How Much Will an Investor Pay for My House?

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By Katy Byrom Updated January 14, 2024

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What do investors look for? | How investors price homes | Benefits of selling to an investor | Risks of selling to an investor | Negotiating tips | Alternatives

As a general rule, investors offer about 70% of a home's estimated resale value after renovations, minus expenses. However, actual offer amounts depend on a number of factors:

  • The health of the local market
  • Your home's condition and location
  • Estimated repair costs
  • The investor's holding costs (mortgage, utilities, taxes, etc.)
  • Overall profit potential
  • How eager you are to sell

Selling to an investor may make financial sense if you're behind on payments or your home needs major repairs. It can also be a convenient way to sell an inherited property or ensure a fast move. Investors generally purchase homes in as-is condition and close quickly for cash.

That said, investors aim to buy low in order to sell or rent high. That's why it's important to gather competing bids before accepting an offer from an investor. You can do this on your own, with the help of a realtor, or through a free cash offer network like Clever Offers.

What do investors look for when buying a house?

✅ Condition

While many investors look for an opportunity to add value through home improvements, they want to avoid paying for high-ticket items that don't add a lot of value when fixed up. 

"I generally steer clear of properties with significant structural issues or extensive repairs needed," advises Chris McGuire, an investor with more than 20 years of experience in real estate. "The cost and effort required to address these issues can affect potential profits and prolong the investment timeline."

Many investors also steer clear of mobile or manufactured homes, fire damaged homes, or homes needing major electrical, plumbing, or foundation work, notes rental property investor Mathew Pezon.

✅ Location

Investors often prefer homes in high-demand neighborhoods or growing areas with room for appreciation.

"Location plays a big role," says Colorado real estate investor Brett Johnson. "It should have growth potential, good schools, and easy access to amenities."

Homes in less desirable neighborhoods could be a red flag to an investor. 

"Properties located in declining neighborhoods or areas with little market demand may not offer a favorable return on investment, so I also tend to avoid those," says McGuire.

✅ Opportunity to add value

Investors tend to look for homes they can purchase at a bargain and improve for a profit. 

"Doing repairs is how we add value to the home and raise its potential sale price," explains investor Mathew Pezon, who prefers "homes that need moderate cosmetic updates like flooring, paint, kitchens and bathrooms."

However, investors may also see potential in more complex renovations.

"What really gets me excited about an investment property is the potential to add value," says Johnson. "This could mean different things, like finishing a basement or turning two bedrooms into a spacious master suite with its own bathroom."

✅ Overall profit potential

To determine whether a deal makes sense, investors will weigh their estimated all-in costs against a home's potential resale or rental value

"We run the numbers based on comps (the sale prices of similar homes in the neighborhood), repair estimates, and target profit goals," explains investing expert Andrew Lokenauth. "Offers consider total fix up costs, holding costs, and potential resale. Ideal deals make sense at 70–80% of after repair value."

How investors price homes

While your house's condition, location, and profit potential are all major factors in how much an investor will pay for your house, the buyer's investment strategy also matters.  There are a few different categories of investors:

  • House flippers
  • Wholesalers
  • Rental property owners

Each has slightly different goals when sizing up a house. 

While some investors look for homes that can generate a steady monthly income and long-term price appreciation, others look for an opportunity to add immediate value through major upgrades.

Investment strategy Ideal offer price
House flippers Buy low, make repairs, sell for a much higher price No more than 70–80% of a home's after-repair value, minus repair costs
Wholesalers Find a home at a bargain, sell the contract to another investor for a small profit No more than 60–70% of a home's after-repair value
Rental property owners Generate steady monthly income and long-term price appreciation No more than 85% of a home's after repair value or 50x the monthly rental value
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House flippers

House flippers buy distressed homes, fix them up, and resell them for a profit. They make offers based on a property’s anticipated repair costs versus its projected future worth. 

House flippers generally aim to pay about 70% of a home's estimated after-repair value (ARV), minus renovation costs. 

The exact amount a house flipper pays also depends on the particulars of the deal. For example, some investors prefer to deal in what's called novation agreements — a type of contract that allows them to fix and flip a home on your behalf while you maintain ownership. They handle the renovation and split the proceeds with you at closing, which lowers their all-in costs. 

While a typical cash offer might only be 70% of a home's post-renovation value, a novation agreement could net you 80–85% of your home's after-repair price. 

Wholesalers 

Wholesalers look for homes they can buy at a steep discount for the purpose of selling the contract to another investor for a small profit. Rather than making money off their sweat equity like house flippers do, they make money off the number of purchase contracts that pass through their hands. 

Since wholesalers typically sell to other investors — who are also looking for a bargain — they are less likely to offer more than 70% of a home's value. 

"They're essentially a middleman," says rental property investor Mathew Pezon. "They need a steep discount because they own the property temporarily and need to make a cut on the flip."

Rental property owners 

Also called "buy and hold" investors, rental property owners purchase properties with the goal of having a steady monthly income stream. They might pay closer to market value, but it depends on the property's potential for rental income. 

"Most of the time we can offer up to 85% of the market value less repairs if our financial analysis checks out," says Pezon, who purchases and improves rental properties in Pennsylvania's Lehigh Valley. "Offering more than other companies is how we've been able to buy so many properties in a competitive market."

Some rental property investors use the 2% rule to price a home. This just means that the monthly income should be greater than or equal to 2% of the purchase price.

If an investor knows that a house could be rented out for $2,000 each month, then it would make sense for them to offer approximately $100,000 for the house.

Benefits of selling to an investor

✅ You get a cash offer

Most investors pay cash, which eliminates many of the hold ups that can come with traditional financing. There's also less risk of a deal falling through due to a lending appraisal that falls short of the asking price or a buyer's inability to qualify for a loan.

✅ You can sell in any condition

Buyers who need financing may not qualify for a loan to purchase a home with major issues. But investors have the cash to buy a house as is, even if it needs extensive repairs. "Doing repairs is how we add value to the home and raise its potential sale price," suggests Mathew Pezon of Pezon properties

✅ You can close quickly

Traditional home sales can drag on for months, especially after you factor in the time to prep, list, and show your home. Experienced investors can usually close on a deal very quickly — sometimes in under two weeks. When you need to sell your house fast, an investor is more likely to deliver.

✅ Your selling costs will be lower

While cash offers often come in below list price, investors typically offer incentives to help sweeten the deal — including paying for closing costs like transfer taxes and title fees.

"I try to provide incentives like covering all closing costs and allowing the sellers time to move out rent-free post-closing," says Bart Waldon, Managing Partner at Land Boss.

"Many times there can be little to no bottom line difference to the seller for a cash offer vs. an open market sale after paying realtor commissions, longer holding costs, repairs, staging costs, temporary housing, or storage costs," says Pezon.

✅ You can save your credit in a foreclosure situation

If you're behind on your house payments or entering foreclosure, you may not have time to list your home the traditional way. In these cases, selling to an investor may be your only option. Investors specialize in distressed property sales and can often save you from having a foreclosure on your credit. 

✅ You can avoid realtor commissions

Selling directly to an investor often waives the need to hire a real estate agent, which can help you save thousands in realtor fees. Just be sure to have a professional to look over the contract before signing — either a real estate attorney or an agent willing to offer this service à la carte.

✅ You have more options in a difficult situation

The typical home buyer might shy away from purchasing a property with liens on the title or a tenant who refuses to vacate. However, these types of issues are generally no problem for investors, suggests Pezon, who notes that the following situations are particularly common in investor deals:

  • Delinquent taxes
  • Mortgage payment issues
  • Tenant issues
  • Liens

Many investors employ alternative offer strategies that may be particularly useful in complex selling situations. 

Let's say you're behind on your mortgage payments and have very little equity in the house. Rather than selling at a loss, you may be able to find an investor willing to take over your payments through a wraparound mortgage — allowing you to walk away debt-free, or even with a little money in your pocket. 

What if your house has huge resale potential, but you can't afford the improvements needed to up its appeal to buyers? A savvy investor might offer you what's called a novation agreement, enabling them to complete the work on your behalf in exchange for a share of the profits. 

A free service like Clever Offers can help you explore a range of offers from local, regional, and national investors. That way, you can make a truly informed decision before you sell.

Get competing offers from leading cash buyers

Risks of selling to an investor

❌ You could leave money on the table

Investors offer you cash and the opportunity to close quickly — without making repairs or putting in any of the usual work of selling a house. The trade-off for this convenience is a lower sale price than what you might get listing with an agent (usually 15–30% less than market value).

❌ You have less leverage to name your price

Because the investor is buying the house to make a profit, the math needs to make sense for them. In most cases, they won't have much room for negotiation. 

That said, investors may offer slightly more if they know they're competing with other buyers. Getting offers from multiple cash buyers is your best insurance against an unsatisfactory offer price.

❌ You'll be on your own during negotiations

Investors are experienced negotiators, so they're probably better at negotiating terms than the average home seller is. That's why it's important to have a professional such as a real estate attorney look over the contract to ensure you're getting a favorable deal. 

Avoid working with buyers who pressure you into signing a contract on the spot. Instead, work with investors who show you how they arrived at their offer and give you time to think it over.

❌ Not all investors are honest

"Real estate investors work for a living, just like anyone else," says Matthew Coan, owner of Cash Savvy Home Buyers. "Honest ones are not here to rip you off. They just want to do their job just like everyone else and be able to support their families at the end of the day." 

However, adds Coan, "if at any point things become shady or you are given an offer that is too good to be true, most likely it's not going to turn out well for you." 

Red flags to watch out for when dealing with an investor include:

  • Pressure to sign a contract on the spot, rather than let you review it with a lawyer
  • Inability to show proof of funds from their bank or lender
  • Reluctance to show you how they landed on an offer price
  • A closing timeline of more than 2–3 weeks, as this could signal you're working with a wholesaler who doesn't yet have a buyer lined up
  • Caveats that let a buyer out of a contract without forfeiting their earnest money deposit

How do I find an investor to sell my house to?

If you've decided that you want to sell your house to an investor, there are a few ways that you can find one:

If you've decided that you want to sell your house to an investor, there are a few ways that you can find one:

Use a cash offer network like Clever Offers

Clever Offers is a free service that helps you quickly compare offers from local real estate investors, national cash home buying companies (like HomeVestors and We Buy Houses), and even iBuyers (like Opendoor and Offerpad). 

Rather than having to call up a bunch of investors yourself, Clever solicits offers from legitimate investors in their network and gives you a dedicated point of contact to help you interpret the fine print and ensure the buyer follows through on their end of the deal.

You can also request a free, professional home valuation, so you can see how well your offers match up to what you could realistically net selling under a tight deadline on the open market.

If you decide you want to list instead, you get the added benefit of a discounted commission rate with a top local agent. Plus, you can always fall back on the cash offer. Homeowners who sell with Clever save an average of $7,000 in listing fees.

Get competing cash offers from investors

Compare multiple offers from trusted cash buyers in your area, plus get an agent's opinion of your home's market value. Clever Offers is free to home sellers, and there's no obligation to accept our investors' offer. Simply tell us about your property, and we'll do everything we can to get you the best possible deal for your home.

Get Cash Offers

Google "we buy houses" companies in your area

Companies that buy houses for cash range from local investors to large, national franchises and cash buyer networks.  Searching for terms like "we buy houses companies [city]" or "sell my house fast [your city]" will usually turn up a variety of results. 

Most "we buy houses" companies are legit, but there may be some bad apples in the bunch. If you work with one of these companies, be sure to vet them thoroughly. 

When working with a cash buyer, "research their reviews and reputation, compare multiple offers, get inspections and repair estimates done first, and hire an agent or real estate attorney to review the contract" advises investing expert Andrew Lokenaugh

You should also ask an investor for proof of funds from their bank or lender, and request an earnest money deposit (10% is typical) to protect you from last-minute contract cancellations. Finally, make sure there are no hidden fees or contingencies that could lead to last-minute surprises. 

Contact an agent

A real estate agent can help you set a realistic asking price and market your home to a larger pool of buyers — including reputable investors in their network. The more buyers your property is exposed to, the more competitive bids you're likely to get on your house. 

Realtors can also help you weigh alternatives like selling your house through a real estate auction or simply listing your home as is on the MLS. 

One of the key benefits of working with an agent is that they'll be available to help you negotiate offers and review contracts to ensure that the terms are fair. However, you may want to find a realtor offering a lower commission in order to avoid paying pricy realtor fees on top of accepting a lower sale price.

Post on the BiggerPockets.com forum

BiggerPockets is an online community for real estate investors. If you express your interest in selling to an investor and specify what town or city you're in, there's a good chance that you'll get connected with someone! 

The potential danger here is that you may be dealing with newbie investors seeking advice on the forum. Some may not have the experience or funds to actually follow through on a purchase offer — let alone make the transaction a smooth one. 

Vetting the buyer's reviews and online reputation, asking for proof of funds, and requesting evidence of past purchases becomes especially important when seeking offers on your own. 

How to negotiate with an investor

Many investors make their best offer up front because they've already worked out what it'll cost them to own your house. But you can still use some negotiation tactics to up your sale price:

  • Don't just call one investor. "Call multiple investors and let them compete for your home," advises San Diego-based realtor Susie Brant. "When they know there's competition they will try harder to earn your business." You can also use a free service like Clever Offers to get multiple competing offers at once.
  • Make sure you're comparing apples to apples. "Don't just look at the price," says Brant. "Consider the extras like who's paying the closing costs, who's paying the transfer taxes, escrow fees, title fees, and so on. A good investor will offer to pay everything so as to make the process as easy for you as possible."
  • Provide utility bills, property tax records, and rental income statements. Rental property investors will consider monthly expenses when determining how much to offer. If they over-estimate these costs, you can prove that your home is actually more affordable than they think by providing them with utility statements and property tax bills. You can also show them how much you have charged for monthly rent in the past.
  • Have an idea of your home's pre- and post-repair value. Any good investor will already be looking at local comps to determine a price point, but knowing the true value of your home can help you size up their offer. You can often find a realtor willing to provide a home value estimate for free.
  • Have a professional look over the contract. "If you aren't working with a realtor, consider having a lawyer look over the paperwork before you sign," cautions Brant. "It's not cheap, but this is a big transaction and worth having some help. If the investor can't wait a few days while you run the contract past your lawyer, that's a big red flag."
  • Don't feel pressured to make a decision. "Look for transparent investors who provide reasonable offers, time for inspections, and don't pressure overnight decisions," suggests Waldon. "Take time to weigh all options before accepting an offer."

Alternatives to selling to an investor

If you're looking for a quick, as-is sale, some alternatives might net you more money than selling to an investor.

Sell with the help of a real estate agent

The reality is that selling your house on the open market might not take as long as you think, especially if you hire an agent with a plan.

"If the buyer brings cash, they can close just a couple of days after receiving a title report," advises Austin-based realtor JC Young. "Buyers who have already gone through the pre-approval and underwriting process with a lender can close 14–17 days after signing the contract."

Realtors can often leverage their personal network of cash buyers and local investors to sell a home quickly and at a fair price. 

Even if you're selling your home as is, a real estate agent can market it as an investment opportunity or dream fixer-upper for the right buyer. They can also assist sellers with less-conventional options like selling to investors or going through a local real estate auction. 

A good realtor will help you explore all of the options available and represent your best interests no matter which route you choose.

👋 Need a great agent on your side?

Connect with top local agents who can help you sell on time and for top dollar. You'll pay just a 1.5% listing fee (half the typical rate), helping you save thousands!

Sell to an iBuyer

Another option is to sell your house to an iBuyer like Opendoor. iBuyers pay cash and allow you to choose your own closing date — ranging from a couple of weeks to a couple of months. They also pay closer to market value than traditional investors.

All you have to do to sell to an iBuyer is complete an online form to request an offer. If your home qualifies and you accept the offer, the iBuyer takes care of the repairs and prep work after they buy the house from you.

The only catch is that iBuyers typically don't buy distressed homes, so this might not be an option if your house needs a lot of work or upgrades.

Is selling your house to an investor worth it?

Selling your home to an investor may make sense if you need to sell quickly or if your home is in poor condition. It may also make sense if you've inherited a home that you can't afford the mortgage, taxes, or upkeep on. 

In these cases, investors can pay you cash and allow you to close quickly without worrying about repairs or closing costs.

Selling to an investor may not be the best solution if you live in a tight real estate market where inventory is low or have a home in decent condition. You will likely earn a better return by selling your home with a real estate agent. 

While this can take longer (a couple of months, as opposed to a couple of weeks), you stand to earn quite a bit more than you would from a 'we buy houses' company.

When considering selling your house to an investor, you'll get the best outcome by seeking competing offers from a variety of sources.

FAQ

How much will an investor pay for my house?

With some exceptions, investors typically pay no more than 70% of a home’s fair market value (after repairs, and minus repair costs). In exchange for a low price, they can often pay cash and close very quickly — in some cases, in as little as a week.

Do investors pay fair market value?

Investors pay less than a home’s fair market value. Because they purchase properties in as-is condition, they need to accommodate for repair costs and still make a profit when they relist the home.

Can an investor make me a cash offer?

Yes, investors frequently make cash offers on homes. Though they offer less than the home’s fair market value, a cash offer will speed up the closing process, which is often slowed down by financing hang-ups.

Will an investor buy a house in foreclosure?

Yes, many investors will buy a home in the early stages of foreclosure. When you've fallen behind on payments, selling to an investor for cash can prevent a foreclosure from appearing on your credit.

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