Companies that promise to buy homes for cash will do it, but their lowball offers probably will appeal only to desperate sellers,.........Bank Rate's real-estate adviser says.
Q: Our house has been on the market for nearly eight months. I recently transferred jobs to another city, and we desperately need to sell because we are now paying two mortgages.
Should we relent and turn to one of those "buy your house for cash" operations? How do these businesses operate, and how much do they typically pay?
A: Most of these companies are legitimate and basically play the role of a fast-acting, lowballing investor. The larger buyers have good credit lines and can close deals pretty quickly. But they pay MUCH less than the market price. Sometimes up to 50% less.
Still, these businesses have a broadening spectrum of customers in today's market. Sellers include those trying to avoid foreclosure or sell off recently inherited property, homeowners caught in less-than-desirable mortgage structures, people who owe a multitude of back taxes and those who are retiring, downsizing or going through a divorce.
Or, as in your case, they may be transferring jobs. Some sellers don't want to go through the machinations of multiple repairs and welcome the convenience of a quick disposal.
The pluses are that such operations pay cash, move quickly and buy "as is." The minuses are the DEEP DISCOUNTS they command. Critics say they welcome unsavory elements in some neighborhoods when they convert homes to rentals. Proponents counter that they actually help prevent blight by ridding neighborhoods of poorly maintained homes.
What do the companies pay? That can vary widely. Most of them use software to analyze how much a home will cost to repair and how much to offer for it. Officials of such operations have told the media in the past that their aim is to buy at about 65 cents on the dollar, although in some particularly depressed markets that number has dropped to as low as 50%, particularly on condos. Some will merely try to gauge how much equity you have in a house and offer that and little more.
As you might expect, these are some of the lowest of the lowballers out there. The deep discounts, they say, allow them to renovate the place, pay for utility and maintenance costs while it's under renovation, and market the home once it's ready to resell. When these homes are repaired, the firms or their franchisees resell the properties or add them to their rental portfolios.
These days, more of these "opportunity investors" are cropping up. The big and established ones focus mostly on starter homes and rental homes in the $100,000-and-under category in older neighborhoods. But as home values continue to drop and conventional sales slack, some have started picking up higher-dollar houses.
How does the process work? Representatives will come to your home, give it a thorough and free inspection, make their assessment, then make you an offer -- usually within a few days. It will be limbo-low, of course, and they expect you to haggle. Be sure you make at least a couple of counteroffers if you are going this route. If their low offer doesn't offend you, your return offer won't offend them.
Make sure you check with the Better Buisness before making any commitment. There are more and more scammers out there. Ideally, the company will belong to an organization such as the National Association Responsible Home Rebuilders and Investors
To employ an overused term, these companies "are what they are." Most nondistressed sellers won't bite at their offers, however.
There are some companies who will record a lien against your house, as soon as the purchase contract is signed. Read everything very carefully as there may be a commission due even if the transaction does not close!!
****In today's market, you need to be very careful before you sell. There are certainly legitimate companies who will buy your house for a low price. There are also companies who will buy your house, supposedly, letting you off the hook if you need to sell via a short sale/foreclosure. Without your bank's approval and going through a normal closing, this can't happen. BE CAREFUL, you may still be responsible for your full mortgage amount or the difference between the mortgage amount and the sale price. Why not let us handle your sale. We can get you top dollar, including our commission and still get you a bottom line that is higher than these companies. If you need to sell via a short sale, the bank will pay the commission and some other closing expenses.
Call or email for more information. There is no obligation. Email to: nancy@nancymagner.com or call or send text to 305-588-9040 S. Fla.; or 772-692-7848 Treasure Coast.
Nancy A. Magner, P.A.,CRS
Broker-Owner
