If you have a home listed for sale, chances are you’ve either noticed the abundance of roadside signs that read, “We Buy Homes Fast!” or perhaps you’ve even received an offer to purchase your home from a real estate investor. The real estate market has changed dramatically over the last decade and it’s becoming more and more common for a typical home seller to encounter investors. But if you’re like most home sellers, this may be your first experience dealing with investors. So, what are the pros and cons of selling to an investor?
Pros of Selling to Real Estate Investors
- Flexible Payment Options – Investors may offer various payment methods such as certified funds, cash, pre-scheduled cash payments, or perhaps they may even take over the existing mortgage completely. With multiple options available, sellers may find a solution that suits their needs.
- Cash Offers – Quite often investors are willing to pay cash for a home and with the recent tightening of financial restrictions, coupled with the growing number of complaints about low appraisals, having a cash buyer has become even more appealing.
- Selling “As Is” – Typically, investors offer to purchase a property “as is,” many times sight unseen. As a seller, that allows you to avoid any costly repairs that would normally be considered your financial responsibility.
- Fast Closings – There are investors who can close within 7 days. How is that possible? Because the sale of the property is not reliant on approved financing, appraised values, home inspections, or the like; bypassing all of these steps expedites the process considerably.
Cons When Selling to Real Estate Investors
- Investors Do Not Need a License to Buy – This means as the seller, you know nothing about the person/entity offering to buy your home. Some investors are corporations, but some are individuals who just happen to also be real estate agents. This is cause for concern for many sellers because they question the motive behind the purchase; do they want to buy my home to resell it for more?
- There are Plenty of Scam Artists Posing as Investors – There’s a risk of fraud in any financial transaction, but it’s especially critical to avoid scams when dealing with your largest asset. To avoid any issues, get the name of the investor and do research online to see who they are, ask for references, look them up with the Better Business Bureau, and ask your listing agent to do some research on your behalf.
- Homeowners Will Likely Sell Below Market Value – Investors have their own costs to contend with and you can be assured that those costs will be factored into their offered price. Investors are also aware of the power behind their cash offer and the fact that they are taking a risk by purchasing “as is.” They may be relying on your motivation to get out quickly. Whatever the reason, it is unlikely that an investor will pay market value for a home in its peak condition.