How Much Do Investors Pay for Houses? What Sellers Should Know

By 

Jamie Ayers

Updated 

March 15th, 2019

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Selling your house to property investors can be a complicated and time-consuming process. A Clever Partner Agent can provide guidance on marketing your house, negotiating an offer, and avoiding the pitfalls of the sale process.

If you decide to sell your house to an investor, your first thought is probably, “I wonder how this will affect my sale price?”

To answer this question, you need to understand the pros, cons, and caveats of selling to a property investor.

What are Property Investors?

Property investors purchase undervalued real estate if there is a chance for capital growth or if they can quickly resell the property for a higher price. The price that property investors will pay for your house is determined by both conventional valuation factors, such as location and property size, and the overall convenience of the sale transaction.

If you do choose to sell your house to a property investor, keep in mind the following best-practice strategies:

  • Keeping a tidy home and yard enhances interior appearance and improves curb appeal.
  • Do your homework on potential buyers. This can involve both online research and advice from a professional agent.
  • Compare property sales data on retail and investor purchases in your area. Factor this information, along with your selling price and sale timeline, into your selling strategy.

Why Sell to Property Investors?

If you’re anxious to close a property sale, marketing and selling your house to a property investor can save you both time and stress. Here are three reasons why:

  • Real estate investors often purchase property as is, meaning you don’t have to pay for new repairs, landscaping, or renovations.
  • Although it is dependent on the sale conditions, property investors usually cover closing costs and back-taxes.
  • Property investors do not typically require financing approval, ensuring quicker and more efficient sale transactions.

However, nothing comes for free in a property transaction. In this case, the advantageous features of selling to property investors will likely translate to a marginal reduction in the sale price of your house.

Property investors To Avoid

While the convenience of selling to property investors has an impact on buyer offers, the type of property investor interested in your house is a more significant modifier of the sale price.

iBuyer Companies

If you’re looking to quickly offload your house, you’ve likely encountered instant buyer, or iBuyer, companies. These companies will list your home on an online fast-sale platform, marketing the property to buyers and investors. If you agree to use an iBuyer service, you will receive a guarantee that your home will be sold within a designated period of time.

On the surface, iBuyers can seem like a time-efficient way to sell your house. However, the convenience of an iBuyer sale comes with some significant downsides. Not only do iBuyers charge an average 6% commission fee, but it is also common practice to attach a 6% “risk fee” to the transaction. To make matters worse, iBuyer companies always sell houses well under market value as this is the only way to sustain a high volume fast-sale business model.

“We Buy Houses for Cash” Companies

“We Buy Houses for Cash” companies, also known as Sign Buyers, share many of the same characteristics as iBuyer companies. Sign Buyers offer to market and manage a fast-sale of your home without charging commission or conveyancing fees. Unsurprisingly, this can be a very attractive option for sellers who need cash fast.

Unfortunately, opportunistic property investors use Sign Buyer services to target sellers who are in debt or other forms of financial stress. In order to make a profit on the sale, purchase offers from Sign Buyers are significantly below market value. If you accept the cash offer, Sign Buyer companies will resell your house within days for a much higher price.

Remember, although iBuyer and Sign Buyer companies are time-effective, the convenience of a faster sale comes at the cost of thousands of dollars in fees and lost property value.

Contact a Real Estate Agent for Further Advice

 

If you’re considering selling your house, a good first step is connecting with a local Clever Partner Agent. An experienced agent can help you avoid bad deals, secure discounted listing services, and negotiate with property investors. With a Partner Agent in your corner, you won’t have to compromise on your closing price in order to finalize a sale.