Should I Consider Selling My House To A Real Estate Investor?
In the current state of the real estate market, homeowners are beginning to see more activity from real estate investors who may be looking to purchase their home. The real estate market has changed dramatically over the past couple years and it is becoming more common for typical homeowners to encounter real estate investors. Selling to a real estate investor is an alternative selling option compared to the traditional option of listing and selling with a real estate agent.
A lot of homeowners are initially unaware of how real estate investors operate and how they arise at there offers. Real estate investors do offer several unique benefits that the traditional sale does not. With that being said, selling your home to a real estate investor is not for everyone. If you are like most homesellers, this will probably be your first time dealing with A real estate investor. So, before you make a decision on which option to choose, let's discuss some of the advantages, disadvantages and homeowner situations this selling option will work best for.
Disadvantages Of Selling To A Real Estate Investor Over A Traditional Buyer
When it comes to selling your home, we want to make you aware that you have options.
Sell traditionally with a real estate agent
Sell for sale by owner
Sell to a real estate investor
Rent your home
Each of these options offer's their own advantages and disadvantages and each option will only be beneficial if your situation fits the deliveries benefits. Before we get to far off topic, let's go over some of the disadvantages of working with a real estate investor.
1) No Formal Training/Education Required
When working with a real estate agent, that agent has to pass an exam and get certified in order to become licensed. This agent will have to typically pay a brokerage or work under a brokerage for a certain amount of time before they can go off on their own.
If you decide to work with a real estate investor, you have to be careful. There are no educational requirements or tests you need to pass in order to be considered a real estate investor. With that being said, there are professional real estate investment firms (real estate solution companies) that are very informational and educated on the topic of real estate. Just make sure you do your due diligence before you decide to work with an investor.
Fortunately, there ARE investors in the Syracuse NY area who do have the skills, knowledge, and experience to help you, regardless of your situation and no matter how complicated it is.
2) Below Market Offers
One piece of the sale that home sellers will have to typically sacrifice is the sale price of your home. In exchange for the beneficial terms (to discuss later), real estate investors will offer below market value for your property. These reason they will give you a lower offer on your property is so that they can use it as an investment vehicle to make some money on the backend. In exchange, real estate investors offer tremendous terms that a home buyer that needs bank financing can't offer.
Advantages Of Selling To A Real Estate Investor
There are several advantages to selling your Syracuse NY home to a real estate investor. The terms real estate investors can offer uniquely separate their offers from the traditional bank financed offer.
1) Avoid Paying Commissions & Closing Costs
Even though you will typically be looking at a below market offer, in some circumstances you may be netting a similiar amount when you compare the sale with a real estate agent. What do I mean by this? When you sell your home to a real estate agent, you will have to pay a 7% real estate commissions as well all of the closing costs, attorney fees and recording fees associated with the sale. In some circumstances this can be up to a 10%-13% reduction in your net profit when the sale is completed.
2) Cash Offers
In my opinion several of the benefits work off of this one advantage. With the increased restrictions from our lending institutions, it has now become much more difficult to receive a loan. Along with the difficult loan process, if you are fortunate enough to get approved, the time it takes to actually close on the property has been dramatically expanded. If you are dealing with a bank financed buyer:
You risk the chance of the deal falling through due to financing
Home inspections request serious repairs to be made
Bank's request expensive repairs be made prior to closing
Low bank appraisals
2-3 month process after you find a buyer
3) Selling As Is
What does selling as is actually mean for a homeowner looking to sell their property? As we just spoke earlier, banks and home inspectors will require you make a tremendous amount of repairs (if your home is in disrepair) in order for the banks to finalize the loan. When you receive an offer where the property will be purchased as is, you will not have to make any additional repairs to the property and the investor will be purchasing in it's current state.
4) Fast Closings
Cash offers allow for fast closings. Fast closings allow the home seller to avoid the hassle of dealing with a bank financed buyer (and all of the issues that may arise). When we say fast closings, typically a real estate investor will be able to get you a check in about 14 business days (this will depend on your state). This is because the sale of the property is not reliant on approved bank financing, appraisals, or home inspections. If you can bypass all of these hurdles - you can expedite the process tremendously.
5) Flexible Payment Terms
Another perk about working with a real estate investor is that they can use several creative methods to purchase your property and relieve you of the hassle of owning it. Some homeowners find themselves underwater on their property -where they owe more than the property is worth. In this scenario, an investor may work a "subject 2" deal, where they will assume your mortgage payments and relieve you of the property. Another option for homeowners could be a seller finance deal. If you own your property with no mortgage and are looking for a passive income, you could always sell your property with seller financing. This means that you will be holding the mortgage and accepting a down payment. There are several other creative strategies that you could work with your investor to determine which may work best for your specific situation.
What Specific Situations Will Benefit The Most From Selling To A Real Estate Investor
As we touched on briefly previously, selling to a real estate investor offers some great advantages but there are specific situations that will benefit the most from this alternative selling option. With most real estate investors they are trying to create a win-win situation for both the homeowner and their firm. This means that the offer will have to generate benefits for both parties. Typically, how is this achieved? You have to be in a situation where you are less worried about the sale price and more worried about the terms being offered. So, what situations might we be talking about? Let's see:
Behind on Mortgage Payments
Out of State Homeowner
These are some of the situations that will benefit from working with a real estate investor. As you can see, all of these situations will benefit from the terms that a real estate investor can offer. If you are a home seller who owns a well maintained property, you do not require a fast sale and you have no financial/physical distress, we suggest that you sell your property the traditional route by hiring a GREAT real estate agent that can get you top dollar for your home.
Not every homeowner will benefit from working with a real estate investor. However, with that being said, there are several situations that will be able to take advantage of all of the benefits associated with working with a real estate investor. We advise that before you begin working with a real estate investor, you do your due diligence on this specific individual or firm. There are reliable, trustworthy real estate investors who will be able to help you solve your real estate problems.
If you are in the Upstate NY area and you are looking for a credible,honest, trustworthy real estate investment firm who has helped several homeowners resolve there issues, give us a quick call or schedule an appointment to discuss your situation specifically.
HS Property Funds, LLC
Funds to Help, Problems to Solve