best sale price you could have received for your home, though you won't have to worry about buyers getting financing or problems arising from home inspections.

Typically, the investor will not require some of the contingencies and inspections a conventional buyer will need. This will help in the speed and ease of the sale, streamlining the process.

Checking the We Buy Houses Investor

If you aren't using a well-known company like We Buy Ugly Houses, it is advisable to do some checking to make sure you are entering into a contract with a reputable business.

Do they have a professional website? Are they using a direct phone number or does it divert to an untraceable number? Does their company sign have a professional-looking logo? Check for customer feedback and look at their Better Business Bureau profile.

If you do a little research, you may discover that you are actually dealing with a real estate agency that is acting as opportunity investors. There are many shady real estate investors out there. It is critical that you do your homework. If you do an online search, you're bound to come across numerous horror stories of homeowners being duped by unscrupulous investors.

Better Alternatives

If you are able to wait a bit longer to close a sale, taking a more traditional approach should leave you with more money. Taking the time to find a real estate agent that is right for your situation, and dealing with the repairs your home needs, will offer a better result. Even selling for sale by owner could be a better option if you can afford to get your money a little further down the road.

If you have real problems selling, there are other possibilities. Renting out your home could be a short-term fix, or selling through a rent to own agreement may provide a better long-term solution, ahead of selling to an opportunistic investor.

Final Thoughts On Selling to An Investor

Selling your home to a real estate investor should only be done if you are REALLY desperate for cash and are going to see your home go into foreclosure in a short amount of time. Researching who you are selling to will be vital to your success. Look for a reputable, well-known company, not a fly by nighter who would just assume steal from you.

Other Active Rain Real Estate Resources Worth Reading

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Enjoy these additional real estate articles to get solid advice when buying or selling your next home.

 

Posted by

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to 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 others.

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Rainmaker
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Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Bill Gassett -  in general I have found the ones around here looking for distressed properties who need quick sales.

Jan 13, 2020 02:26 PM #1
Rainmaker
3,102,086
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

We are bomboarded with those offers here in NH. I have saved a couple of sellers recently who were offered half price by these buyers . Lucky for them they didnt sell but listed with me, still got them cash offers and quick closes but at a much higher price. 

Feb 11, 2020 05:23 AM #2
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Rainmaker
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Bill Gassett

Metrowest Massachusetts Real Estate
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