I wanted to take a few minute to share some insight on selling your home to an investor. I am not writing specifically about a direct sale from you to an investor such as, We Buy Crumbling Homes or Closed Windows, but the information does cover working with them too. My goal is to help you understand who investors are, why you might sell your home to them and what you need to be aware of if you do, I am not going to tell you investors are bad or that you shouldn’t consider selling your home to an investor.
Let’s quickly cover the two main types of home investors and the three main ways that investors make money investing in real estate. The two types of investors are individual and corporate investors. Individual investors are exactly what they sound like an individual or a small group that purchases real estate with the goal of making money from it. A corporate investor is also what it sounds like a corporation that purchases real estate with the goal of making money from it. The three main ways that investors make money are wholesaling, flipping, and renting. A wholesaler purchases property with the goal of selling the home immediately to another person or investor with no repairs or other work done to the home if at all possible. Sometimes they will not actually close on the home since their offer may contain an “or assigns” clause allowing the wholesaler to attempt to locate another buyer prior to closing at a higher price than they agreed to purchase the home for from you. A flipper will purchase your home with the intention of making repairs and completing upgrades and then turning around and selling the home at a higher price. A rent and hold investor purchases your home with the intention to make upgrades and repairs as needed and then rent the home out for an amount greater than what they pay in mortgage payments and other costs. While flip and hold provides a smaller immediate gains it allows the investor to make money in 3 ways; profit on the rent above the cost of ownership, someone else is paying down the mortgage creating additional equity and as the home appreciates in value the equity also increases.
Why would you consider selling your home to an investor? The answer simple: The investor makes the best offer to purchase your home! That may mean different things to different sellers but in general the two most common factors in a “best offer” are the amount of money you will net from selling and the time it will take to complete the transaction. This means it is very important for you to know what your home should sell for in today’s market and how long the transaction will take before you move forward selling your home to an investor. An experienced REALTOR® can be an excellent resource to provide you with market information, answer questions and help you find the best offer. Whether you choose to work with a licensed REALTOR ® or are considering going through the process directly with an investor make certain that you understand the costs, dates and clauses of the contract before you sign. As always if you have questions consult an attorney before signing a legal contract. In short make certain before selling your home to an investor that it is the best offer for your situation.
Some common things for you to consider before selling your home to an investor are: What is the condition of my home? What is my home worth, as is? What is the top market value in my area for a similar home? What would it cost to increase my home’s value to that “top of market” value? How much cash will I net selling “as is” versus “top of market” value? Am I willing to invest money into my home to net more money? What are the costs that the investor will want me to pay when they purchase the home? How much cash will I net after those investor costs? How quickly do I need to sell? How long does it take on average to sell a home in my area? Will the investor let me rent the home back after closing for a period of time? Who are the parties to the contract? What are the terms of the contract? Are there any clauses or addendum I need to be aware of in the contract? How do those clauses affect me and my rights? Does my HOA have restrictions that may make an investor sale fall apart?
I hope you have enjoyed selling your home to an investor and found the information informative. If you have any comments on the material or questions please do not hesitate to contact me directly 817-729-4281 or email@example.com