Should I List With an Agent or Sell to a Home Investor?
When making plans to sell a house, homeowners face a big decision: should they work with a local real estate agent and list on the open market or sell to a home investor? As investor sales continue to develop, so do the options available to sellers.
Here is what to know about both paths — and how to choose the right option for you.
What is the difference between a typical homebuyer and an investor?
Perhaps the biggest difference between the typical homebuyer and an investor is their intentions for the property upon buying it. In the case of the typical homebuyer, they’re looking for a permanent residence for themselves and their family.
Investors, on the other hand, see your home as a business opportunity. Depending on the type of investor, they may be looking to make some renovations and flip the house, or they may want to invest in rental property for income.
4 Common Types Of Investors
According to the National Association of Realtors, cash sales grew by 7% in the hot market of 2021, accounting for 23% of existing home sales. In particular, investors bought a quarter of all homes in 2021, according to researchers at the Pew Charitable Trusts. Much of this growth came from the rapid rise of investors and iBuyers that are coming onto the market and snapping up properties.
At the end of 2022, higher interest rates pushed buyers using a mortgage to purchase their home out of the market. This increased the percentage of homes purchased with all-cash offers up to 28%. Challenging economic conditions also prompted investors to pull back on home buying activity.
What’s important to understand, is that not all home investors are the same. Here are a few of the most common investor types you’ll run into as a home seller.
1. Buy-And-Hold Investors
A buy-and-hold investor is just as the name suggests: they intend to purchase and own a property for an extended period of time. Typically, these investors will use the properties as rental income, counting on both the rental payments and property appreciation to turn a profit.
These investors often target single-family homes or condos in growing neighborhoods that are in turnkey condition. This allows them to maximize the amount of rent they can charge for the property (as well as get renters into the house as quickly as possible).
2. House Flippers
House flippers, on the other hand, take a very different approach to real estate investing. Using a buy low, sell high strategy, these investors purchase properties (often at a deep discount) that they can fix up and sell for a profit.
These homes often need substantial repairs or renovations that the homeowners don’t have the time, money or interest in taking on themselves.
3. Wholesale Investors
These investors will buy properties at well below market value, with the goal of selling to another investor for a higher price. They often re-sell properties almost as quickly as they purchased them without making any improvements first.
iBuyers may be the new kids on the block, but sales to these companies are quickly gaining steam — and contributing heavily to the growth in all-cash offers over the last few years. iBuyers, or instant buyers, provide a simplified online home-selling experience in exchange for a convenience fee. They look for homes in good condition that they can purchase and resell quickly (typically without renovations) at a lower per-sale profit margin than you’d see in a flipper sale.
JC REInvestment Group "Your Florida Home Buyer®" is one of Florida's big iBuyer players with a Simple Sale platform that will provide sellers with a quick cash offer and the ability to close quickly on their schedule.
Four Advantages Of Selling Your Home To An Investor
Although it may not be the right choice for everyone, there are many sellers who will benefit from working with an investor. Here are a few benefits it provides — as well as how to determine if it’s the right decision for you.
1. A Hassle-Free Sale
When you sell your home to an investor, you’ll get a quick, cash offer without having to go through the typical process of cleaning and staging the house, dealing with real estate showings and paying for repair or renovation work.
According to Inderrieden, this type of sale can be appealing to someone who inherited a home — particularly if the home is in a different city or state. “It’s generally people who aren’t keen on maximizing value,” he says. “They just want to walk away and not see that house again.”
2. No Financing Delays
Although the number of cash sales has been growing, 87 percent of recent home buyers financed their home purchase. This not only adds extra time to the process (it currently takes 47-50 days to close a purchase loan), but it also adds a layer of uncertainty that can be stressful for buyers and sellers alike.
A cash sale means no financing contingencies based on the results of an appraisal or the buyers’ finances — either of which can create further delays or cancel the deal altogether. In fact, both investor and iBuyer deals can close in a matter of days.
3. No Repairs or Renovations Needed
According to the latest data from the National Association of Realtors, 36% of homebuyers are looking for a turnkey property that requires little to no repair or renovation work. If you have a home that needs work, and you lack either the funds, time, or the interest in making those updates yourself, selling to an investor might be an appealing option for you. An investor (particularly a flipper investor), will typically purchase your property as-is, taking into account the needed repairs and renovations when making you an offer.
4. Greater Flexibility
Whether you’re relocating for a job in another state or a family emergency, there are situations that may require you to pick up and move quickly. In addition to avoiding financing delays, investors may be more flexible with the close date than a traditional buyer.
The closing date is often up to the seller (within reason) so you’re free to choose the date that works best for your timeline, whether that means selling ASAP or timing it just right with the close of your new house. You may also be able to leave stuff behind you don’t want, which isn’t always an option in a traditional sale.
Six Questions To Ask Yourself Before Selling To An Investor
Looking To Sell Your House?
If you need to quickly settle an estate, split marital assets in a divorce, or relocate out of state swiftly for a new job, you can’t always afford to wait around for the standard 47-50 day — or longer — closing window. Home investors are much more willing to work with you and your timeline than traditional homebuyers — and can complete the entire sales process in a matter of days.
When deciding whether an investor might be interested in your home, keep the following in mind:
- Buy-and-hold investors are looking for single-family homes or condos in up-and-coming neighborhoods to rent out.
- Flippers want a deal on an “as is” property, often single-family homes, that they can renovate and sell quickly for a profit.
- iBuyers want a home in good condition typically valued within $200,000 to $500,000.
Depending on your market, multiple types of investors might be interested. Minteer says that “the majority of the properties that we see go the direction of an investor sale are the ones that need more love.”
Of course you want to make money selling your home, but you also have to consider the cost of preparing the house for market, as well as the repairs a potential buyer might ask for after the home inspection process. The costs can be steep, with a recent survey finding that the average cost of selling a house (including agent fees and closing costs) is $21,000. A bad roof, faulty plumbing and HVAC issues can run up to $10,000 each in repairs alone.
As you compare an estimation of what you could fetch on the open market against a cash offer, you should calculate your estimated net proceeds rather than compare offers at face value.
If you’ve already got your eyes on a new property and need the proceeds from the sale of your house to take the next step, then a cash sale liquifies your assets faster. Investors can typically close on the date of your choosing, even if it’s within a few days, and in some cases, they “can provide specialized solutions for each specific seller’s situation. For example, they can release the money to the seller early to help pay for moving expenses if cash is tight,” says real estate investors at Your Florida Home Buyer®.
If you’ve inherited a property that is out of the area, the process of cleaning out the home, staging it for sale, and being present for the closing process might seem like more than you want to take on. In this case, working with a local investor — particularly one who will manage the home cleanout, as well — could be the quick solution you’re looking for.
Yes, but like all things, not all home investors are created equally — and there are some bad apples in the mix.
As we previously mentioned, this is why it’s so important to get multiple quotes, do your research, and have a top real estate agent on your side who can help you evaluate offers and ensure you’re making the right decision for you and your financial future.
We at JC REInvestment Group “Your Florida Home Buyer®” offer a hassle-free solution that allows you to sell your house fast. When you deal with us, we handle all of the paperwork. Plus, we have our funding lined up and ready to go before we even discuss your house. We are professionals and know how to navigate the transaction process with the least amount of hassle or time wasted.
If A Simplified Sale Is The Priority, Selling To An Investor Might Be Right For You!
Now that you understand the key differences between selling to a traditional homebuyer and a home investor, the next step is to evaluate which path is right for you. As we stated earlier, while working with an investor won’t necessarily result in the biggest financial gain, what it will bring you is a speedy and simplified selling process.
We at JC REInvestment Group are professionals and know how to navigate the transaction process with the least amount of hassle or time wasted. We offer a hassle-free solution that allows you to sell your house fast. When you deal with us, we handle all of the paperwork. Plus, we have our funding lined up and ready to go before we even discuss your house. We pay cash which allows us to buy as-is & close when it’s most convenient for you!