What To Know Before Selling Your Home To An Investor
Selling a home is a major decision and all homeowners need to consider their options before deciding how to sell their property. When your property is in great condition and you don’t have a time constraint on selling then listing your home with a traditional brokerage will likely give you the best result.  If your home is in less than perfect condition or you have a short timeline to sell the property then a real estate investor may be a better option than listing the home. Real estate investors are not buying the home to live in and are happy to purchase properties as-is, with cash, and close within a few weeks. Here are a few items to think about when considering selling your home to a local real estate investor.
1. What are the common reasons to sell to an investor?
Inheritance
The previous owner of the home is deceased. You were left with the home through probate, trust, or a will. You may have no interest in maintaining the home or moving into it. It’s common practice for beneficiaries to sell inherited properties. The condition of the home and the interest of all parties involved will ensure a quick, smooth cash transaction. The executor of the deceased’s estate will also be happy knowing they have one less thing to deal with after going into escrow with an experienced investor.
Foreclosure
If you are at any point of the foreclosure process, you may want to sell your home to an investor as soon as possible. You may have failed to make a few mortgage payments or even received an active notice of default from your lender. Fortunately, this is a situation when a cash investor can be a fantastic resource. As long as there is enough equity in the property a quick closing can be completed and the foreclosure process can be avoided. Selling to an investor can prevent a foreclosure on your record and often you can capture some of the remaining equity in the process. If you are facing foreclosure and can’t make mortgage payments any further, selling it to an investor (even in as is condition) may be the best option.
Financial Hardship
You may be facing a decision where you may have no choice but to sell the house. A cash investor will have the experience and the resources to purchase your property. You’ll have fast and easy access to the cash you need. Financial hardships affect not just the individual, but also their family. The hardships may come from a variety of circumstances that require you to pull your home’s equity. Often timing is important when selling due to financial hardship and closing the sale quickly will give you a cash runway to address the hardship you or your family member is facing.
2. How do I know if an investor is credible?
Anytime you are working with someone on a major transaction, like selling a property, it’s important to do your due diligence on the company. A past track record of performance is the best way to test credibility of any investor. It’s important to look for the 3 L’s in an investor. This includes the following:
- Licensed: They are agents who are regulated by a third party agency.
- Liquid: This means they have (and can show you) the cash to purchase the home.
- Local: They reside and work in the local market where your property is located.
It’s also helpful to check public review websites like google to see how other consumers rate the company.
3. How much will an investor pay for my house?
An investor is buying the property with the intent to make a profit. They don’t pay retail prices for any homes they acquire. Typically, an investor will pay between 50 to 80 percent of the retail value. The retail value is what the property will sell for to an owner occupant user if it was fully updated. Remember, there are still some costs that are involved with the selling process. This includes but are not limited to the following:
- Real estate agent commissions
- Closing costs
- Buyer credits
- Expenses for repairs
An investor will have the speed, convenience, and experience to take on the risk of purchasing your property for cash.
4. What are the pros and cons of selling your home to an investor?
Pros
- Convenience: Cash offers with quick closing
- Expertise: Agents who are able to navigate distressed properties and situations.
- Time: Quick closing so you can move on with your life.
Cons
- You will not be selling for full retail value
- You miss on the upside if you were to do a complete renovation and list with a traditional real estate broker.
How we (FTRE) can help?
At FTRE, we can make the selling process a breeze. We are local, licensed, and invest in Southern California exclusively. If you are interested in selling your home to an investor, call Fair Trade Real Estate @ (949) 317 – 2320 and find out how to sell your home quickly and easily!