Selling your home quickly can save you months of anguish and surprise expenses. The key is finding the right buyer who can close on your home with the least amount of setbacks.
There’s no perfect closing process, but a credible house buying company has tools in place to keep the transaction running smoothly from start to finish. Here are a few important things you need to look for when choosing a house buying company.
Types of House Buying Companies
Not all house buying companies are created equal. There is a range of companies to choose from that want great deals on distressed properties.
Your home is considered distressed if you have an urgent reason to sell. Simply being overwhelmed with stress is enough of a reason to seek out a quick sale.
House buying companies want distressed properties because sellers are motivated to offer discounts. These buyers earn money based on the discount you can offer on your home.
Here are some of the ways house buying companies earn money from distressed properties.
1. House Flipping
One of the most common ways a house buying company earns money on a property is by flipping it for a property. You’ll notice many billboards and street signs that promise to buy homes in any condition.
These companies don’t care what condition your home is in or how ‘ugly’ it is because they intend to renovate it and resell it at a profit. The amount an investor offers on your home depends on how much renovation your property needs.
Don’t expect to be anywhere near market value if you need major repairs like a new roof or if there are foundation issues. House flippers need to have enough of a discount on the sales price to cover the cost of renovations and still sell the home later for a profit.
2. Rental Properties
Another reason a house buying company might make an offer on your home is to use it as a rental property. This real estate investing strategy is called a ‘buy and hold.’
Investors buy the property and hold onto with over a long period of time. During the holding period, the home appreciates in value and the mortgage balance gets paid down by tenants living in the property.
This long term investment strategy helps owners build equity and increase their net worth.
An online house buying company is often an iBuyer. These companies present you with an instant offer on your home.
This is beneficial when you want a quick sale without haggling. The price is based on the condition of your home so if you misrepresent information on the property, the iBuyer might not move forward with the sale.
You’ll either need to offer additional credits towards the repairs at closing or lower your requested sales price.
What to Look for in a House Buying Company
A house buying company can help save the day when you’re looking to quickly sell your home. Depending on the sales price, an investor might buy your home cash.
What you look for in a house buying company should reflect your expected sales price and how quickly you want to close. Take a look at these factors when deciding on a house buying company.
Cash vs. Financing
One of the most important factors when choosing a house buying company is how the buyer intends to pay for the home. Smaller investment firms might not always have cash on hand to buy a property without financing.
Ask your investor whether or not your home can be purchased in cash. A cash sale is usually any home being sold for less than $50,000, but there are exceptions.
Many investors pay cash for homes well above $50,000 to speed up the sale. In neighborhoods that are in high demand, cash offers are more attractive than financed deals.
A house buying company might offer you a cash deal to entice you into accepting their offer over a buyer that will need months to close on the sale. You’ll get the most money when selling to a non-investor, but no guarantee that the deal will ever go through.
When you need to sell quickly, opt for an investor like URB Inc. instead of selling to a traditional buyer. You might spend months going through inspections, negotiations, and repairs only to have the bank deny the buyer’s loan application.
Another thing to look for in a house buying company is credibility. Look for past testimonials to learn how the investor handles transactions.
Were previous homeowners happy with the speed of the transaction? Did the house buying company stick to the promises they made in the contract?
Integrity is everything when dealing with investors. They’re savvier than you are in buying and selling homes.
You don’t want to be taken advantage of with last-minute bait and switch offers that leave you without a profit on the deal.
The next thing to note is whether the house buying company buys homes As-Is or if repairs are needed. Most often, investors won’t bother slowing down a transaction to ask for repairs on your property.
But it is possible that they’ll ask for credits towards the cost of repairs. House flippers might simply ask for a lower sales price to offset out of pocket costs.
The decision depends on the extent of the repairs needed.
How to Sell Your Home to a Company
A house buying company needs assurance that you can sell your home at a discount before they can move forward with the transaction. Depending on the condition of your home, this discount might be huge or minuscule.
Don’t be afraid to negotiate if your home is in good condition if you need to walk away from the deal with a certain amount of profit. For more information and tips, visit our blog for updates.