If you’re planning on selling your home, there are a myriad of options at your disposal. Of course, you can go the traditional route and list your home on the market.
However, going this route means hiring a real estate agent, making repairs and renovations, and waiting for an interested buyer to make an appealing offer. In short, selling your house traditionally can take several months, and there is no guaranteed outcome.
Conversely, think about selling your house to investors. Most investors will buy a home in any condition and have guaranteed financial backing. This makes the process much easier.
But is selling your house to an investor a good idea? We want to provide a little insight. Keep reading for everything you need to know about the pros and cons of selling your house to an investor.
The Financial Pros and Cons
First, let’s take a look at your home selling costs and potential earnings. There is a major difference here when selling your house traditionally and selling your house to investors. We’ll break it down by the numbers.
Most home sellers who list their homes on the market hire a real estate agent. Real estate agents usually charge a 3% commission fee and it’s not unusual for sellers to pay for their realtor and the buyer’s realtor. Therefore, if your home sells for $310,000, you could very well be paying $9,300 to $18,6000 in realtor fees.
When selling your house to an investor, you don’t need a real estate agent. This can automatically save you tens of thousands of dollars.
In the traditional home selling process, once you and the buyer agree to terms, you enter into the closing process. Most banks and mortgage providers also charge a 3% fee for their services.
Using the same example from above, this means paying an additional $9,300 to have the lender process the sale of your home. When selling your house to a real estate investor, the investor typically covers all the closing costs.
Repairs and Renovations Vs Selling Your House As-Is
Many homeowners who consider working with real estate investors do so because they don’t have the time or money to invest in extensive repairs and updates. These are often necessary for attracting buyers in the traditional home selling process. For this reason, most homeowners spend more than $21K making their homes ready for the market.
While these updates can increase property value, they’re not guaranteed to do so. Some homeowners end up spending tens of thousands of dollars on renovations only to see a fraction of that money returned.
As noted in the introduction of this article, most real estate investors will buy properties in any condition. They will then invest in their own repairs and renovations to flip the property at a later date. For you, it means you don’t have to spend any of your own money on repairs or updates before you sell your house.
The Value of Saving Time
One of the best things about selling your home to investors is that it exponentially reduces the amount of time it takes to complete the sale. Many homeowners who look to real estate investors are facing some kind of problem in their life.
For example, you might be considering selling your house to an investor because you can’t keep up with your mortgage payments. In this case, it’s only a matter of time before the bank threatens to foreclose on your house (if they haven’t already).
You might also be separating from your spouse, being relocated for work, trying to sell an inherited property you can’t afford, etc. All of these issues are time-sensitive and call for immediate action.
But how does selling your house to a real estate investor help you save time?
First, the traditional home selling process generally calls for a home inspection and a home appraisal. Both of these services can take several weeks to schedule an appointment.
Furthermore, if the inspection comes back with a lot of issues you want to fix, it means dedicating several more weeks to repairs and renovations before you have your home appraised.
When selling your house to investors, they have in-house experts who can usually come by within a few days to inspect your home and provide you with a fair cash offer.
Expedited, Guaranteed Closing
Next, let’s take a deeper look into the traditional closing process. As we talked about earlier, this process can be quite expensive. It also takes an average of 30-45 days to complete.
If you’re trying to avoid foreclosure, you probably don’t have that kind of time. Furthermore, the closing process can be delayed or completely interrupted for any number of reasons outside of your control. The buyer could disqualify themselves for something as simple as taking out a small loan to furnish the house.
On the flip side, selling your house to investors gives you access to a quick and guaranteed closing process. In many cases, once you agree to a cash offer, you can close on your house in as little as seven days.
If you’re on a tight schedule, check out how fast you can sell your house here.
No Tours, Offers, and Negotiations
Sometimes, one of the most tedious aspects of the traditional home selling process is dealing with prospective buyers. Once an offer lands on the table, the buyer will have an inspection done on your home (if you haven’t already). Most often, this results in the buyer making demands on what they want to be fixed or updated.
If you comply, it means spending several days or weeks scheduling and completing repairs. If you refuse to meet their demands, they will either ask for a lower price or walk away. If they walk away, you’re back to the drawing board.
Is Selling Your House to Investors the Right Move for You?
Should you sell your house to an investor? As you can see, there are plenty of pros and cons to selling your house to investors. However, if you want to sell your house as fast as possible and/or you don’t have the means or the desire to make renovations, it might be your best option.
For more real estate tips and financial insight, stick around. Look through some of the other articles on our blog to find more valuable advice and information. Our website was created to help our readers make good decisions.