Whether you need a quick home sale or can’t afford your mortgage, you have options other than a traditional home sale. Many homeowners choose to sell their home to an investor instead. Recent data shows that investors bought 18.4% of U.S. homes sold during the fourth quarter of 2021.
You can avoid the stress of a complicated home transaction process and sell directly to an investor. These kinds of sales may allow sellers to bypass things like inspection contingencies and avoid appraisal concerns or buyer financing issues. An investor, will typically purchase your property as-is, taking into account the needed repairs and renovations when making you an offer.
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. Here’s what to know about both paths — and how to choose the right option for you.
What is a Home Investor?
A professional home investor is either an individual or a company that buys residential properties as part of a business or investment strategy. Investors can solve many problems for struggling homeowners. For example, if your home requires repairs that you can’t afford, you can get cash for your home instead of worrying about renovations.
Real estate investors pay cash for homes that need a quick sale or for a property that’s having trouble selling. Investors will buy any home at just about any condition. They do this because they look at homes as a business opportunity. They may flip your home and resell it to new buyers or they may even rent the home out to tenants.
When trying to assess if the investor who has made you an off is reputable look to see if they:
- Have the cash on hand (or has a loan approved)
- Have a history of satisfied clients
- Respond quickly
- Is upfront and honest
- Will buy your house in any condition
- Will close when you need to
- Understand your local real estate market
- Have local contractor connections
- Have a local title company connection
What is the difference between an investor and a typical homebuyer?
Perhaps the biggest difference between an investor and the typical homebuyer is their intentions for the property upon buying it. In the case of the typical homebuyer, they’re looking for a permanent residence for themselves and their family.
Investors, on the other hand, see your home as a business opportunity. Depending on the type of investor, they may be looking to make some renovations and flip the house. Or they may want to rent it out as income property.
Pros and Cons of Selling to an Investor
Although it won’t be the right choice for everyone, there are some sellers who will benefit from working with an investor.
Some of the pros are:
- A hassle-free sale – When you sell your home to an investor you’ll get a quick cash offer without having to go through the typical process of cleaning and staging the house, dealing with real estate showings and paying for repair or renovation work.
- No financing delays – A mortgage loan currently takes 47-50 days to close and brings a level of uncertainty that can be stressful for buyers and sellers alike. A cash sale means no financing contingencies based on the results of an appraisal or the buyers’ finances which can sometimes lead to the sale not happening. Investor sales can, and often do, close in a matter of days.
- No repairs or renovations needed – According to the latest data from the National Association of Realtors, 36% of homebuyers are looking for a house that needs little to no repair or renovation work. If you have a home that needs work, and you lack the money, time, or interest in making those updates yourself, selling to an investor is an appealing option.
- Greater flexibility – Whether it’s a new job in another state or a family emergency, there are situations that may require you to pick up and move quickly. In addition to avoiding financing delays, investors can be more flexible with the close date than a traditional buyer. You may also be able to leave stuff behind you don’t want, which isn’t always an option in a traditional sale.
- No prep work – With a traditional home sale, you’ll have to do a lot of preparing before you list, from cleaning and decluttering to taking listing photos and staging. In fact, according to Zillow research, the average seller spends $6,570 prepping their home for sale. That figure includes hiring a professional for projects like painting, staging, house and carpet cleaning, lawn care and gardening. Most investors care more about the financials and less about how your home looks.
Selling to an investor has many benefits but there may be some downsides to selling to an investor.
Here are some of the cons:
- You might not sell your home at market value – We recommend that you look up the market value and compare that to the price an investor is willing to pay.
- You don’t know who’s buying your property – Or, what they plan on doing with your home. Investors aren’t legally required to tell you who is buying your home. For the most part, this isn’t a problem. But be sure to conduct your own research to be sure the investor isn’t accused of shady practices.
- Longer to close with foreign investors – The closing process can take longer if your investor isn’t U.S. based. That’s because complex tax requirements and other difficulties may come into play. Yes, money is money but to be safe we recommend that you work with domestic investors.
- You may find a scam – There are many real estate investor scams. For example, a foreign or out-of-town buyer will be interested in buying your home and may want to close immediately without even seeing your home. A scammer can get you with unfavorable terms and even a false check. Not only are you out of money, but you have no home.
To sum it up; while most people still sell their home the traditional way, there are quite a few scenarios where selling to an investor might make the most sense. Selling to an investor saves time and hassle. Personal situations, like a job relocation, divorce, or potential foreclosure are some common reasons people end up quickly selling a home to an investor. And, when selling to an investor you can expect a quicker close, an as-is sale and an all-cash offer.
There are many investing options, but working with a reputable investor like Black Girls Buy Houses is by far the fastest and most convenient option. We can work with you regardless of the situation or condition of your home. We provide a quick and simple sales process for every homeowner we help.
No matter the situation, we want to give you the highest and best offer possible. To start the process, we invite you to fill out our Homeowner Sales Form.