Can You Trust "We Buy Houses For Cash Companies"?

Signs at the side of the road that read “WE BUY HOUSES FOR CASH” can be a bit disconcerting at first, but believe it or not, these companies are a legitimate part of the real estate market in Hamilton. The reality is that the We buy houses for cash companies aren’t for everyone, but can be extremely useful for those who need or want to sell their house fast.

While many “WE BUY HOUSES FOR CASH” are completely LEGIT, there are some that are not. Selling to a real estate investor is something that requires some due diligence on your part.

WHAT ARE "WE BUY HOUSES FOR CASH COMPANIES"?

House for cash companies offer to buy your home fast, with no real estate agent involvement. They are private investors who pay cash for your property, and buy it "as is". As they will do all the repairs and upgrades needed, they usually buy at a discounted rate.

THE PROS OF SELLING TO A PRIVATE INVESTOR

FASTER CLOSING TIME

One big benefit of working with an all-cash offer is that the closing process is much faster (and smoother) than working with a buyer whose purchase is financed. To get a mortgage loan fully approved takes at least 30 days. During that time the buyer could drop out of the transaction and the seller would have lost valuable time and money.

When the all-cash buyer and the seller have agreed on a price, an appraisal and inspection are not necessary which also help to shorten the closing timeline; an all-cash deal can usually close in as little as two weeks.

YOU CAN SELL AS-IS

Most of all-cash buyers are investors, which means they will fix the homes that they buy and either flip them (sell them for more than they paid) or rent them out. Those investors usually have their own contractors to tackle those repairs and renovations to get the property to their standards and specifications, that means the seller doesn’t have to worry about it at all.

If your home is outdated or needs repairs adding up to a significant amount, and you have financial or other reasons why you’d rather not to handle those repairs yourself, then working with an all-cash buyer might be an option you want to consider.

THERE WILL BE FEWER (OR NO) CONTINGENCIES

In a financed sale, buyers might request all kinds of contingencies that sellers will have to accommodate. The biggest one is the financing contingency: If the financing doesn’t clear, then the sale will be canceled. There may also be an the appraisal contingency, which stipulates that if the home appraises at a lower value than the sales price. In this case you’ll have to renegotiate the price to more closely reflect the appraisal price. Another option is to pay for repairs needed.

All-cash sales don’t include financing or appraisal contingencies, and other contingencies are usually easier to negotiate for all-cash sales.

THE SALE IS MORE LIKELY TO CLOSE

When the buyer doesn’t need a lender to secure financing to buy a property, most likely the sale close without any problems. There are many reasons why a lending company would deny a mortgage, leaving a buyer high and dry A private investor may not be using a lender at all, hence all of those possible roadblocks are removed. This can be a powerful incentive for sellers to accept an all-cash offer, despite the drawbacks (which we’ll be covered in the next section.) Sometimes it’s preferable to have an almost-guaranteed sale and get the process over with.

THE CONS OF SELLING TO A PRIVATE INVESTOR

EMOTIONAL ATTACHMENT

If you’ve got a strong emotional attachment to your home you might not be happy to sell it to a private investor. Instead of moving into the house and living there, investors will either repairs and upgrades that will help them get a higher price when re-selling it for a profit, or they’ll be renting the house out.

YOU MIGHT NOT GET FULL PRICE

Investors who want to fix and flip your home have one goal in mind: To make a profit . This means that they’ll need to sell it for more than they paid for it and more than they spent to fix it, and their offer will be less than the market value of your house. On the other hand, because you are not paying a commission, you may get as much as if sold through a real estate agent.

SPOTTING A SCAM

Most companies that buy houses for cash are completely legit, but there are some that are not. Learn to recognize the early warning signs of a scam. Here are four things to look out for when selling your home for cash:

1. The Buyer Approaches You
2. They Offer to Pay List Price
3. They Don’t Need to Inspect the Property
4. They want to communicate only through Email

One big red flag is an all-cash buyer that wants the seller to pay an application fee, be ware that it’s most likely somebody trying to take you for a ride.

There are some common house flipping scams that all sellers should be aware of. Selling to a private investor is something that requires some due diligence on your part.

Other things to consider when working with all-cash buyers

LAWYER ADVICE

You should hire a lawyer to handle the paperwork involved to officially transfer ownership of the property and to make sure that you get payed as promised.

Explore other options

If you’re in a financial or life situation that is driving your desire to sell — and sell quickly — be aware that you might have options beyond selling to an all-cash buyer.

1. Before deciding whether to go ahead with all cash buyer company, ask some local estate agents what price would get you a quick sale.
2. If the reason you’re selling is you’re struggling to keep up with your mortgage payments, contact your lender to discuss your options.
3. If you’re selling your home to pay for your long-term care, make sure you’ve looked into all the alternatives and have spoken to an independent financial adviser who specializes in funding long-term care.

Some homeowners think working with a realtor is the best possible way to sell their home, others believe that an all-cash buyers are their best option. It really depends on the situation, every deal is different! Make sure you fully understand the pros and cons of each of them before committing yourself (and your biggest asset) in writing.