Top 5 We Buy Houses for Cash Companies in Minnesota

Clever's Real Estate Experts compiled objective overviews of five companies that buy houses for cash in Minnesota. Our assessments are based on publicly available information — we've sifted through everything to present the pertinent factors you need to know to make a decision.

The traditional home selling process doesn't work for everyone. In Minnesota, a typical home sale can take 97 days from listing to closing. Some homeowners can't wait that long.

Enter "we buy houses for cash" companies.

These, and other types of cash buyers, offer a fast solution for homeowners. They purchase houses "as-is" — that is, in their current condition, without any repairs or prep — and pay in cash, so sellers don’t have to wait for a buyer to get a mortgage approval. The process is quick, easy, and requires no repairs or home prep.

For home sellers who need to sell in a hurry, want to avoid repair costs, or are looking for a more convenient selling method, a cash buyer can be a great option. But they're not right for everyone.

To ensure a profit, "we buy houses for cash" companies make offers that are well under fair market value. The speed and convenience they offer doesn't always outweigh the hit you could take to your bottom line.

In this article, we explain how "we buy houses" companies work, review five legitimate companies in Minnesota, and break down examples to help you understand how much you can make selling to a cash buyer compared to other alternatives.

Read on to make an informed decision — and maybe find the buyer for your home!

How We Buy Houses for Cash Companies Work

While the smaller details and timeline varies from company to company, "we buy houses for cash" companies all share a basic business model.

• After being contacted by an interested home seller, the cash buyer assesses the property, focusing on factors like necessary repairs and the potential resale value.
• Based on the amount of time and money they'll need to invest in the property, the investor makes an "as-is" cash offer.
• If the homeowner accepts, the deal can close quickly because there's no need to negotiate, wait for financing approval, or inspect and appraise the property.
• The cash buyer repairs the home and then resells it for a profit.

The quick process benefits homeowners who don't have the resources or time for a traditional sale.

For perspective, in Minnesota houses typically spend 52 days on the market before the seller accepts an offer. Then there's the closing process, which takes between 30 to 45 days if the buyer is applying for a mortgage. That means it can take the typical seller up to 97 days to finalize the sale.

In comparison, some "we buy houses for cash" companies in Minnesota can complete the whole process in as few as 7 days.

Traditional Home Selling Timeline vs. "We Buy Houses for Cash" Companies

Many "we buy houses for cash" companies advertise that they'll send you an offer in as few as seven minutes. This is not an official offer.

After talking to a company representative, they'll give a ballpark estimate of what they'll pay. Very few investors will make a binding offer sight-unseen — and if they do it'll be substantially lower to account for possible issues.

Once you schedule an in-person inspection, the investor will present a legal offer, often on the spot.

Also, know some of the bigger, well-known companies aren't the actual buyers. They are a network of local investors, or they collect interested sellers' information and pass it on to flippers. In these cases, how long the process takes will depend on the investor in your area.

For example, we called five "we buy houses for cash" companies that advertise offers in less than an hour — none of them responded within that time frame.

>>LEARN how "we buy houses for cash" companies work

We Buy Houses Companies in Minnesota: Reviews

Express Home Buyers

Minnesota Home Guys

We Buy Houses

Ryan Buys Houses 4 Cash

We Buy Ugly Houses

>>LEARN more about national "we buy houses for cash" companies

How Much Will We Buy Houses for Cash Companies in Minnesota Pay?

"We buy houses" companies use the 70% rule to ensure they'll make a profit. Basically, the 70% rule says the buyer shouldn't pay more than 70% of the home's After Repair Value (ARV) — what they hope to sell the house for — minus repairs.

Selling a House to a Cash Buyer in Minnesota: 2 Examples

"We buy houses for cash" companies use home values of comparable properties to estimate ARV. Assuming your house is the same size and has the same layout as most homes in your area, your city's average home value is more or less the ARV a cash buyer is shooting for.

However, the cost of necessary repairs will significantly impact the offer you receive.

For many sellers, being unable to pay for repairs limits their options. You need to consider whether paying for repairs out-of-pocket is an option before deciding to sell to a cash buyer.

Let's look at some examples of cash offers a home seller could expect in different Minnesota cities versus what it would cost to pay for repairs out-of-pocket.

Home in Bloomington in Need of Major Repairs

Say your home is in Bloomington, where the average home value is $303,496. Your house needs a new roof (average repair cost: $724), a kitchen remodel ($28,921), foundation repairs ($3,766), and sod installed on the lawn ($1,509).

Here's how a cash buyer will calculate their offer:

_{Cost of repairs based on HomeAdvisor Local averages (June 2020)}

The offer may seem low, but most homeowners don't have almost $35,000 to pay for the repairs. In addition, more extensive repairs can easily get out of hand and exceed the average (i.e. a kitchen remodel with new cabinets, counters, and appliances can cost upwards of $50,000).

To avoid that out-of-pocket expense and the risk of spending more than you'll get back, in this example, it's understandable why a seller would accept an offer that is about 42% below fair market value.

If the cost of fixing your home is similarly high, selling to a "we buy houses for cash" company may be your best option.

Home in Minneapolis in Need of Minor Repairs

In Minneapolis, the average home value is $297,907. If your house needs minor repairs like new carpeting ($1,476) and a fresh coat of paint ($2,594), here's how a cash buyer will calculate their offer:

_{Cost of repairs based on HomeAdvisor Local averages (June 2020)}

In this case, the total cost of professional repairs is $4,070, but the offer is 31% below fair market value.

Instead of selling to a "we buy houses" company and losing almost $94,000, it might be a better option to pay for the repairs, make some minor fixes yourself, or offer traditional buyers a repair credit.

Are "We Buy Houses for Cash" Companies Scams?

Many "we buy houses for cash" companies in Minnesota are safe and completely legal. They provide a valuable service to homeowners who need to sell their homes quickly or can't afford to make repairs. Many local cash buying companies are family owned and work with sellers to meet their closing and moving timelines.

That being said, as with any industry, there are bad apples. If a "cash buyer" approaches you, check that they have an established web presence and customer reviews before giving them your personal information.

Also read all the fine print on any contract they present you. Look up words or terms you don't understand. And never assume the contract says what you agreed to verbally.

Most importantly, look at the contract's contingencies. These are the conditions that allow the buyer to back out of the sale or change the terms. Unless you understand the contingencies, you could be taken advantage of.

How Much Does Selling to a Cash Buyer Cost?

Every real estate transaction has costs that can add up quickly. Expenses like closing costs, repairs, and real estate agent commissions can eat away at your profits.

Luckily, when you sell to a "we buy houses for cash" company, you avoid many traditional selling costs like:

• Realtor commissions
• Closing costs
• Staging
• Seller concessions

When you add all these expenses up, selling to a cash buyer can have significantly fewer costs than a typical home sale. However, given the lower sale price of selling to a "we buy houses" company, the savings don't always make up the difference.

Let's take a look at four different ways to sell your home and how the costs compare:

Selling Cost Comparison in Minnesota

_{*Based on 2020 iBuyer Report
^Minnesota seller concessions and commission rates based on a Clever survey of 500+ real estate agents}

Repair Costs

Many cash buyers advertise that home sellers do not have to pay for repairs. And it's true. You don't have to open your wallet and pay for a contractor or repair supplies. However, since cash buyers take on these costs themselves, their offers are lower to make up the difference.

So when selling your home, consider the different ways necessary repair costs impact your bottom line — both positively and negatively.

_{*Based on 2020 iBuyer Report
+Based on a Clever survey of 500+ agents; 85% in Minnesota said repair credits rarely exceed $5,000.}

Carrying Costs

Many homeowners sell to a "we buy houses for cash" company because speed is their biggest priority. They might need to sell quickly to avoid foreclosure or to get out from under the costs of owning an unwanted property, also known as carrying costs.

Every day you wait to close your sale, you lose money on carrying costs. Here's how those costs break down in Minnesota.

Average Carrying Costs in Minnesota

_{Carrying costs based on data from the U.S. Census, Insurance.com, Move.org, WallerHub, and Clever Real Estate}

Now let's look at how these costs can add up depending on how long it takes to sell your home in Minnesota.

Total Carrying Costs

_{*Based on the average time it takes for homes listed with Clever to receive an offer}

Total Selling Costs in Minnesota

Let's get down to brass tacks: How much can you expect to make selling your home to a cash buyer versus with an agent on the open market?

Looking at an example with actual numbers will help you see if selling to a "we buy houses for cash" company is really worth it for your situation.

Here's how much a seller in Minnesota can walk away with using the state's median sale price of $273,000 and its average selling cost rates (closing costs, repair costs/credits, carrying costs, etc.).

Minnesota Cost Breakdown

_{*Based on the 70% rule and assuming the house needs 10% of its ARV in repairs
**Based on iBuyer offers being 98% of fair market value and a house needing 2% of its ARV in repairs
^Based on HomeAdvisor national average}

Pros and Cons of We Buy Houses For Cash Companies in Minnesota

Pros

• Fast, certain cash offers: After viewing your home, most "we buy houses for cash" companies will give you an offer within 24 hours. And unlike other buyers, there's no chance of the deal falling through because a mortgage application is denied or the buyer getting cold feet.
• Sell your home "as-is": If you don't have the time or money to make significant repairs to your house, a "we buy houses for cash" company could be your best option. While their offer will account for the cost of repairs, they'll buy homes regardless of their condition.
• Schedule your own closing date: Instead of going through the typical 30-45 day closing process, you can schedule a day to close in as few as 7 days.
• Low closing costs: Most "we buy houses for cash" companies will cover typical closing costs. This can save you 1-3%.

Cons

• Lower offers: Cash buyers are property investors. To ensure they make a profit, their offers will likely follow the 70% rule (at most 70% of the home's ARV, minus the cost of repairs).
• No negotiating: You can either take an offer from a "we buy houses for cash" company or leave it. They don't negotiate, even if you disagree with their evaluation of the property.
• Predatory tactics: Many sellers considering a cash buyer are in a difficult situation. You might be facing foreclosure or not have enough money to sell the traditional way. "We buy houses" companies know this and some might try and take advantage of your situation. Never sign anything because you feel pressured and be prepared to walk away if something doesn't feel right.

>>LEARN about more cash buyer pros and cons

Alternatives to We Buy Houses for Cash in Minnesota

Many homeowners turn to "we buy houses for cash" companies because they think it's their only option. They need to sell quickly and can't afford to make repairs.

However, there are other ways to sell fast without sacrificing the amount of money you make off the sale.

iBuyers

As mentioned above, iBuyers purchase homes in good condition with cash. They use proprietary algorithms to make offers that are at or close to market value and can close in as few as seven days.

However, unlike we buy houses for cash companies, iBuyers will not buy houses that are in need of significant repair. They're also not available in every city in Minnesota.

Traditional Agents

In general, it takes longer to sell a house with an agent than to sell directly to a cash buyer. But there are realtors who specialize in quick sales. With a little research, you could find an experienced agent who can sell your home "as-is" in a matter of days.

Hiring an agent does mean paying commissions, which can eat into your profits. In Minnesota, expect to pay 5.4-6.2% of your sale price in realtor fees.

>> LEARN more about real estate commission

Clever

Clever can connect you with top agents in Minnesota based on your unique needs. If you need to sell your house fast, Clever will put you in touch with a local agent who has proven they can get offers in a matter of days, or even hours.

Plus, with Clever you save on listing commissions meaning more money in your pocket at the end of your sale.

Additional resources for home sellers in Minnesota

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