Selling your home can seem like a tricky, time-consuming process, and you may not even know where to start. Many people immediately choose to sell their home in a traditional way on the local market, though others may opt for the convenience that selling to a real estate investor can bring. Figuring out which route is the best for you to take is important before taking those first steps toward selling your home through either avenue.
When considering the best route to selling your home, there are pros and cons to working with a local real estate agent or selling your property to a home investor. These benefits and drawbacks depend on your specific needs and priorities. What works for one seller might not be in the best interest of the next. In this article, we’ll look at the different kinds of home investors to help you stay informed. We’ll also outline some questions to ask yourself to determine if selling to an investor is the right option for you.
Buyer Intent
One of the main differences between a typical home buyer and an investor is what they intend to do with the house after they purchase it. A homebuyer will usually want to live there and turn it into their primary residence. An investor, on the other hand, looks at your property as a business opportunity, meaning they usually will flip it and sell it for profit or rent it out.
Different Kinds of Home Investors
There are three main kinds of home investors: iBuyers, buy and hold investors and home flippers. These investors all have different goals when they make an offer on a home, and that can impact whether they will be interested in your specific home or not. It may also dictate how much they want to pay and the experience that they can give the seller.
Buy and Hold Investors
This type of investor wants to buy a home for a long period of time without living there. They will use the house to get rental income and profit both from that and from property appreciation in order to make money in the long term. This type of investor usually targets a single family home or a condo in an up-and-coming neighborhood that is ready to rent.
House Flippers
These investors will buy low and sell high. They buy houses in poor condition at a low discount, renovate and repair what is needed to attract high-paying home buyers and then sell it for a profit. This usually takes only 12 months.
iBuying
iBuyers are investors that offer an easy online way to sell your home. Doing so online comes with a service fee for the convenience. Instead of buying one or two homes a year, they tend to buy thousands annually.
Benefits of Selling to a Property Investor
– No delays because of financing.
86 percent of buyers have to finance their home purchases, which makes the entire transaction take longer. Financing issues are usually the biggest reason for delays in settlements. Real estate investors like to pay cash, so you can close on it in only a few days and take the risk out of financing delays entirely.
– Sell as-is.
If you don’t have the money you need to make repairs to your home, you can sell to an investor. Some of them will buy properties as they come at a discount, so you can sell your home in no time at all.
– Minimal prep work.
Selling your house to an investor before the house hits the market will allow you to avoid staging the home or vacating it long enough to be shown at an open house.
Drawbacks of Selling to a Property Investor
Offers from investors tend to be lower than ones you might be able to get on an open market since their main goal is to turn a profit. A majority of sellers will go with a listing agent for this reason. Some investors might be able to give you a higher offer than others, but this depends on the property type and price range and the way it aligns with their goals.
Should You Sell to an Investor?
To decide if selling to one of these home investor types is right for you, you’ll need to consider the following questions:
1. How quickly do you need to sell?
Home investors are more willing to work with you on timeframes than a buyer in an open market would be. If you need to quickly split marital assets, settle an estate or move out of state quickly for any reason, you don’t always have 45 days to wait for the transaction to close. In these cases, working with a real estate investor is a good option.
2. What shape is your home in?
Depending on the market, there are different kinds of investors that might be interested in purchasing your home. Investors aren’t going to live in the homes they buy, so they don’t need to build any sort of emotional connection like a traditional buyer might when looking at a property. They can look past any issues with upkeep and cosmetics and focus instead on the true investment value of the home.
Conversely, if your property is in good condition and there is a buyer who would pay the price for the renovations you’ve put into it, you might regret leaving that money on the table by way of selling to an investor at a discount.
3. How much cash do you have for repairs and other preparations?
You can expect to bring in some money when you sell your home, but you have to take into account the price for getting the house ready for the market. You also need to consider repairs any potential buyer might ask you to make after an inspection. If your home needs expensive repairs that you can’t afford to make, it might be hard to find a traditional buyer. In this case, you can work with a real estate investor who will be happy to buy your house as-is.
4. Do you have the energy and time to prepare the house?
Getting your home ready to put on the market can take a couple of weeks to a couple of months, depending on its current state. When you are preparing your home for the market, you’ll have to:
- Pack and get rid of personal items from rooms in the house, which can take around a week.
- Take care of any landscaping, which can take up to three days.
- Paint, patch and fix damages and dings, which can take three days.
- Deep clean the entire house, which can take three days.
- Find a place to store your belongings and donate the rest, which can take a day or two.
This timeline is a minimum suggested amount of time you’ll need to effectively complete all of the work. It doesn’t account for any major repairs or large projects you may have to take on. If convenience is most important to you when selling your home, you can sell to an investor that buys as-is and avoid those projects.
5. What’s your next step?
If you are planning to buy a new property and need the money from the sale to be able to buy it, then a cash sale to an investor will liquefy your assets much quicker. Investors can close on the date that you choose and get the money to you more quickly.
After asking yourself these questions, you can start thinking about your priorities when it comes to selling your home. For a lot of people, this means deciding between money and convenience. Working with an investor will mean less work upfront but a lower offer while selling your home on the market will usually give you a higher price. This will mean investing the time needed to get your property up to speed.
These decisions don’t need to be made entirely on your own. It’s a good idea to talk to an agent and get their input on both options. After all, it’s their job to offer guidance on a case-to-case basis, helping you to make the best decision for you.
At the end of the day, it boils down to what you are looking to get out of the sale of your house, how much time and energy you have to sell and prepare the house and how much money you are looking to make. There is no one size fits all, cookie-cutter answer, as the priorities and capabilities of sellers will differ from person to person.
In this article, we explored the three main types of real estate investors. We also offered tips on questions to ask yourself to figure out if selling your home to an investor or through a real estate agent is best for you. Take this information into account and consider your options, and then speak to a professional for a second opinion before making your decision.