House buying companies, a new option
I received the note above in my mailbox a while back. A friend across town received one too. Maybe you got one?
I’m always interested in non-traditional home buying and home selling techniques. My favourite is still a company that used to advertise along Highway 6 with a billboard that read, “We buy ugly houses!”
- Q: Does that really work?
- A: I haven’t seen that type of advertising for a while so I suppose not.
Property investors, in my experience have a hard time competing in a Seller’s Market. With two or twenty other offers trying to buy a property, investors looking for their next flip or cash flow, ROI… focus too much on profit and loss statements and are unlikely to throw caution to the wind when bidding gets crazy.
That makes sense. They are only in it for the money.
But property investors are also sometime well connected and cash rich. Home sellers looking for a quick sale clearly have a new option. If you believe the note that says 42 happy sellers have used their service ( I do) then read on.
The pros and cons of using a house buying company when selling your home
1) They will buy your home “as is”
Almost everyone does decluttering, depersonalizing, and minor repairs and improvements before listing their homes for sale. If you want to do nothing in preparation for your sale, selling to a house buying company is worth considering.
I can think of two or three scenarios where you might not want to have nothing to do with the home preparation
- There has been a personal tragedy in the home
- You’ve inherited the home (and you live far away)
2) Cash offer
There are likely good at what they do. They will know the market value. They will be able to inspect the home and will have the financial connections to offer a cash deal. There may be a waiting period (conditional upon bank appraisal), maybe not.
3) No commission
Although home sellers using real estate agents know that they have received fair market price for their home, they still do not like paying commission. As there is no real cost to you for selling your home to a home buying franchise, in theory, you should be able to knock 4 – 5% off the best comparable home sold recently in your neighbourhood.
That is a good savings.
4) Quick closing
The fastest I’ve ever been able to close a deal was 17 days. Most lawyers like to have at least three weeks to a month. Home buying companies can close fast.
5) Long closing
At the other end of the spectrum, though 60 and 120 days are not uncommon, most home buyers like to close, in about 90 days. Local homebuilders were taking over a year to deliver new homes recently, so I can understand at least one reason why a home seller might want a long closing.
The cons of using a house buying company when selling your home
There is only one bad thing.
Fair market price
I noticed (because I’m a Realtor) that the note I received in my mailbox used the phrase (in CAPS) “at fair cash offers!!” not “at fair market price”, as we never know what market price is until a property actually sells. The only real negative to using a house buying company that I can think of is that you will never know what you could have received for your home on the open market.
Essentially, I think home sellers who may choose to answer an advertisement from a house buying company are paying for convenience and in some cases that would be worth it.
When is the best time to sell?
In my area, iBuyers charge “fees” equal to or greater than commission. But the speed and the certainty can be worth it in some circumstances.