In the United States, a recent Bankrate survey, indicated that nearly 70% of Americans are worried that a major recession is right around the corner. While a recession can be worrisome and can lead to inflation and higher prices for goods and services, a recession can also be an excellent time to sell a house.
Regardless of the economy, qualified buyers and investors are always searching for good real estate deals that nobody else knows about. Selling off-market is a strategy some owners and investors use to find a qualified buyer willing to offer the right price and close quickly without marketing the home to the general public.
In this blog, we’ll take a look at some of the general benefits of selling your house during a recession, and the specific benefits of selling a house off-market during a recession to an investor.
What Does it Mean to Sell a House Off-Market
Selling a house off-market means putting a house up for sale without listing it on the Multiple Listing Service (MLS). The MLS is the network of real estate services used by agents and brokers to publicly promote houses for sale, manage contracts, and establish guidelines for commissions and compensations.
When a house sells off-market, it is typically purchased in a more direct transaction by a cash buyer and not subject to the traditional real estate transaction process. Even during times of a strong economy, there are many reasons to consider selling a house off-market, including:
- You need to move quickly
- You don’t have the funds to make repairs
- You have a tenant occupied home, or non-paying tenants
- You need to settle an estate
- You are getting divorced
- You can’t gamble on how fast your house will sell on the open market
If any of these situations apply, then selling off-market is an option for you to strongly consider. Maybe the main benefit of selling your house off-market is that you sell your house as-is, with all its flaws. This means no repairs, as well as no need to invest the time necessary for showings and searching for a buyer when selling property off market.
Even if you start off intending to sell to a traditional buyer, you might end up getting a compelling offer from an investor, perhaps one with minimal contingencies and the promise of a quick close.
Some Benefits of Selling a House During a Recession
Selling a house off-market is often a fast and easy way to sell your house that comes with less hassle than a traditional real estate agent led sale – making it a particularly attractive option during a recession. Let’s take a look at some of the general benefits of selling your house during a recession.
Capitalize On Your Equity
One benefit of selling your house during a recession is that it allows you to capitalize on the equity you’ve built. Cashing in on the equity from the sale of your house makes it significantly easier to make a move to a new home. With that cash in hand, you will have funds that you can immediately put towards a new home that will work better for your present needs.
A Pent-Up Demand for Homes
Before a recession it can be difficult to buy a home, especially for first-time homebuyers. In the current market, there is an on-going shortage of starter homes. That means homebuyers that are qualified to buy a home may not be able to find something that fits their needs without building a new home. Younger homebuyers, especially Millennials and Gen Zer’s, want to buy houses but have limited options that they can afford. This tide of young homebuyers make up a huge amount of the market, which can help cushion the housing market during a recession – making the impact on the housing market relatively small.
There tends to be fewer houses on the market when you are selling during a recession. Many people are concerned that they might lose their jobs or that they will not be able to afford the increase in prices for goods and services, and so most people tend to hold onto their properties rather than selling. That means less competition for you from other sellers which can make your house stand out.
Avoid Expensive Repairs
Selling your home during a recession can also help you avoid expensive and unnecessary repairs. While many people think that you need to make huge upgrades to be able to sell your home, there are no renovations that will add more value to your home than they cost. So, you don’t have to waste your time and money on projects that won’t have a high return on your investment.
Price Declines Will Be Small
There is a chance that you will see some declines in price when you sell your home during a recession. This is because home prices peak right before a recession when it is a seller’s market and there are fewer homes available.
In past recessions, like The Great Recession, there was a significant decline in housing values. This resulted in the housing bubble popping and homes dropping to record low prices.
However, this is not typical for most recessions. The majority of economists believe a recession in 2023 will most likely not cause as big of an impact on the housing market as it did during The Great Recession. This means that declines in housing prices will be small, if there even is a decline in price. If you sell your home during a recession, you should still be able to get a good price.
Benefits of Selling a House Off-Market During a Recession to an Investor
Selling your house off-market, even during a recession, has it’s benefits. But why sell to an investor? Let’s take a look at some of the specific benefits of selling a house off-market during a recession to an investor.
Many Options for Investors
Selling your house during a recession makes it easier for you to find investors that are looking for real estate. Often, investors (like Black Girls Buy Houses) will pay cash for your house. This guarantees that you get all of your money from the sale of your house, making it easier for you to put it directly into other investments, like a new home.
Potential Savings
Another advantage of selling your house to an investor off-market during a recession is that you will save money by not have to pay real estate commissions, closing costs, listing fees, or fees from other real estate support professionals like photographers and stagers. Although your off-market offer might be lower than what you would get by listing with a real estate agent, avoiding the fees associated with a traditional sale can ultimately save you more money in the long run.
Save Time
During a recession houses tend to take longer to sell because there are fewer buyers. Days on market is often a source of anxiety and fear for sellers working with traditional real estate agents, especially during a recession. When you sell to an investor, the closing not only has no cost but usually happens very quickly, often in less than a month.
Home Occupied by Tenants
Even when the proper notice is given, it can be a hassle for your tenants to have their lives interrupted by real estate agents scheduling multiple showings. By selling your tenant occupied house off-market, you can avoid the multiple showings and disruption to your tenants. Plus, if the property is already occupied with paying tenants, the investor may even be more likely to keep the current tenants in place.
Major Repairs Are No Required
Another reason owners sell off-market is when the property needs a significant amount of repairs. Homes normally need to be in good condition for a conventional sale, but making thousands of dollars in repairs to a home that’s going to be sold anyway can put unnecessary financial stress on a seller. Investors will buy your house in “as-is” condition so that you don’t have to worry about making costly repairs.
In Summary
Selling a house off-market during a recession to an investor offers the property owner several potential advantages, including saving money on sales commission and fees, not having to make costly repairs, and, if it’s a rental property, not disrupting the tenant and losing rental income.
If you want to learn more about quickly selling your house during a recession to a cash investor, Black Girls Buy Houses can help! You can start by entering some basic information about your house and you’ll be on your way to getting your free, no-obligation cash offer!