Selling your home is a big deal. You’ve seen the signs and the commercials stating “We buy homes for cash” but are these offers too good to be true? Is it something you should consider or just avoid when selling your home?
Before we look at whether you should consider this type of home buyer or avoid them, it’s important to understand what the “buy your house for cash” buyer is all about.
What “We Buy Homes for Cash” Companies Are All About
While these companies have expanded and now include more than just those signs you see at intersections, the “We Buy Homes for Cash” crowd still targets the same sellers. They are looking for sellers that struggle to sell with a traditional real estate agent or have some type of urgency or issue with selling in a traditional real estate setting.
Some of the types of sellers these buyers are looking for include:
- Those going through foreclosure
- Homes in probate
- Sellers dealing with a bankruptcy
- Vacant homes
- Damaged homes
- Those with expired listings
- Sellers going through a divorce
- Sellers needing to sell very quickly
- Homes with some type of problem making them hard to sell fast
The big deal for sellers is the fact that these companies don’t charge a real estate commission. However, this is misleading, as most sellers will end up with a higher net profit from the sale of their home when they hire a listing agent. In fact, it can be as much as 125% more than the fair market value, which you won’t get from a fast-cash buyer.
What to Expect from “We Buy Homes for Cash” Buyers
Before you even inquire about a company willing to offer you cash for your house, you need to understand how they work. They won’t offer you the fair market value for your home as they wouldn’t have any room to make a profit.
Typically, a fast-cash buyer will offer what you still owe on your mortgage or slightly more, unless you have built up quite a bit of equity. Even if you have plenty of equity, you cannot expect an offer anywhere near the fair market value of your home.
On average, a cash-for-homes buyer will offer about 65% of the fair market value of the home. Of course, this depends on the condition and you better believe, if there’s a major repair needed, you’ll receive a lower offer on the home.
Should You Ever Consider a Cash-For-Homes Buyer?
In most circumstances, the “We buy homes for cash” crowd of buyers should be avoided at all costs. We will discuss why it’s better to choose an agent in a minute, but for now, let’s look at a few situations where this type of buyer might make sense.
If you’re in a situation where you really just need to get out from under the property and you’re willing to take a hit, a cash-for-homes buyer might be the answer. They won’t make you wait very long to get paid and you won’t have to deal with any repairs, showings, or anything else. In fact, they will likely skip the inspection and the appraisal altogether.
Just know, if you choose a cash-for-homes buyer, you’ll likely leave plenty of cash on the table. Only in very desperate situations where a very fast sale for a low price is necessary should you consider this type of home buyer.
Why Choosing to Sell Through a Real Estate Agent is Far Better.
When you compare selling through a real estate agent to a cash-for-homes buyer, 99% of sellers will come out far better with an agent than this type of cash buyer. Most sellers don’t need a quick sale and don’t need to take a hit on the price.
When you choose a full-service brokerage to help with the sale of your home, you’ll likely sell for the actual fair market value, if not higher. Yes, you will pay a commission for the sale of your home, but it will pale in comparison to how much money you will lose to a cash-for-homes buyer. In addition, selling with an agent will likely net you more money for your home compared to selling on your own or selling to a cash-for-homes buyer.
Even if your home has issues, a real estate agent can advise you on what to fix and what to leave for the new buyer to fix. Often, it’s worth it to take care of the repairs yourself and sell with an agent, as they will be able to use the repairs as a way to market the home. For example, if you need a new roof, getting it replaced means your home can be marketed as a home with a new roof. For buyers, this takes away the worry of replacing the roof for decades!
Before you consider any type of “We buy homes for cash” company, talk to a real estate agent first. Even if you need to sell quickly, they often have a better way to help you get more for your property than these types of buyers are willing to offer.