Real estate is big business these days. Since the housing market crash (resulting in tons of foreclosed properties), a new market of “house flippers” has emerged. These are people that buy distressed homes, do some quick fixes and cosmetic updates, and then resell for a profit. You might have seen their "We buy ugly homes" signs.
What exactly are these ugly home–buying companies?
These companies are most often house flippers looking for a bargain. Someone came up with the great eye-catching slogan about ugly houses and it has caught on. Lots of companies use some version of this tagline, but the original (and only one) is by HomeVestors of America.
House flippers typically look for distressed properties or owners that are desperate to sell. Here are some of the factors that would make a house “ugly” and ripe for a flipper:
- Poorly kept, bad outward appearance
- Foundation or structural issues
- Houses located in undesirable neighborhoods
- Owners who want to sell because of a bad mortgage or other bad situation
Any or all of these factors can make a property attractive for a house flipper to purchase. They often focus in metro areas as opposed to really rural areas. This is where there are more potential buyers and often a higher resale value.
How does buying ugly homes work?
Although some companies may have a slightly different process, they all follow the same basic steps. If you are thinking about selling your house and you call them, they will then:
- Conduct a home inspection
- Appraise the property
- Give you a no-obligation all-cash offer (or no offer if they aren’t interested)
- Propose terms of closing (which may include paying closing costs, etc.)
You likely have a short amount of time to consider their offer and decided whether to accept it. Once you accept it, the next steps all happen very quickly. House flippers are in the business of turning properties (and profits) around quickly, so they don’t have time to waste.
What are the pros and cons of selling an ugly home to one of these companies?
One of the major pros of selling to one of these companies is that they will pay cash. This means no need for banks to get involved, which results in appraisals and more paperwork. Also, once they make the offer, there is no additional inspection, meaning the offer is pretty much guaranteed. This can be a big pro if your house is in disrepair or has structural issues.
They will probably also propose a 30-day close which means things will get done quickly. However, if you haven’t yet found a new place to live, this may be a problem, since they likely won’t close on your schedule. They can often close in as little as 10 days.
For the most part, selling to one of these flipping companies is a quick and simple process. But there are some cons to consider. House flippers want to buy houses for a bargain. This means you won’t get top dollar, but at least you will get something.
What other options do I have?
You must first decide how desperate you are to sell your home quickly. If you are in a hurry (about to be foreclosed on, etc.), it may benefit you to call one of these companies. However, if you just want to sell your home, are looking for a good price, and aren’t in a rush, just call a real estate agent!
If your home is in good shape and the house needs minimal work, working with a real estate agent or company will result in the best market price for your home and the least amount of work for you.
No matter what route you decide to go, you should always consult with a licensed real estate agent first. They can give you honest feedback about the state of your home and the potential market price. This way you are at least armed with some information if you do decide to work with the “ugly house” companies.