Selling your house for quick cash? Not so fast!
by: Better Business Bureau
If you are considering selling your home, you may have the choice between selling to a traditional buyer or to a real estate investor (or opportunity investor). You may have received offers or seen advertisements promising to buy quickly and cash. Here’s what you need to know.
Professional real estate investors make offers to sellers who are willing to sacrifice profit in exchange for a faster, easier selling process. In recent years, iBuyers have also emerged – internet companies that use algorithms and proprietary valuation data to provide no-obligation cash offers to sellers.
BBB recommends the following tips to help you find the right type of buyer for your home and avoid getting scammed.
- Consider your time constraints. With traditional home sales, buyers may require a 45-day escrow period to allow time for appraisals, mortgage approval contingencies, inspections, etc., which means completing a sale may take several weeks. On the other hand, property investors can usually close in a month or less and iBuyers can give owners a tentative offer within 24-48 hours and close in as little as a week. If time is tight, it might be worth considering one of the faster options, although you’ll likely sacrifice profit for speed.
- Determine the profit you need to make. The biggest downside to working with a real estate investor or iBuyer is that you will almost always get a lower offer than a traditional buyer. Traditional buyers may be willing to pay even more than the market value for a home they fell in love with, while real estate investors are buying your home purely as an investment. This lack of emotional connection can cost you benefits you may be counting on. Determining in advance how much profit you need to make on the sale of your home can help you make an informed decision when you receive an offer from any type of buyer.
- Consider prep work. When marketing your home to traditional buyers, you will need to do a fair amount of prep work. Cleaning, decluttering, painting, staging, landscaping, photographing, and listing your home are all essential tasks in preparing your home for sale. When you’re selling to an investor, you won’t need to invest time and money in this kind of preparatory work. Forbes adds: “Typically, investors offer to buy a property ‘as is’, often without seeing it. As a seller, this allows you to avoid any costly repairs that would normally be considered your financial responsibility.
- Research investing companies before doing business with them. Always research businesses on BBB.org before sharing personal information or agreeing to services with them. Make sure the business has an official name, phone number, and physical address. Also read customer reviews, keeping a close eye out for complaints or reports of dishonest transactions.
- Don’t fall victim to a real estate investor scam. Scammers exploit a seller’s desire to make a quick sale by offering deals that seem too good to be true. They also take advantage of the fact that real estate investors do not need credentials to purchase property. When considering an offer, ask lots of questions and don’t settle for vague answers. Never give money to an investor before the closing date. Do all transactions through a closing agent or escrow and don’t let anyone force you to make payments “off the books”.
- Consider your alternatives. If you’re not pressed for time, consider working with a full-service brokerage. You will need to do some prep work and it will take longer, but you will make a much bigger profit on the sale of your home. You can also consider renting your home for an amount that covers your mortgage payments or entering into a lease-purchase agreement.
- Be on the lookout for scams. Learn more about foreclosure rescue scams and title deed fraud.
To report a scam, go to the BBB Scam Tracker. To find reputable companies, go to https://www.bbb.org.
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