All throughout our lives, we have to make some difficult decisions about a plethora of things. One of those things is whether you should sell your house. It's more difficult when you need to sell your house quickly, you're going to want to know all of your options. One of the most common options (89% of sellers will do this) is to hire a real estate agent. But sometimes people cannot wait and they'll consider looking into those companies that'll pay cash for your house.
Although this may seem like a great way to sell and get cash, you need to know some more facts about how these companies work.
What are cash-for-houses companies?
Cash-for-houses companies deal with the seller directly - no real estate agents needed. There are four types:
● House flippers are those who buy a house with the intention of selling it for a profit - the average being 36.7% net profit.
● Buy-and-hold companies will buy a house and turn it into a rental property.
● iBuyer companies use technology and algorithms to make an offer on a property. They'll charge the seller a fee because they're going to market and sell your home, but they will also charge you if the home requires any major repairs.
● Trade-in companies will help you buy a new house and treat your existing home as collateral. Sometimes these companies will even allow you to live in the new home until your old home is sold.
What's the cash-for-houses selling process like?
If you're going to sell your house using this method, you'll want to understand the process so you know what to expect.
- Sellers contact a cash-for-houses company and provide them with all sorts of information about the home.
- You'll need to make an appointment for a representative to come to your home and assess the home's condition and if any repairs need to be addressed.
- The representative will then figure out the fair market value. If the home requires any repairs, they'll figure out the after repair value.
- With the numbers in hand, they'll make an offer, as well as give you the terms of the sale and an estimated date for closing.
- You'll then get to negotiate and when an agreement has been made, the closing date will be scheduled.
Weighing the pros and cons
If we haven't lost you yet, let's take a look at the good and bad aspects of going this route.
The good:
It's a lot quicker to sell your house with one of these companies and some companies will even buy your home as-is. This means you don't have to worry about fixing it up or waiting months to get to closing.
The bad:
Don't expect to get top dollar for your house because you aren't going to get it. These companies tend to offer below what your house is worth and that means you could miss out on tens of thousands of dollars.
Another problem with these companies is that there's the possibility of getting scammed or dealing with a company who has a backdoor buyer (the company buys your house because they already have a buyer for the house). The problem with backdoor buyers is that their financing could fall through and that could cause your own deal to fall through.
Is it a good idea to sell to a cash-for-house company?
Everyone has different reasons as to why they need to sell their homes and sometimes we don't have the time to wait for a lengthy selling process. We understand that using one of these cash-for-houses companies may seem like your best bet, but it may not be.
According to HomeLight's 2021 Q1 survey, 97% of real estate agents say they have a strong seller's market. Not only that, but 94% are saying they are seeing more and more bidding wars happening because there simply isn't enough homes to meet demand. And you know what? Since it is such a seller's market, your home is likely to sell so much quicker than normal. Heck, some homes receive numerous offers the same day it goes live!
To sum it up, selling your house with one of these companies is a decent option if you need your house sold in a very short amount of time. However, in today's market, it's possible to sell your house rather quickly and sometimes for more than you would if you went with one of those companies. So... All in all, cash-for-houses companies are good during a slower market, but in a hot seller's market like it is now, you may want to stick with working with a real estate agent. It'll be worth it.
