Introduction
Selling your house to an investor may sound risky and confusing, but if you have ever sold a home traditionally, that can be a difficult process as well. There are elements that differ between the two selling methods, and in both scenarios, there are ways to make the process a little easier than anticipated.
If you’re not sure whether you should sell a house to an investor, you might find yourself better informed if you weigh the pros and cons of the decision.
For your convenience, we have compiled a list of pros and cons of selling your house to a direct home buyer. This way, you can examine your options and make the best choice for your individual needs.
Pros
Though selling your home to an investor may sound intimidating, there are several positive outcomes related to this type of scenario.
Here are 16 pros you can reap the benefits of if you decide to sell a house to an investor.
- Purchasing Homes As-Is – No Need to Make Repairs
When you sell your house to an investor, they assume all the risks. Once you accept the offer and signs the paperwork, the home is theirs and they’re responsible for making repairs. You do not have to clean or repair anything when you agree to this type of sale. Your home is sold as-is. - Sell Your House in a Bad Neighborhood
Even if you live in a neighborhood that seems to be pushing away homebuyers, an investor will likely be interested. Even if you live in a “bad” neighborhood, you can sell the house to a direct buyer quite easily.
- Fast Closing
Closing can be one of the most inconvenient aspects of selling a home, because the timeline can stretch on for so long. When you sell a house to an investor, you can skip the drawn-out closing process. Investors buy houses for cash, so there is no need to deal with the red tape involved with a traditional sale. The home can close in as little as a week. - No Commission Fees
When selling your house to an investor, you’re not required to pay commission fees. This is because an investor is not a real estate agent. They’re a direct buyer and they’re purchasing your house from you, not just helping you sell it. - No Closing Costs
If you sell a house to a direct home buyer, they usually cover the closing costs. This means that you do not have to shell out any extra money in order to sell your home.In fact, much of the time, selling to an investor means that you do not have to spend any money at all on your home sale. An investor often ensures that you do not have to pay to stage the home, repair anything, clean, or meet any contingency demands. - Flexible Payment Options
Selling to an investor can result in a hefty cash payout. However, if you don’t want all of your earnings in a lump sum, you and your buyer can arrange a different payout schedule, including monthly or yearly pay. - Get Paid in Cash
A direct buyer will pay you cash for your home, and because of this, you can have the freedom to do whatever you plan to do next as easily and quickly as possible. You can use your cash payout to buy a new home, travel, or you can save it for the future. - You’ll Never Have to Relist
Once your home has sold to an investor, you never have to worry about it again. You’re free from having to relist, change, stage, show, or any other aspect of home selling that would traditionally happen with a long home sale. - Get Help with Foreclosure
If you’re approaching foreclosure and you want out, selling your house to an investor might be the best possible option. It’s fast, usually free for the seller, and it can relieve you of the stress you’re facing with the impending foreclosure. An investor can take the home off your hands and the foreclosure can disappear so that you’re free to move on with your life. - The Market Doesn’t Matter
Even in a bad market, selling a house to a direct buyer can proceed quickly and easily. You don’t have to wait around for a traditional homebuyer to show up when you get in contact with a reputable investor. - No Complicated Paperwork
Selling your home to investors comes with the convenience of lightening the normally massive load of paperwork. Because there are no financing issues to contend with, the paperwork associated with an investor sale is typically far shorter and more straightforward. You won’t spend over an hour signing stacks of paper with this type of sale. - Potential for flexible purchase arrangements
Some investors are open to the type of purchase they’re willing to get into. If you’re looking for some sort of variable purchase agreement, talk to an investor and they will walk you through the options they’re able to present. - There’s little risk you won’t close for lack of funds
When you sell a house to an investor, you’re usually agreeing to a cash deal. Because of this, the investor is usually prepared upon the closure of the sale to pay you for the property. You’re unlikely to run into any funding issues as the end of the sale approaches when you sell to a cash buyer. - Lower Risk Transactions
If you’re selling your house to an investor, you’ll want to ensure that you’re working with a reputable professional. As long as this is the case, there is almost no risk of anything going wrong with your transaction. A reputable cash buyer cares about their business and their company’s reputation and therefore, they are highly likely to ensure that the sale proceeds fairly. - No Showings
If you sell a house to a direct buyer, you don’t have to deal with having people constantly in and out of your home to look at it. There is no need for showings when you sell to an investor. They will likely look at the house once before they make you an offer and from there, your need to show the property ends. - Move Out Time
Selling to an investor allows you to close on your own time. If you need to plan your move, or you’re not due at your new home until a certain time, you can arrange this with your buyer. There is usually not a strict closing or move-out timeline when it comes to these types of home sales.
Cons
Though selling your house to an investor can be very rewarding for plenty of reasons, there are a couple of negatives that you need to consider before making an informed decision.
These are the four main cons associated with selling your house to a direct buyer.
- Below Market Offers
Investors buy homes to invest in them, and because of this, they usually make offers that are below what the current market might offer. Homeowners need to decide if the lower offer is worth the convenience of a fast sale and no additional costs attached to the sale (no fees, contingencies, etc.). - Beware of scams
Like with any financial agreement, it’s important to be sure that the person you’re signing a contract with is a reputable professional. There are scams in every industry and if you plan to sell your home to an investor, you need to keep an eye out for people who are just looking to steal money or property from you. - You don’t always know who’s buying your property
In traditional sales, you usually meet the buyer or the buyer’s representative. When it comes to selling your home to an investor, you might not have any idea who is actually buying your home. You might be selling to a reputable investor who rents out affordable properties in your area, or you might be selling to an aspiring slumlord. - If the cash buyer is a legitimate foreign investor, it could take much longer to close than with a domestic buyer who needs a mortgage
Even if you’re working with a legitimate foreign investor, finalizing the sale may take longer than you’d like it to. If you’ve got time to spare, this might not be an issue, but if you’re in a hurry to sell, it’s important to get an accurate timeline of the sale before agreeing to sign a contract.
Conclusion
Selling houses to investors is becoming more commonplace in this day and age. Many homeowners are opting for fast, convenient home sales so that they can get through their homeownership burdens faster than expected in a traditional selling arrangement.
If you’re contemplating selling your home to an investor, research your options. Talk to different investors and real estate agents in your area. This way, you can gauge the way each arrangement sounds, and whether it can meet your needs.
Should you decide to sell your home to an investor, ensure that you’re working with a legitimate business before proceeding. Consider the pros and cons of your decision before committing to it.
Selling to an investor can be an excellent choice for many homeowners. If you do not want to invest money or labor into your sale, and you want to close as quickly as possible, selling through this method may be just the arrangement you’re looking for.