Investors That Buy Houses
But if the traditional route doesn't appeal to you or circumstances make it difficult, there are alternatives that allow you to still sell your home. In many cases, it involves selling your home to a company.
investors that buy houses
While they may all seem similar on the surface, there are many different types of companies that are interested in buying your home, often for cash and with a quick turnaround. We're breaking down the types of companies you may encounter and how they do business, as well as what you should factor in if you're considering selling your home to a company.
The companies that will buy your house from you are varied, and they have different methods of purchasing properties, as well as different motivations. Here are six types of companies that could buy your house:
There are a handful of national brands you may recognize that purchase homes for cash which operate as franchises. That means the individual you're working with would be a local franchisee, adding the benefit of local expertise. Some names you may recognize most are We Buy Ugly Houses, HomeVestors of America Inc. (which is also the parent company of We Buy Ugly Houses), We Buy Houses and I Buy Houses.
"Our typical focus is buying houses that we either fix up and sell, or we keep as rental properties," says HomeVestors CEO David Hicks. He notes that, as the We Buy Ugly Houses name illustrates, the focus is on purchasing a home as-is and paying for it based on its current condition, especially if that means it needs some work.
In the last few years, companies known as iBuyers have become a more vocally present type of company offering to purchase homes for cash quickly. Offerpad, Opendoor, RedfinNow and Zillow Offers are well-known companies that fall under the iBuyer category.
These companies, which operate in a growing number of markets across the U.S., purchase homes that need very little work to be ready for the market, with the goal of turning around and selling it quickly for a higher price. The amount paid to the home seller tends to be higher than a cash buyer would pay for houses that need more work, but an iBuyer is involved in more transactions total by operating as a single company located across many markets.
While iBuyers may get a lot of coverage in the news, they are ultimately a very small portion of the homebuyer market. Redfin, a national real estate brokerage and parent company to its own iBuyer platform, RedfinNow, reported that just 0.3% of the homes sold in the fourth quarter of 2020 were purchased by any of the four major national iBuyer companies (Offerpad, Opendoor, RedfinNow and Zillow Offers).
If you're familiar with shows on HGTV, you're probably familiar with the concept of flipping a house: Investors purchase a property that is outdated or run-down, and renovate the property to make it move-in ready, ultimately selling it for (hopefully) more than the cost to purchase and remodel the property.
House flippers commonly aim to flip a house within six months or a year to cut down on operating and holding expenses. While cash buyer franchisees may flip houses, there are also many independent local companies that likely have the ability to make a deal happen fast by offering cash to a homeowner.
Many individual homeowners with some contracting experience will flip houses as well, but their cash reserves to make a purchase and renovation without financing is something you're less likely to come across, unless they have investors backing them up.
Another type of investor you're likely to come across is one who will purchase your property and keep it to rent out to tenants. In many cases, the investor aims to buy a house that requires some work to avoid paying top-dollar, and will renovate before leasing it.
Franchise cash buyers and real estate investment companies may be buy-and-hold investors, but nearly 73% of rental properties across the U.S. are owned by individuals who own between one or a few properties to bring in income, according to the U.S. Census Bureau's 2018 Rental Housing Finance Survey, the results of which were first published in 2020. Like with house flippers, cash offers are certainly possible, but investors may also finance the deal, which could make the closing time longer than with an individual or company offering cash.
In some cases, the companies providing a kind of trade-in option are lenders or real estate brokers that purchase a buyer's existing home so the buyer has cash to make a more competitive offer on another one.
While there's often an additional fee or percentage of the final sale price that goes to the company providing the service, the ultimate goal for many lenders and brokers offering these types of programs is to encourage people to actively buy and sell homes. The broker will benefit from the commission of being a part of two transactions, and the lender will typically provide the homeowner with his or her next mortgage.
It's also important to consider the current housing market. In many parts of the U.S. right now, few properties for sale and high demand from buyers means many houses sell quickly and for above initial asking price. If you're on the fence, consider speaking with a real estate agent about your potential success on the market when you also inquire with companies that could buy your house.
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We Buy Houses (WeBuyHouses.com) is a national cash buyer with hundreds of offices throughout the country. The company is often confused with other companies that buy houses for cash because it has such a generic name.
Offerpad can provide home sellers with a fast cash offer and quick closing (as little as eight days). We noticed that most recent Offerpad reviews are positive, with home sellers noting that Offerpad reps were friendly and helpful throughout the selling process.
In comparison to other iBuyers, Opendoor offers the best value because the fees are capped at 5% and it pays close to fair market value for homes. Sellers should be aware that Opendoor deducts repair costs from their final offer, and the company no longer allows home sellers to handle repairs on their own.
Selling to a local cash buyer is best for homeowners willing to network and negotiate with investors in their community, typically through in-person meetups or online forums. You can also use third-party companies, such as Sundae, that make introductions to real estate investors.
Because investors buy and sell properties frequently, they can usually make you a fast cash offer and close on your timeline. Their funding sources may also allow them to skip the lengthy closing process traditional lenders require.
The fastest way to sell your house for cash is with an iBuyer or "we buy houses" company. iBuyers pay more, but they only buy houses in select markets that are basically move-in ready. "We buy houses" companies, on the other hand, make low offers and tend to focus on distressed properties that can be fixed up and resold.
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I Buy Houses is a network of individuals and companies that want to buy homes for cash. The company acts as an intermediary, connecting homeowners who want to sell with interested members who might want to buy.
If you want to explore your options, you can always see what some cash buyers are willing to offer to get a sense of what you could earn in a speedier deal. Then, talk with a real estate agent to get a professional opinion on what they realistically believe your home could command on the open market. Do not sign a contract with an agent first, though; you may be bound to pay them a commission even if you opt to sell for quick cash. And keep in mind that cash offers may come with expiration dates.
In general, companies that buy houses work with pre-vetted investors or buy homes directly. If you decide to work with a local real estate investor instead, you'll be on your own to check their references, request proof of funds, and negotiate thedeal.
Working with We Buy Houses is more likely to be positive than working with a local private real estate investor. We Buy Houses vets all of its investors and gives them an exclusive license to operate in its territory, so investors who use the brand name have an incentive to work hard in order to maintain their advantage.
I Buy Houses connects home sellers with a network of subscribers who are independent real estate investors. These investors aren't vetted in any way, so it's impossible to know what level of service you'll receive, and negotiating will be entirely up to you. In fact, there's no guarantee that anyone will even contact you when you submit your information.
iBuyers like Offerpad and Opendoor are the next generation of companies that buy houses for cash. Most rely on technology to make an initial offer within 24-48 hours and close in as little as two weeks. Though iBuyers are more selective about the homesthey purchase, they generally pay much closer to fair market value than "we buy houses" companies.
Wondering how to find a real estate agent who can do just that? Enter your zip code below to see how much local cash buyers will pay for your home. We'll match you with a top local realtor, who will bring you offers from trustworthy cash home buyers in your market. Your agent will also provide you with a free professional home valuation, so you can discover what your house is worth on the open market. 041b061a72