I've been seeing signs that say "We Buy Homes" or "Cash for Your Home". What's the deal with those?
While I can’t speak for the business model of any particular company, the We-Buy-Homes people typically purchase property with the intent of selling it to someone else for a profit. This means they want to buy your house for wholesale (at or below 80 percent of market value) so they can sell it to another buyer at retail prices.
If you have to sell quickly, or if your home needs significant repair, this can be a good option. But if you are trying to maximize your own profit on the sale of your home, selling it retail with a good Realtor will most often net you the most money.
If you’re thinking about doing business with one of these individuals or companies, here are a few things to keep in mind.
· A popular sales pitch for this type of transaction is that you will save money by not having to pay commission to a real estate professional. Make sure you have a good idea what your house is worth so you don’t give away more money in equity to your fast-cash buyer than you would have paid in commissions.
· Beware of people who want to buy an option to purchase your home; ask you to sign a contract they plan to transfer to another buyer; or offer to take over the payments on your loan. These tactics usually give your potential buyer a ton of power and the ability to walk away from the deal with little recourse for you. You take all the risk and whole thing has a good chance of blowing up in your face.
· If the fast-cash buyer offers to buy your home on a short sale, watch out. It is not uncommon for some investors to be working several of these deals at once. He closes on whichever deal gets worked out with the bank first and then abandons the others.