If you want to sell your home, you may have found a real estate investor willing to buy your house for cash upfront. If you’ve been considering selling to property investors instead of a typical homeowner via a real estate agent, read this article first.
In this article, you’ll learn about the different types of home investors in the real estate market and the pros and cons of selling to one.
Real Estate Investors in Idaho
Unlike a traditional buyer, who is simply looking for a new home to move into, cash home buyers in Boise and real estate investors are looking to use your home as an investment property to make money.
There are a few types of investors, each using a different investment strategy to earn a profit from your home.
The typical real estate investor might hold your home for 5-15 years before selling it. This kind of real estate investment is a long-term strategy that involves analyzing different market conditions and predicting the state of the local market in years to come. An investor using this business model may be operating alone or with others.
Another type of strategy is one that focuses on generating rental income. Potential buyers might purchase your home, turn it into a rental property, and generate monthly income from renters for years. They may or may not sell your property eventually, but home selling is not necessarily the primary profit source for these investors.
House flippers are more aggressive investors that focus on turning a quick profit. Unlike with a traditional sale, you can typically get cash for your house fast, within a few weeks or less, with minimal hassle.
They also focus on buying homes as-is, even if your home has significant damage or you are behind on your mortgage payments and facing foreclosure.
Such investors focus on buying homes below market value to ensure maximum profit. That’s why they don’t mind buying homes needing repairs, which typically have fewer interested buyers. They rely on the after repair value being higher than the current sale price plus the cost of repairs.
You may not have the money to afford the needed repairs, so selling to a buyer making a cash offer might be a good option.
With such a sale, the home seller will enjoy a quick closing date and reduced closing costs compared to selling through a realtor, while the buyer will quickly renovate the property and resell it after just a few months. Steady cash flow is a must for this business model, and flippers typically focus on promising neighborhoods.
Some flippers have a more long-term focus. They may add a new addition to the home or turn a single-family dwelling into a multi-family home, depending on whether zoning laws allow that. They can then flip the house for a significant profit.
Is Selling to a Real Estate Investor the Best Option?
That depends on several factors, such as the condition of your home, how much money you have, and how quickly you need the sale to close.
If you have a home in good condition, you might want to consider selling to a traditional buyer, provided you have the time to go through with the sale process and can afford closing costs. Remember, whether you do an FSBO sale or use a real estate investor, it can take months to find a suitable buyer and close the deal.
Real estate investors, on the other hand, focus more on distressed properties. While some think they take advantage of buyers who are experiencing hardships, the truth is that it is a win-win for both the buyer and investor.
If your home needs extensive repairs, but you don’t have the funds to finance those repairs, a real estate investor willing to buy your house as-is could be a lifesaver. Perhaps you inherited an old cottage from your grandmother, but you can’t renovate it and don’t know what to do with it. You can make some quick cash by getting it off your hands.
Similarly, let’s say you need to move urgently due to a job relocation or need quick cash to fund an investment opportunity or a health emergency. A real estate investor can help you sell a house fast in Idaho.
Even if there are no renovations you must make, you will save considerable time, not to mention money, by selling to a cash buyer instead of going down the traditional selling route. You won’t have to wait months to get your cash; you can have it in your bank within a few weeks. You can also move out and relocate to your new city without your house holding you back.
Let’s examine another case in which selling to a real estate investor is optimal. If you can no longer afford your mortgage and your home is facing foreclosure, a real estate investor may be willing to buy your home and take on the rest of the mortgage. That may be true even if you have negative equity, which is when your mortgage debt is higher than your home’s value.
For the investor, spending that extra money to pay off your mortgage may be worth it if they can sell the house later for a more considerable amount of money.
On the other hand, selling to a real estate investor might not be the best choice if your home isn’t in such a bad condition and you have the time, money, and patience to make the necessary repairs. Even simple maintenance, such as repainting and hiring a landscaping company, can significantly improve your home’s curb appeal and drastically increase its sale price.
In that case, it might be worth it to ride it out, do the work, and sell to a traditional homebuyer.
Another case in which you might want to avoid real estate investors is if you’re in no hurry and you forecast home prices in the area to increase drastically over the next couple of years. In that case, you can earn a lot more money from the sale by simply having some patience.
Alternatives to Selling a House to a Real Estate Investor
There are always alternatives to selling a house to a real estate investor. Here are the top alternative ways to sell a house, depending on your financial situation and the condition of your property:
- Sell to a cash buyer who is not an investor but instead wants to live there.
- Use a real estate agent to find a traditional home buyer taking out a mortgage.
- In the case of negative equity, make a short sale or use a deed in lieu of foreclosure to get out of your mortgage.
Some other alternative options include:
- Keep your home and turn it into a rental property, so it generates passive income for you.
- Rent it out on Airbnb or turn it into a vacation home.
- Lease it to long-term tenants, so you don’t have to worry about finding new tenants all the time.
Of course, not all of those options may be applicable. For example, a deed in lieu of foreclosure requires you to give up your home without getting anything out of it, while you could sell to a cash buyer and make some money.
Furthermore, turning your home into a rental property might be something you don’t have time for. Managing tenants isn’t always easy.
Selling with a real estate agent isn’t always a bad idea, but you will lose out due to the hefty closing costs involved. For example, you will have to pay an agent commission of 5-8%, which is on top of other expenses, such as a home inspection fee, lawyer fees, and capital gains taxes.
How To Find the Best Type of Home Buyer for Your Home
Selling a home typically presents a few challenges:
- Avoiding scams
- Getting your home’s actual value
- Getting your cash as soon as you need it
- Avoiding costly fees and expenses
Sometimes, finding a selling method that addresses all those challenges is hard. For example, using a real estate agent can help you avoid scams and get your home’s actual value. On the other hand, you will typically have to wait at least several months before the deal is complete, and you will face additional fees.
Selling to a company specializing in buying homes for cash is often the best solution. We buy houses Meridian using a hassle-free three-step process:
- Call us or contact us online for a quote.
- Our team will come to view the property, or you can send us pictures, so we can give you a fair cash offer.
- We will close on your schedule, depending on how fast you need the money and whether you want to live in your home a little longer.
We base our offer on the overall Idaho housing market and the state of your home while eliminating fees and commissions, allowing you to get the most out of your home with no headache.
Conclusion
While most people don’t think of real estate investors, cash buyers, and house flippers when planning to sell their homes, you shouldn’t overlook them as an option. A reputable cash buyer can eliminate the stress and potential for scams while ensuring you get the maximum value for your home.