Should I Sell My House To An Investor In Warren, MI?
The Rule of Thumb
The rule of thumb is that if the house needs a lot of work or you are in a hurry to sell, your choice should be to sell to an investor for cash. (Although in a strong sellers’ market like we have now if it is nice, I can sell it as an agent right away). The reasons are simple. An investor with cash could buy the house on the spot and you are done. Now typically, you need to schedule an appointment with the investor. They normally will come out that same day or the next. Once they see the property, they can usually make the offer on the spot or shortly thereafter. Most likely they will need to order title work to make sure you are the person who has a right to sell the property, which can take a few days. Then closing is scheduled, which can be within a few days and the deed and closing documents are completed. Presto, you have your cash (Usually you get a cashier’s check or you could for about $20 have it automatically deposited in your account.
When an investor comes out to see your house, it is not like “showings” to retail buyers when the house is listed with an agent. Investors buy “as-is – no need to clean up or leave. There is no embarrassment if the place is a mess or in disrepair. I have bought cluttered and hoarder houses without hesitation. Even smelly ones!
Many investors will tell you closing can be within 7 days or 14 days. The fact is – it all depends. Does the title work reveal something that requires investigation or additional work, or is there a mortgage of which the closer needs a payoff statement? Further, in some cases, the investor needs to get the cash, either by a loan or in pooling from other investors. Sometimes, the investor may even need a little time because he is not the actual one who will be buying the house: he is going to be selling the agreement he has to buy the home from the homeowner to another investor for a profit (called “Wholesaling”). Nothing really wrong with selling the original sales agreement (called an assignment) but it can extend the closing somewhat to bring the real buyer on board. Although if the wholesaler overvalues the house in his purchase price, he may back out of the agreement with the homeowner because no other investor will buy the sales agreement at that price.
How We’re Different
Our team has for years bought houses for investors, not always as a realtor, and have rehabbed them or used them as a rental. We still do, always having a couple of projects going on at all times. Sometimes, due to timing and other factors, we have wholesaled to other investors. We have never had a problem with houses we wholesaled and it has always worked out for the sellers as they get the price they agreed to. Either we buy the house ourselves or one of our numerous colleagues buys it under the terms we negotiated. We rehab so many houses and other investors are so anxious to rehab houses we find, we are able to close very quickly. The other benefit to the homeowner of selling to an investor is you can discuss with them how soon you want to move out. If you sell on the market, the buyer usually wants occupancy immediately at closing or within 30 days thereafter.
I have actually purchased a house as an investor and closed it within two hours of first contact with a homeowner, but that is unusual. Count as typical, 2 weeks two weeks to close when you sell to an investor. In my two-hour closing, I was driving around and went up to the door of a house that looked empty and in need of repair. The owner did not live there; it belonged to them for years and had been a rental but the long-term tenant had recently moved out. The homeowner owned the house free and clear – there was no mortgage on the property. I was able to see the house on the spot, and I was able to make the owner an offer the right way because I knew the neighborhood and I am always prepared with contracts in my briefcase. The owner accepted my offer after discussion, I went to the local Starbucks with my laptop and searched the Register of Deeds records for the house (I am familiar with this search and confident I can do it correctly). While at Starbucks, I prepared the deed and closing documents (forms on my computer) and sent them to a branch of my bank in the area. Both the seller and I met at my bank, signed the documents that the bank printed, witnessed, notarized, copied, and the seller was paid the purchase price. This obviously is not a typical cash sale in that it usually will take a week or two, and I usually let the title company do the title work and other tasks of a closing. But I think I got the deal because the homeowner was fed up with the property and was in a hurry to get on the road back to Florida.
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In addition to homeowners doing cash sales when they are in a hurry, need the money quickly, or are fed up with the property, sometimes only an investor can see a property’s potential. If they listed it with an agent and placed it on the MLS, potential retail buyers may not be attracted to the house. But investors know what can be done to improve it and know the cost and potential return if it was restored to a desirable house. Another factor that requires a cash sale is where because of an issue with the property, a mortgage could not be obtained on the property as-is. It could be that a buyer could not get a mortgage on the property because of needed repairs or the house is missing certain necessities, like a working furnace, plumbing, electrical, etc.
If a homeowner can only get cash for a home, they are better off not hiring a real estate agent. They should get the best cash deal from an investor that they can because, regardless of whether it is listed on the market on the MLS, an investor is almost always the only one who will have the cash available to buy it in any case. Why pay the commission and closing costs if you can avoid it? You know your price will be significantly lower because of the condition of the property. There are investors ready and willing to pay you a fair price in cash, as-is, and pay your closing costs. Really, once you determine the recently sold prices of similar houses in the same area, factor in the condition of the house you are trying to sell, look at the cost of renovating the house so it is desirable, take off the holding costs, the later sales commission and closing costs, the 90 days to 6 months of waiting for an offer if it is listed, the inspection process where you may be asked for repairs or knock more off the price, the retail buyer asking you for concessions on their closing costs (can be up to 6% of the purchase price) and of course the much lower offers you will receive for distressed property, the cash offer is usually your NET PROFIT anyway.
I am a realtor with Keller Williams Platinum serving the metropolitan Detroit area, and I list houses on the market and I help buyers find houses that they crave. As you can see, I am not trying to persuade anyone from listing with a realtor. I’m just trying to be real! I have personally and professionally done both: sold and bought houses on the market and also personally for myself as an investor. If you have the time and are willing to wait for that special buyer to come around and see your house, and your house is in good condition in a desirable area, by all means, list with a realtor and get the best price you can. In most markets, in these situations, the house will not be on the market long, your price will be high enough, the inspection will not turn up many repairs and the buyer will be so anxious for the house they will handle issues and costs that arise by themselves. I have special techniques and methods that get these nice properties in front of so many potential buyers that offers flow in quickly.
But if the property doesn’t meet the condition of houses described in the last paragraph, look very seriously at selling for cash to an investor. You will save time, aggravation, and probably end up with the same or even more money in the long run for your house.