So you’ve decided to sell your home. Whatever your reason for moving, there are undoubtedly many ways to unload one of the most expensive purchases you’ve made in your lifetime.
Let’s start with what not to do. For example, just because you have a friend in the real estate business, it doesn’t mean they’re the best choice to help you sell your home. Tap or click here for helpful home selling tips.
TV shows have made house flipping a form of entertainment. The reality is that home investors are stepping up their game and buying more properties. They may make enticing offers, but should you do business with them or a more traditional homebuyer?
The numbers are up
According to Redfin, real estate investors are buying a record number of homes in the U.S. An incredible 18.4% of the homes purchased in the fourth quarter of 2021 went to investors.
Redfin’s research shows that home prices rose 15% year over year in December 2021. The shortage of available properties for sale created a high demand, which investors are taking advantage of.
Home investors entice potential customers with cash offers, which Redfin says accounted for more than 75% of investor home purchases in the fourth quarter of last year.
Cash may be king, but it’s not always the best option. The Better Business Bureau warns about the risks of all-cash offers, which usually come at a cost.
A traditional home buyer will want time for appraisals, inspections, walk-throughs, bank approval to secure financing and more. That means a closing can take several weeks.
An investor can put a no-obligation cash offer on the table and close in a week. This can be helpful if you’re in a rush, but you might take a hit on the price.
The BBB suggests considering these factors before selling your home:
- Think about time constraints. With traditional home sales, buyers can require a 45-day escrow period to allow time for appraisals, mortgage approval contingencies and inspections. This means completing a deal could take several weeks. On the other hand, home investors can usually close in a month or less, and iBuyers can give you a tentative offer within 24 to 48 hours and close in as little as a week. If time is of the essence, it may be worthwhile to consider one of the faster options, although you’ll likely sacrifice profit for speed.
- Determine how much profit you need. The biggest con of working with a home investor or iBuyer is that you will almost always get a lower offer than you would from a traditional buyer. Traditional buyers may be willing to pay more than market value for a home they’ve fallen in love with. In contrast, investors are buying your home solely as an asset. Determining how much profit you need to make on the sale of your home ahead of time can help you make a sound decision.
- Factor in prep work. When marketing your home to traditional buyers, you’ll need to do prep work. Cleaning, decluttering, painting, staging, landscaping, photographing and listing your home are essential tasks when getting your home ready to sell. You won’t need to invest time and money in this prep work when you sell to an investor.
- Research investment companies before doing business with them. Always look up companies on BBB.org before sharing personal information or agreeing to services with them. Ensure the company has an official name, phone number, and physical address. Read customer reviews, keeping a close eye on any complaints or reports of dishonest dealings.
- Don’t fall victim to a home investor scam. Scammers prey on your desire to make a quick sale by offering deals that seem too good to be true. They also take advantage of the fact that home investors don’t need any credentials to buy property. When considering an offer, ask plenty of questions and don’t settle for vague answers. Never give money to an investor before the closing date. Complete all transactions through a closing or escrow agent, and don’t let anyone pressure you into making payments off the books.
- Consider alternatives. If you aren’t pressed for time, consider working with a full-service brokerage. You’ll need to do prep work and it might take more time, but you’ll make a larger profit on the sale of your home. You can also think about renting your home for an amount that covers your mortgage payments or setting up a lease-to-own agreement.