Are ‘We Buy Houses for Cash’ companies a real thing, or are they simply scammers looking to extort cash or property from you?
Most home sellers hire a real estate agent to help them with their house sales. In fact, according to the National Association of Realtors, around 89% of home sellers decided to sell their houses using this traditional method.
Despite this high number, this method isn’t for everyone. If you need to sell your house fast, if your house is in poor condition, or if you’re facing foreclosure, finding the right buyer might be challenging. Not everyone wants to purchase a house they’ll have to spend thousands on repairs. Also, since it takes 55-70 days on average to find the right buyer, it’s easy to see why they aren’t a good choice when you need to sell a house fast.
You have probably seen those billboards with ‘We Buy Houses for Cash’ plastered all over them. Are these companies a real deal, or is this just another scam?
‘We Buy Houses for Cash’ are, in fact, real estate investors who are willing to buy your house. They won’t literally give you a bag of cash, but they’ll pay you without dealing with bank procedures or standard mortgages. This allows them to be able to purchase your house much faster than a traditional buyer would.
Of course, there is a catch in all of this. Real estate investing companies, while they will pay in cash, will also buy for a price that is above average. However, there is one thing to consider. When you sell your house with a real estate agent, you’ll eventually get an offer from the buyer – but this isn’t how much you’ll profit. In truth, from the money you’re offered you’ll have to pay for certain expenses. This includes, but is not limited to:
- Closing costs
- Commission fees
- Title documentation
- Additional repairs
- Attorney fees
With ‘We Buy Houses for Cash’ companies, you don’t have to pay for anything! What you’re offered is what you’ll get, and the real estate investor will take care of the rest.
What Is a Cash Offer?
‘We Buy Houses for Cash’ companies will give you a cash offer. What does this mean?
A cash offer is a sale in which a buyer will pay you the entire price for the home at once, without using a mortgage loan or any other financing. This helps you sell your house much faster, since you can skip several lengthy – and costly – steps. Skipping these steps is the biggest difference, in fact, and this is why many people opt for a cash sale of their house. Not to mention that cash buyers are much safer than regular ones, as sellers don’t have to worry about buyers making a mistake that might ruin their chances to get a mortgage. Also, as the appraisal isn’t mandatory, this is another risk you can cross out from your list.
So, in short, both traditional and cash sales include a money exchange. However, cash sales have much fewer steps and they remove many obstacles, so you can close the sale much faster.
Which Home Sellers Greatly Benefit from This Offer?
As we’ve mentioned, any property can be sold to a cash buyer. However, some houses are more likely to be sold in this way. This is usually before a traditional sale is not a good option, or an option at all, for these kinds of properties.
The most common situation when people agree upon a cash offer is when a home is facing foreclosure. These properties need to be sold fast, so the seller’s options are very much limited. If the house isn’t sold on time, homeowners are facing eviction and a huge negative impact on their credit score. A cash sale is a good option as it will enable a fast sale of your house.
If you’ve experienced some life change that might request you to move out or to sell your home, such as divorce, retirement, a new job, or the death of a family member, you might need to move out quickly. Waiting for the right buyer is not an option, especially if you’re selling in winter or in the buyer’s market.
Also, if your house is facing some code violations or is in urgent need of many repairs, you likely won’t be able to sell it on MLS. Traditional buyers are looking for a house they can move in immediately, and houses that need a lot of investing money in are not attractive. No one wants to buy a house they can’t move in during the following few months. Direct buyers purchase properties as-is since they don’t plan on using your property for themselves. This is why they don’t mind investing a bit more to make your house beautiful once again.
And, finally, cash offers are great for home sellers who don’t have enough cash to complete the sale process. Selling a house isn’t cheap, as you have to spend a lot of money on commissions, various fees, and closing costs. With cash buyers, such as Sparks Property Investors LLC, these expenses are non-existent.
Pros of Selling Your House for Cash
- These companies can close quickly, sometimes in just 7 days
- You don’t have to worry about sale contingencies
- The buyer won’t fall through
- They are a great way to avoid foreclosure
Cons of Selling Your House for Cash
- The offer will be smaller
- There isn’t much room for negotiating