Have you noticed those billboards all over town? The ones that say “We Buy Houses”, “Cash for Houses”, “Sell Your House Fast” or some variation along with a phone number? They are everywhere. What’s the deal with those signs? Why do people want to pay cash for houses?
Well, most of those signs are put up by real estate investors. We pay cash for houses as investments. We buy houses below market value, fix them up, and sell or rent them for a profit.
You may be wondering why anyone in their right mind would sell their home for below market value, and that’s a good question. There are actually many reasons why people might want to sell a house quickly. Perhaps they inherited a house far from where they live. Many people in this situation don’t know where to start selling their property, and the prospect of selling it in a matter of weeks for cash is very appealing to them. Some other people who might want to sell quickly for cash include: those facing foreclosure, divorcing couples, tired homeowners, and people who don’t have the time or cash to do the repairs themselves.
In a traditional real estate transaction, you would list your home with a real estate agent, make any necessary repairs, prepare the home for showing, and put it on the market. Depending on the market, your home could sell for anywhere from a month to over a year. You would have to deal with potential buyers constantly walking through your house, and when you finally got an offer, buyers will use property inspections and appraisals to try to further reduce the price or make repairs before closing. After it’s all said and done, you’re paying closing costs (such as escrow fees, title insurance policy, and home warranty), real estate agent commissions (usually 6% purchase price), holding costs during the time your home was for sale. market (mortgage payment, home insurance, property taxes, utilities and maintenance). Often you will also have to pay for professional photography or staging up front.
Once you add up the costs, time commitment, and hassle, it’s no wonder many people are looking for other options to sell their home. For many people, those “We Buy Homes” signs are the breath of fresh air they’ve been looking for. While it’s not necessarily the best option for everyone, if you run the numbers and consider the value of your time and sanity, it often makes a lot of sense to see if an all-cash offer from an investor might work for you.