Are House-Buying Companies Worth Your Time For a Fast Sale?

Life is all about knowing your options and selling your house is no different. As a seller, you don’t have to rely on the average home buyer to purchase your property. One option available that you may not have considered is to look into companies that buy houses!

You’ve probably seen those ads from companies claiming that they’ll put cash in your hand today and buy your house tomorrow! But, how legitimate are these companies? How much do we really know about companies that buy houses? 

Well, this guide is the perfect place to start your research!

What is a house-buying company?

A house-buying company is a company that deals with the homeowner directly to purchase their properties. Selling your house to these companies is a faster (and often simpler) way to sell your house without dealing with a real estate agent or trying to sell the house on your own.

There are 4 types of house-buying companies: 

• House flippers buys the property, renovates it, and sells it for a 10% to 15% profit, depending on size, location, and depth of repairs and renovations that need to be done.
• Buy-and-hold companies will buy a property and use it as a rental property. These companies can be small ma-and-pa type property management companies but there are large companies that do this, too. 
• iBuyers is a business that relies on technology and real estate market data to make an immediate offer on a house, sight-unseen. These services will charge a fee to handle the marketing and sale of the house. If the home inspection shows any repairs need to be made, the business usually asks for credit at closing. 
• Trade-in companies will offer to buy you a new house and will use your current home as collateral. Sometimes the company will even allow the homeowner to rent the new home until their old one is sold.

How does the process work?

The way the process works to work with a house-buying company will vary from company to company, but here are the general steps you can expect: 

• Either the seller or the listing agent will contact the company and will share pertinent information about the house. 
• The company will make an appointment to tour the home to check out the condition of the home and see if any repairs need to be made. 
• The company will do it’s research to find out the market value after repairs have been made – also known as after-repair-value.
• Company makes an offer that includes the price they’re willing to pay, terms of sale, and possible closing date. 
• Negotiations ensue and the closing date is finalized once agreements have been made. 

Pros and cons of house-buying companies

Before you make any big decisions, you’ll need to weigh the pros and cons. 

Pros: 

Fast sale – Usually selling a house will take anywhere from 21 to 24 days. However, these companies can close on your house in as little as seven days! 

Sell as is – House buying companies aren’t afraid of a house that needs some work because they’re willing to make the improvements necessary to be ready to rent or resell. 

Inspection contingencies – Selling to one of these companies typically reduces how intense the home inspection will be. 

No staging – If you’re selling, you’ll typically want to get your house in showing condition. You don’t have to do that when you’re selling to one of these companies because they don’t care about the pets, personal touches, and the cluttered playroom!

Cons: 

Low offers – These companies aren’t looking to pay top value for your home – they want to buy below market value so they can make a good profit. Sellers accept this because the company typically pays in cash and will close quickly. 

Backdoor buyers – There could be a chance that the company you’re selling to could sell the house to another buyer who could back out of the deal, meaning your deal falls through.

Risk of being scammed – As a whole, home buying companies are legit, but there are some that aren’t. If this is something you’re considering, you’ll need to do your research to be certain you’re working with a reputable company. 

According to insights from top agents, millions of homeowners are at the risk losing their homes once the mortgage forbearance ends. Selling to a house-buying company could be your way to avoid potential financial ruin. And, with the roll out of the COVID-19 vaccine and real estate market improving, you could take the money you earn from the sale to find a home that best suits your needs at this time.