As a Real estate investor is important to understand the options every home owner has when selling.
This can be very beneficial to be able to understand their situations and see if we can be a good alternative
I would love to buy every single house that I schedule an appointment to meet the owner, but lets be honest, sometimes we are not their best alternative
So let’s review a few options a homeowner will have.
What is the best alternative for the seller
The sellers outcome is what determines the right choice
Not all home sellers are the same. As an example If they inherited a property and have no urgent need for cash, the house is in great shape, perhaps a traditional sale is the right one.
If you need to get cash in hand quickly, selling to an investor may be the best choice or selling at the auction.
Understanding the pain or seller’s motivation will be a great measurement to point them in the right direction.
Now lets explore the different alternatives the seller has when selling a house
- Traditional sale using a real estate agent
- For sale By Owner
- As-is sale to an investor or a house buying company
- Selling at auction
Selling the Traditional Way with a Realtor
Pros
With the traditional sale, the homeowner will need to hire a realtor or a real estate agent to negotiate the sale of the house on their behalf. The agent will walk the homeowner through the selling process.
Make sure to choose the right realtor, because like every other profession, you can get weak representation.
A great benefit of working with a real estate agent, especially if your house is in great condition, is getting the highest price possible. A professional agent knows how to show your house at its best and the agent will be provide a list of recommendations for the homeowner to follow.
Cons
In order to get the most price for the house, there are lots of details the homeowner will have to do, based on the suggestions from the agent
The homeowner cannot have a guarantee closing date. Just keep in mind the property could be under contract for 60 days and at the last minute that the buyer cannot close.
I have been under contract for several times with qualify buyers and days before closing the deal felt apart. this is very frustrating when the house is renovated and you have the home for 6 months on inventory and I have to pay all the fees while is sitting there waiting to close
Other things the seller has to consider when selling their property:
- Multiple open houses and visits from buyers to see the house. The seller will have to leave the house for an hour, waiting for the property to be shown multiple times a day for 45-60 days until the property goes under contract.
- The house must be cleaned at all times — no clutter around the house
- Repaint the house and do some repairs if needed
- A Buyer home inspector will list every detail of all items the house needs to be fixed or replace
- A home buyer will expect you to fix just about everything the inspector finds
In general, expect to pay around 1.5 percent of the sale price on inspection repairs, plus six percent to the two real estate agents (three percent each to listing agent and buyer’s agent).
Other expenses you may not have counted on include roughly two percent to the title company (which includes escrow and recording fees, plus title insurance).
Even after you finally get through inspections and the option period, you still face the appraiser. The appraiser will determine if you can sell your house for your listed price. Three different companies may appraise the same property and provide wildly different values.
A $200,000 home may be appraised as much as $15,000 under or over that price. One worst-case example is a home listed for $220,000, under contract for $215,000, but appraised at $180,000.
For sale By Owner
Pros
The home owner gets to keep the 6% a real estate agent will get when selling the traditional way
Cons
Selling your home “By Owner” is very similar to selling with a real estate agent; the only difference is the seller have to do all the work.
Market the property, find the buyer, show the house, negotiate the sale,write the contract and disclosures, and so on.
Most buyers will need to get financing so there will be a risk of appraisal. There will still be closing costs and fees that need to be paid.
This is a great solution again if you have time and are comfortable in handling the sales process.
Selling to a real estate investor
Pros
Selling to a real estate investor is a great alternative when selling the house As-Is, no repairs, and no headaches.
A real estate investor will offer a flexible closing date.
The real estate investor should only have to visit the house a few times during the selling process
The house will not need to be appraised because the house-buying company will be using their own cash or money from a private mortgage company that does not require appraisals.
Additional advantages:
- No need for inspections — The real estate investor is buying the house “as-is,” the seller does not have to fix a thing
- No showings
- Most of the time the investor will pay all closing costs
- No last-minute rescinding of an offer —The investor an put down a large, nonrefundable deposit so the seller know they can close with confidence
- If there is a title issue on the house, a professional real estate investor should have experience cleaning title and can help the seller through this process
Cons
When working with a real estate investor the seller will not get the highest price, the seller is willing to sacrifice some of the equity for the convenience of selling the house in just a few days, without doing any repairs.
Also, all real estate investors are not the same. Some unscrupulous investors will say yes to everything just to place the house under contract, but knowing they wont be able to perform. they may string the buyer along and then not close.
As a professional investor, be honest with the seller. I rather tell the seller that I think at that price I cannot close myself, but I would like to have two weeks under contract to see if other investors are willing to buy it as they have different criteria, but if they are willing to lower the price where I need to be I will buy it myself. then is up to the seller to make that decision
I rather be upfront
Auction Sale
At auction, the seller is not going to get top dollar for the home. they will have to pay fees to the auction company. A house sold at auction may not be open for inspection or even a walk-through. While not the most desirable way to sell a property, an auction sale is still a possibility for many sellers.
Whether the seller chooses the traditional route, For Sale by Owner, the real estate investor, or an auction, make sure to pick choose a great group or team to work with when selling, because a strong company will make the process much smoother.
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