Some understanding on CASH offers for homes:
Investors buying houses for cash, and then selling them for a profit, is no small venture. The National Association of Realtors estimates that since March 2019, about 21% of all residential sales are cash transactions, of which 13% were Investor Buyer transactions.
Selling your house to an Investor for cash is a lot like trading in your car to the dealership. If you’re looking to sell your car, you can certainly do it yourself. Or do some minor repairs and sell by owner, keep in mind you are arranging all the test drives with unknown people. However, it’s easier to just take the car to the same dealership you’re buying your next car from and let them deal with it. So why not let an Investor Buyer purchase your house, with all its problems and lack of updates, and he takes care of it?
Who are these cash buyers, anyway?
As a whole, cash buyers, by definition, are individuals or entities that buy the property you want to sell without lender financing. Simple.
In general, selling your home to a cash Investor Buyer allows you to skip all the home preparations (cleaning, occupancy inspection, lack of updates), staging, showings, and Inspection hassles from a retail buyer. An additional advantage is an Investor Buyer, like me, is more flexible on a closing timeline; Investor Buyers are usually willing to coordinate with you so you can get the purchase of your next residence lined up.
But not all cash buyers have the same conditions and policies and in fact are identified in more detail:
1. Buy-and-Hold Investors
Buy-and-hold investors purchase homes and convert them into rental properties.
Within the buy-and-hold category, you have individual investors who purchase and rent out properties for passive income. On a larger scale, there are institutional investors that purchase at a minimum 10 rental properties per year, the quintessential example being Invitation Homes, a subsidiary of Blackstone that operates in 17 markets across America.
In Q1 2019, 1.9% of single family home and condo sales were sold to institutional investors, according to ATTOM Data Solutions.
As a seller to a buy-and-hold investor, you have a more flexible closing.
2. Cash Investor Buyers
Think Chip and Joanna Gaines, or Flipping Vegas, or your remodeling-enthusiast uncle, — they buy homes, typically in a poor or outdated condition, “as-is”, at a lower cost than a retail buyer because the Investor Buyer is doing all the repairs which takes time and lots of money. Their intention is renovating the property, bringing it up to code, making it turn-key, and often putting in $80,000 to $150,000 worth of repairs.
Cash Investor Buyers in this category will always work with your Closing date – in as little as 10 days (just enough time to get clear title work) or up to six months if needed; and they won’t ask you to do any costly repairs! And, like me, they will buy a house in ANY condition.
This can be a very appealing situation for the Seller needing to sell immediately, or someone who needs the guarantee of a sale in 6-months, or a Seller who cannot possibly take on the needed repairs.
ATTOM Data Solutions reports that there were 207,957 homes done this way in 2018, representing almost 6% of all single-family home and condo sales.
One of the biggest (and newest) players in the sell house for cash world is the tech-savvy and data-driven iBuyer, short for “instant buyer.” iBuyers use automated valuation models (AVMs) to make competitive offers on residential homes that are typically in better condition.
Since iBuyers typically make less profit per flip, their business is more reliant on turning over a high volume of homes using technology to streamline operations.
Need to Sell Your House for Cash?
Find out what a cash Investor Buyer would be willing to pay for your home right now.
Call Terry at TSW Properties: 314-226-2779. Have a conversation about what’s really going on.
Avoiding Contingency Clauses.
Contingencies run rampant in contracts. Contingencies are “back out” clauses that do a lot to protect buyers but are onerous for sellers. The fine print might say something like:
- Offer is only valid if the buyer’s current home sells within three months.
- Offer is only good if the inspection doesn’t turn up a cracked foundation.
- Even if the bank has approved it, the offer is only valid if the mortgage lender comes through.
If you’re selling your home for cash to an Investor Buyer, this may be an extra obstacle you can avoid as most Investor Buyers do their own inspections. Terry almost always does his own inspections. Call Terry at TSW Properties: 314-226-2779 to avoid these contingency clauses.
Financing is pleasantly different with Investor Buyers
The reason home sales take forever is that banks get involved. If you have to borrow money, you’re on the banks timeline, that is the banks underwriters timeline, and they don’t really care about your timeline. Did you know that almost 90% of home sales involve a bank? The banks get bogged down. Additionally FHA and USDA Lenders require a 45 day Close and have very strict guidelines on repairs. Cash purchasers can Close quickly because they don’t have to deal with lenders or banks at all, and repairs don’t matter to them.
Financing is where many home sales tend to fall apart, as many as 8%, so selling your home to someone who is buying for cash means you can skip this hiccup, too.
Selling a house for cash is quicker and less legwork
Because you have someone interested from the beginning, you don’t have to go through all the primping that goes into listing your home for sale. No need to worry about staging or hiring a pro photographer or figuring out your marketing description and options like the other nearly 90% of home sellers in the US. Call Claire at 314-680-1978 and ask her about some of the problems her Sellers have faced and the ones who wished they had gone with an Investor Buyer instead.
Investor Buyers take care of the inspections and repair responsibilities and can completely bypass the lending steps.
Call an Investor Buyer: they ask you some questions and they will most likely make you an offer. You can take it or not; if you take it you can Close in your own timeframe.
This can be an especially attractive option in the event that you have to drop everything and sell the house for a job relocation or other sudden, unexpected, life change, or have inherited a nightmare.
Call Terry at TSW Properties at: 314-226-2779 today.
You could also rent out your house or sell it on the open market with an agent’s assistance.
If you’re weighing the decision of selling your house for cash, consider some of your other options, too.
If your home is in decent shape and you want to rent it out, you’ll need to hire a property management company, or a realtor who will manage it, or be prepared to do maintenance and repairs yourself. Since rental payments tend to exceed mortgage costs in most cases, a tenant can supplement or completely cover your mortgage payment.
You might even try offering a lease-to-own option to tenants. You’ll probably need a well-versed real estate Broker for this option, again, call Claire.
If you must List your property with a local Real Estate Broker, consider Claire Gardner of Keller Williams Realty Chesterfield, who will organize the “test drives” for you. Call her at: 314-680-1978 for a free CMA.
Scams happen in every market
Life events or circumstances such as divorce, foreclosure, bankruptcy or employment transfer all make the option of selling your house to an Investor Buyer for a quick, no-fuss transaction more attractive. But that doesn’t mean you shouldn’t do your homework.
Investors, unlike real estate agents, do not need to be licensed to operate. Though there are many legitimate and legal cash-for-houses companies, it is an industry that has some bad apples.
TSW Properties has worked with many home sellers like you. When we promise to Close, we Close.
What is this business model?
An opportunity to sell your house directly for cash, skip the hassles of staging and showings, and Close in your timeline.
It’s good to have choices!