We buy houses. You have probably seen their signs or heard their advertisements on the radio. Even in a difficult real estate market, they are spreading their message. But, who are these people and how can they constantly be able to buy houses? Where do they get the money? What do they do with the houses? Let’s take a look.
First, they are investors and investors want to make money. Since they have been around for awhile now, even in tough economic times, it is likely that their business model is working for them. They are making money.
When they approach a homeowner who is considering selling his or her house, there will be certain things that are in their presentation. Here is what you can expect:
– We will pay cash;
– We will settle quickly;
– There will be no fees or commissions to be paid to a real estate agent;
– They will likely ask you how much you owe on the house in mortgages and other liens;
– We will have no contingencies for any type of inspections;
– We will buy your house in its as is condition;
– You will not need to do any repairs;
– They will probably walk around and through the house performing an apparent evaluation of its condition;
– Although, they will buy the house as is, they will still point out the things that they see wrong with your house;
– They will make you an offer and they will have the paperwork ready to go.
So far it sounds like a very good path to take. It is a hassle free way to sell your house.
Indeed, in some cases, it is an expedient and beneficial way for a homeowner to sell his or her home. But this is not always the case. Let’s take a closer look. Sell my house in Bolingbrook
-When you go to the settlement table, you will receive cash, even if the buyer is getting a loan to purchase the house. The only way that you will not receive cash is if you finance the house yourself, which is rarely the case. When the buyer is getting a loan, they should show you a pre-approval letter and ultimately they should show you a loan commitment letter from their lender. When this happens, it is almost as good as the buyer having cash. When someone is paying with cash, you should follow similar steps to that of a purchaser using a loan. First they should provide evidence that they have the money and second they should ultimately be willing prior to settlement to place it in an escrow account, which will designate, that the purpose of the money is for the purchase of the home. It is likely that they will be unwilling to do this.
-A quick settlement may be 15 days. If they actually provide a contract that is for a 15 day settlement, then you should make certain that you can settle that quickly. It is more likely that they will actually provide a settlement of closer to 60 days. A 2 month settlement date is not unreasonable, but their true reason for doing this is because they do not actually want to purchase your home. If they truly have cash, then they could easily settle within 2 to 3 weeks. However, during this 2 month time frame, they are trying to find another buyer. If they do find another buyer, they will sell the house to that Buyer at a price higher than that which they are paying you. In this scenario, they would be assigning your contract to another buyer and the price difference would be called an assignment fee. If all of their deals go like this, then they will never need to come up with any money. However, keep in mind that in some situations an assignment is not allowed, so they may go through with the purchase, but usually only if they have another buyer lined up to whom they can immediately sell the house. If they do not have another buyer ready to go, then they will look for a reason to get out of the contract.
-They will tell you that you will save about 7% by not having to pay a real estate agent a commission. Yes, there are some situations where an agent will charge 7% for selling your home and where it is appropriate, but typically commissions are not 7%. They may average closer to 5% and could be lower. However, they will not give you this savings; but rather, they will ask you to discount the price of the home by 7%, since you do not have to pay an agent. So in the end, your net profit on the house will be the same with or without an agent. If you are not using an agent, then you have no one who is looking out for your interests. You are giving up 7% for no service and for no representation.
-How much you owe on the property should be irrelevant to the buyer. He should offer a price that works for him. If that price is too low to cover what you owe, then you will not accept the offer. The reason for asking what you owe is because they will make an offer that is just enough to cover that amount. If the amount that they want to offer is lower than what you owe, then they will not make an offer, but otherwise, they will go down to that amount. What this does is take the equity which may be in the home, which is basically the difference between what you owe and what the house is actually worth, and gives it to the buyer.
-Be careful about contingencies. There will be a clause of some sort or another which allows them to get out of the contract.
-They will not ask you to do any repairs, however your house might not need many or any repairs in the first place.
-Generally speaking, these individuals are not inspectors, although they will have a good idea about houses because they look at so many. They may seem to know about home construction, but they are just talking.
-No matter what the condition of the house, they will tell you that something needs to be replaced or is not up to code. For example, you may have a 2 year old roof with 30 year shingles, and they will tell you that the shingles are curling up, so they may need to replace it. It will not be true, but if you are not familiar with how to evaluate a roof, then you may believe them. Or you may have older windows, which work fine, but they will suggest that they will need to be replaced. Of course, all of these things will have a cost that they will factor into the price that they offer.
-When trying to justify a price, they will use the lack of a real estate commission, repairs, which probably do not need to be done, and comparable sales prices, which they will provide. Keep in mind that they do not represent you, but rather themselves so the comparable sales will be those that work in their favor.