Should You Sell Your House to An Investor?

No doubt, selling your home can be a lengthy and stressful process. There’s the prepping, cleaning and staging, making necessary repairs, and once you list your home, you need to keep it ready to show at a moment’s notice when a potential buyer wants to take a look. And when you want to sell your home fast, the longer it takes the more stress you feel. That’s why it’s no surprise that so many homeowners wonder if they should sell to an investor. After all, selling to an investor as an all-cash deal can speed up the home sale process, and convenience is a bonus. When asking yourself if you should sell to an investor, you need to know how much they are willing to pay and why. You should also consider what it means to sell to an investor? Who are they? What are the pros and cons? Is this the best way to sell my home fast? What do they do with the house or existing tenants?

Exploring these questions will help you decide whether or not you, as a home seller, want to consider investors as potential buyers.

What Is a Real Estate Investor?

A real estate investor invests capital in properties. They make at least some of their income by buying, rehabbing, managing, renting out, and/or reselling real estate. Some people work as an individual investor, with a partner, or as part of a network of investors managing, renting out, and/or reselling real estate. Some individuals work a regular job and then maybe buy one house a year on the side as an investment. While others make a living as an investor and may purchase many homes a year. Often, they look for properties they can turn into rentals. Some investors buy properties to renovate, then sell or flip for a profit. While others buy to grow equity and hold on to properties until they can cash in on the appreciation.

What Are The Pros of Selling Your Home to an Investor?

• Selling “As Is” - You can sell your home as-is without having to do any repairs or upgrades. Since the investor isn’t planning on living in the home, he/she (or the company), doesn’t care whether your kitchen has been updated in the last 10 years or if your toilets are the original ones that came with the house when you purchased it 20 years ago. Many investors look for homes that are old or outdated so they can fix them up themselves to flip and make a profit. As the seller, you save money by not making repairs or upgrades. You also save time and have the convenience of not having to make repairs or upgrades yourself.   
• Cash Offers - Most investors pay for homes in cash so there is a very little risk that you won’t close for lack of funds. Even when a buyer has been preapproved for a loan, the lender can decide the buyer’s creditworthiness has changed and refuse to issue the funds needed to buy your home. However, before you sign a purchase agreement you should ask the investor for proof of funds. This can come in the form of bank or money market account statements that show cash or liquid assets that exceed the purchase price of your home.
• Fast Closings – Because the sale of the property is not reliant on approved financing, appraised values, home inspections, etc., bypassing all of these steps expedites the process considerably. Since most investors purchase with all cash, you can sell your property as soon as both parties agree on the conditions of sale. The average time it takes sellers to close with an all-cash investor is about two weeks, sometimes sooner.  If you’re selling to a buyer who needs a mortgage, it will take a minimum of 60 days.

What Are The Cons of Selling Your Home to an Investor

• Investors don’t need a license to buy - As the home seller, you know nothing about the individual or entity offering to buy your home. Some investors are corporations, while others are individuals who just happen to also be real estate agents. This is cause for concern for many home sellers because they question the motive behind the purchase. Do they want to buy my home to resell it for more? Probably.
• Scam artists can pose as Investors – There’s a risk of fraud in any financial transaction, but it’s especially critical to avoid scams when dealing with the largest asset such as your home. To avoid any issues, get the name of the investor and do research online to see who they are, ask for references, look them up with the BBB, and ask your East Valley REALTOR® to do some sleuthing on your behalf. 
• Cash-buyer is a foreign investor -  If the cash buyer is a legitimate foreign investor, it could take much longer to close than with a domestic buyer who needs a mortgage. Investors who aren’t U.S. citizens could suffer negative tax consequences in their home countries by purchasing your home. So the sale could be delayed for months while the investor works out the logistics of closing.
• Your home will likely sell below market value - Investors have their own costs to contend with and those costs will be factored into their offer price. Investors are also aware of the appeal and power of a cash offer and the fact that they are taking a risk by purchasing “as-is.” They may be relying on your motivation to get out quickly. Whatever the reason, it’s unlikely that an investor will pay market value for a home in its peak condition.

How Much Will an Investor Pay for My House?

Keep in mind that investors tend to recognize when a property offers a good value to them or not. Investors buy a property because they believe they can make more when they sell it than they paid for it. Predatory investors may try and low-ball home sellers who don’t know what their home is really worth. For the most part, investors buy homes as-is, not market-ready homes.  

Fair market value is what someone is willing to pay on the open market, and your home’s condition is a major factor in fair market value. A  home that is being sold as-is won’t have the same price point as a home that’s been renovated, even if the homes are very similar in style, age, size, location, etc. If you see homes in your neighborhood selling for $500,000 for example, that doesn’t mean your home’s fair market value is comparable. Fair market value is based on your home’s current as-is condition. That means the purchase price may be lower than you’d expect on the market.  

Can I Refuse to Sell My House to An Investor?

Rejecting an offer is entirely legal as long as you do it for the right reasons. There are many reasons that are legally acceptable, including a low offer and concerns about inadequate income to afford the home or bad credit (unless the buyer pays all cash, of course). That being said, sellers cannot discriminate against individuals protected under state and federal law.  

• A low ball offer - You certainly don't want to take a loss on your property if you can avoid it. A home seller can always reject an offer that they don't think reflects the value of their house.
• Not sure the buyer can qualify for a loan - If the economic position of a potential buyer is questionable, the buyer may not be able to get a mortgage. Accepting an offer only to have the sale fall through before closing wastes valuable time and might prevent property owners from accepting a better offer.
• Changed your mind about selling your home - Just because you put your house on the market doesn't mean you are obligated to sell or can’t change your mind about selling. It's your house and you can stay in it for as long as you like.

Even though homeowners may reject an offer if they choose to, doing so for the wrong reasons could lead to legal action. The Federal Fair Housing Act prohibits discrimination in the sale or rental of housing, including against individuals seeking a mortgage or housing assistance, or in other housing-related activities. What that means is that a seller can not consider a buyer’s race, color, national origin, religion, sex, familial status, and/or disability when deciding whether to accept or refuse an offer. 

When selling your East Valley home, you will likely have many questions and concerns. And obviously, you want to do everything by the book. It’s always best to seek professional advice from an experienced East Valley REALTOR® if you have questions about rejecting an offer made by a home buyer or investor.  

How Do I Sell My a Home ASAP?

The National Association of Realtors (NAR) says that on average it takes just under a month to get a home under contract once you list it. According to mortgage data firm Ellie Mae, it takes around 46 days to close a home purchase mortgage once the seller accepts an offer. So, if you’re the average seller, you will probably have your money in eight to ten weeks if everything goes according to plan. But what if that’s not fast enough? There are several reasons that a traditional home sale and typical timeline won’t work for every seller such as:

• A divorce  might require you to sell your home fast
• You might need cash NOW
• You could be trying to time a tax break 
• You value your privacy and don’t want people to know you’re selling

Fortunately, there are traditional and non-traditional ways to speed up the home-selling process and get your money faster: 

Work with a Cash buyer/investor 

You can close an all-cash deal with no mortgage in less than two weeks. However, speed comes at a premium as most cash buyers are investors looking to resell the property and need a substantial discount from the fair market value (30% to 50%) in order for the deal to make sense. The buyer usually waives the right to contingencies, inspections, walk-throughs, appraisals, repairs, and title insurance. 

Real Estate Auction

Another way to sell your house fast is with an auction house. According to  NAR, selling a home at auction has a few benefits such as: 

• Buyers are preapproved and ready to buy 
• Auctions operate very quickly 
• You can protect your privacy as your home doesn’t have to be listed publicly 
• Competition from motivated buyers can get you full market value 

There are also disadvantages to selling a home at auction to consider:

• Many prospective buyers believe (incorrectly) that auction properties are distress sales and expect to pay less than the market price 
• Auction costs are higher (often, much higher) than real estate commissions 
• If the property doesn’t sell, you still owe substantial fees to the auction house 
• In an auction without a reserve price, you may get less than you wanted or expected, but you have to take it  

Working with an iBuyer  

The term iBuyer means “instant” buyer. An iBuyer is a specific type of cash buyer - an organization that uses an automated valuation model (AVM) to analyze your property and set the price it is willing to pay. There are no real estate agent commissions, and you can avoid the hassle of listing your home and the uncertainty of when the sale will close. In general, iBuyers offer a higher percentage of fair market value than investors/home flippers. But, according to a MarketWatch study, you will end up with about 11% less by selling to an iBuyer than by selling on the open market with the help of a real estate agent.

Working with a Top-Rated Real Estate Agent

Selling with a top East Valley REALTOR® can get you a fair market price or better. An experienced agent will understand the market, know how to prepare your home for sale, and can help streamline the process. Your agent can help with items like inspection, repairs, negotiating, price setting, and more. You’ll want an experienced agent with a track record of sales that proves they know how to sell your house fast; an agent with many contacts among agents and potential buyers; and an agent with a strong work ethic and stellar reputation. 

Selling a home under the gun ups the pressure significantly, but putting your home sale in the hands of a skilled real estate professional can get you the speedy transaction you need at a price you can accept. Get your home sold fast at the highest market price by enlisting the services of East Valley REALTOR® - Cathy Carter.

Partner with Top-rated East Valley REALTOR® - Cathy Carter 

Cathy has been serving East Valley home buyers and sellers for over two decades with a commitment to her clients and a passion for real estate. Known for her warm and friendly demeanor, Cathy’s personal approach to the real estate process allows her to connect with her clients and uncover the right homes for them. Cathy is a very good listener and will be able to quickly ascertain your needs and wants and have a plan of approach that's based on your specific criteria. 

Cathy is very down-to-earth, and someone you can trust and feel good about working with. Her clients appreciate her honesty and transparency and feel it helps them as they make important real estate decisions. An excellent communicator, Cathy makes herself available to her clients whenever they have questions or concerns and promptly returns any texts, calls, or emails. Her client testimonials speak volumes about her professionalism and care for every detail.  

Having a trusted professional like Cathy by your side means there is one less thing to worry about. As your agent, she will protect your interests, advocate for you, negotiate on your behalf and do whatever is necessary to ensure the best results possible. To find out more about buying or selling East Valley real estate, please give Cathy Carter a call today at (480) 459-8488 or get in touch by email. 

RE/MAX Cathy Carter Real Estate & Luxury Homes
Professional REALTOR®
ABR, CRS, CDPE
RE/MAX Alliance Group
725 W. Elliot Rd., Suite 111
Gilbert, AZ. 85233
Email or Call: 480‑459‑8488
Toll-Free: 800-519-5578

CATHY CARTER

WWW.REALESTATECHANDLER.COM

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