Whats the deal with these “We Buy Houses” companies?
If you have been out and about there is a good chance you have seen signs or billboards that offer to buy your house. Most of them simply state things like ‘we buy houses,’ and include a phone number. Some emphasize the fact that they will offer straight cash in exchange for your house.
Although most people should be wary about selling to a “We Buy Houses” company, to a distressed home seller, these companies can solve a very real problem. Taking a deeper look into how a “We Buy Houses” company works can help you get more comfortable with the idea, and at the very least help you consider them as a backup option should you ever decide to sell.
What’s the Deal?
Most “We Buy Houses” companies are run by real estate investors that specialize in buying homes at a discount so they can turn around and use as rentals or renovate and resale to make a profit off of. Thus, their offer of cash is not entirely altruistic, but no one purchasing your home is buying it for your benefit. These investors have their eyes on properties that need some work that sellers may not want to mess with.
They also offer a solution to people who need to sell their home quickly, because selling a home traditionally can take months or even a year depending on the market you live in. “We Buy Houses” companies can offer you cash on almost the same day, so even if the amount is less, it can save you months of paying on a second mortgage.
Who Benefits from Selling to a ‘We Buy Houses’ Company?
As outlined, people who need to sell quickly are usually the biggest clients of ‘We Buy Houses’ companies, but they are not the only ones. A wide number of sellers can benefit from selling their home to a company that can offer them cash now versus traditional selling methods. For instance, someone who has to relocate and has secured a second mortgage will want to unload their old house quickly. Selling for 70% of the home’s worth can help them escape paying on a second mortgage for months.
Homes that Need Extensive Repairs
Homes that are considered ‘ugly’ are also easier to sell to a “We Buy Houses” company. Most banks won’t lend money to buyers if homes need extensive repairs. This means that sellers who own ‘ugly’ homes will have a hard time finding a potential buyer for their home. Most potential buyers will stipulate that they want repairs made before they will enter a contract, and if the seller doesn’t have the money to make the repairs they may find themselves stuck. A “We Buy Houses” company buys homes As-Is. Many times, sellers will actually come out ahead, because the cut they take on the home value is still larger than the costs of necessary repairs.
People Who Want a Quick Sale
Not everyone wants to deal with a lengthy sale. Even if you don’t need to sell your home promptly, just signing up with a real estate agent can take days, and then you have to wait months for the buyer. Once you find a buyer you go under contract for the escrow period which can take about 30 days during which the sale often falls through. Waiting for a sale to close can be a very painstaking process, and one you can skip when you use a “We Buy Houses” company. Since most of these companies pay cash, the sale can close in a matter of days.
“We Buy Houses” Includes Every House
Houses deteriorate over time, and if you haven’t had the time or money to repair and maintain your home it may be in rough shape. This happens a lot to people as they age and no longer have the physical ability to look after their homes. This can make a home very unattractive to buyers, and in some cases even compromise its safety and functionality. At this point you may feel like paying just to have someone take it off your hands. The good news is that a “We Buy Houses” company will still offer you money. When they say they buy every house, they mean every house.
Of course, you may get less than you would if the home was in proper condition, but you will still receive some money which is more enticing than taking an entire loss on the property. At the very least you will get paid for the lot the house sits on, and if there is any potential left in the home possibly more. For those with nothing left to lose, selling a home to a “We Buy Houses” company can be a dream solution.
“We Buy Houses” Simplifies Selling Your Home
Some people hate the idea of selling their home because they don’t want to deal with all of the hassle that comes with selling their home. The idea of making a lot of decisions over repairs and selling can be intimidating, but when you work with a house flipping company the only thing you have to decide is whether you want to sell or not. You get one offer and simply have to decide whether to take that offer or not. If you decide to take the offer, then you can unload your home and use the cash as you see fit.
In addition, you don’t need to find a real estate agent to help you sell your home or worry about staging your home and keeping it clean for showings. The “We Buy Houses” company representatives do not care how the inside of your home looks and will not care whether your paint is fresh, the couch is centrally placed, or the clutter is hidden away. For people with kids who need to sell their home, skipping the staging and showing stage is a real benefit.
Of course, an extra perk is you won’t have to pay a real estate agent any commission. Thus, while you may lose a bit on the final sale price, you will make some money back in other ways. Not paying a real estate agent commission for simply listing your home can feel great.
“We Buy Houses” Balances Quick Sales with Savings
Since “We Buy Houses” companies are run by investors, they usually only offer 70% of what a home is worth to the seller. They have to leave room to renovate or rent out the house so that they can still make a profit. Some people consider this is a loss, but when you do the math only getting 70% is actually more appealing than it sounds.
Consider this, when you sell a home you usually have to pay for many repairs and simple updating. Almost every homeowner chooses to update their paint job, refresh their outdoor landscaping, purchase new yard décor items, and pay for storage so that they can empty their home and properly stage it. In addition, they have to buy updated appliances and make standard repairs. Then the buyer will have their inspection, which likely will uncover problems that need repaired and some the bank may demand is repaired before a sale takes place. At this point, the seller will have spent quite a bit on just getting their home ready to sale.
If they get through to the closing process, most buyers will ask the seller to cover closing costs or at least a fair portion of them. This is standard practice, and involves paying more money out of your profits. By the time a seller gets to this point it is likely their spending will cut heavily into the overall profit they make on the sale. Thus, that 70% of home value in cash might not actually be as large as a cut as it sounds. Depending on the amount of repairs a property needs, it may even be almost the same. The main difference is that when you work with a “We Buy Houses” company you end up with the same cash in hand without the hassle, time, or lengthy process.
General Pros and Cons of “We Buy Houses” Companies
- Sell Your Home Quickly
- Sell ‘Ugly’ Homes
- Skip out on Repair Cost
- Buy any Type of House
- Cash Offers on the Spot
- Buy Houses As-Is
- You Don’t Have to Pay a Real Estate Agent Commission
- Will Offer Less than a Home’s True Value
- There are Scam Artists who Masquerade as “We Buy Houses” Companies
- Improving Your Home Won’t Improve Your Offer
Be Aware of House Flipping Scammers
While most “We Buy Houses” companies are legitimate, there are a handful out there that are not. While a house flipping company can simplify your sale, it’s still smart to do some due diligence before you choose to work with a “We Buy Houses” company. If a company asks for any type of payment before they assess your home to purchase this is a red flag that the company is likely attempting to scam out. Checking out reviews online and doing your research is a great way to protect yourself. With the internet you can research the name of the investor or company you are considering and make an educated decision.
Ready to Sell Your Home?
If selling your home today sounds like a great idea, then it is time to contact “We Buy Houses” today to set up a time for an investor to come take a look at your property. By working with a legitimate company, you can sell your home without dealing with any of the hassle, and have a nice cash bonus you can put towards anything you want. Call today to find out how easy it really is to sell your home.