Your house's location, age, and potential for income or profit will affect how much an investor will pay for your house.
The type of investor also matters. House flippers generally aim to pay 70% of a home's estimated after-repair value, minus renovation costs, while rental property investors want a deal that will give them monthly income — ideally 2% of the purchase price.
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. Investors generally purchase homes in as-is condition and close quickly for cash.
That said, investors tend to buy low in order to sell or rent high. You may make more money with an alternative option, such as selling to an iBuyer or even listing on the open market.
Our advice: Compare multiple offers before selling to an investor
If you need to sell quickly and want a fair price, Clever Offers is a good starting point. With Clever's free service, you can compare cash offers from local and national cash buyers against your home's fair market value.
A licensed agent from our team will ask you some questions about your property, gather offers on your behalf, and walk you through each one.
We can also connect you to a top listing agent in your area who can give you a realistic idea of how quickly your home could sell in your market — and for how much.
There's no pressure to accept an offer or work with a Clever partner agent. Clever Offers is simply a way to compare your options and make an informed decision. If you do decide to list your home, you’ll get the added benefit of saving on realtor commission — $7,000 on average.
What do investors look for when buying a house?
The majority of investors who buy homes tend to focus on low-price homes because these homes offer more potential for profit. While there are no hard and fast rules that investors use to decide how much they'll pay for a house, there are some principles that many investors apply when they're putting together an offer.
Two main types of investors buy houses, and each have slightly different goals when sizing up a house:
- House flippers buy distressed homes, fix them up, and then resell them. They make offers based on a property’s anticipated repair costs weighed against its projected future worth.
- Rental property owners buy properties with the goal of having a steady monthly income stream. They might pay closer to fair market value, but it depends on the property's potential for rental income.
|House flippers||Rental property owners|
|Goal||Buy low, make repairs, sell for a much higher price||Generate steady monthly income|
|Pricing strategy||The 70% rule: Never pay more than 70% of the home's after-repair value, minus repair costs||The 2% rule: The monthly rental rate should be at least 2% of the purchase price|
Of course, other factors play a part in an investor's valuation of your home, including:
- Overall condition
- Profit-earning potential
How house flippers price a home
Generally, house flippers won't pay more than 70% of a home’s after-repair value, minus repair costs. This is because a house flipper's goal is to rehab the property and sell it for significantly more than they paid.
Say that a house flipper identifies a house in an up-and-coming neighborhood that he believes will be worth $300,000 once it has been renovated. But, the house currently has a lot of problems and will need approximately $50,000 of work before it's ready to go on the market.
Using the 70% rule, the flipper would decide that he'll pay $160,000, at most, for the house ($300,000 x 0.70 – $50,000 = $160,000).
This still gives the flipper enough room to spend some money upfront on repairs and upgrades.
How rental property investors price a home
The rule that some rental property investors use to price a home is the 2% rule. This just means that the monthly income should be greater than or equal to 2% of the purchase price.
Rental property investors buy houses with the goal of renting them out and earning money through the monthly rental fees that they'll charge their tenants.
Because landlords are making a long-term investment and they'll have ongoing costs like property taxes, utilities, and maintenance, it's important to them that the rental income from the property covers all of these costs and still leaves them with a net profit.
If an investor knows that a house could be rented out for $2,000 each month, then it makes sense for them to offer approximately $100,000 for the house ($2,000 is 2% of $100,000).
If the numbers pencil out, a rental property investor might pay more for a house than a flipper because it's a long-term investment. The difference is that house flippers generally buy homes that are more distressed because they plan on forcing appreciation quickly through major upgrades.
Is it worth selling your house to an investor?
Selling your home to an investor may make sense if you need to sell quickly or if your home is in poor condition. Cash buyers allow you to close quickly without worrying about repairs or closing costs.
Perhaps you are going through a contentious divorce and need to offload the marital home, or maybe you've inherited a home that needs extensive, urgent repairs. If you’re feeling pressured by time, a cash buyer can be a strong option.
Selling to an investor may not be the best solution if you live in a tight real estate market where inventory is low. In this case, you will likely be able to 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 in a cash-sale situation.
With the current national median home value of $436,800, a cash buyer price might offer around $300,000 (just under 70% of market value). However, a private buyer offering 95% of market value would come in at $100,000 more, leaving way more of a profit margin for the seller at closing.
If you’re looking to sell at market value but time is also of the essence, you might consider matching with a local seller’s agent who has a proven track record of fast sales. Depending on local market conditions, a realtor can help you look at all of the options without an obligation to work with them moving forward. Explore free agent matching services in your area, like Clever.
|✅ Benefits of selling your house to an investors
|❌ Downsides of selling your house to an investor
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:
Use Clever Offers
Clever Offers is a free service that helps you quickly compare offers from local real estate investors and national cash buyers (like HomeVestors and We Buy Houses).
You review offers with an experienced real estate agent who can help you interpret the fine print. You also get a home value report 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. Plus, you can always fall back on the cash offer. Homeowners who sell with Clever save an average of $7,000 in listing fees. Compare cash offers.
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!
Respond to "we buy houses" ads in your neighborhood
Companies that buy houses for cash make a profit by buying distressed properties, fixing them up, and then reselling them. These companies may be centralized, run by individual franchisees, or made up of a network of cash buyers. Some "we buy houses" companies are legit, but others are a scam. If you work with one of these companies, never pay any money upfront.
Contact an auctioneer
Holding a real estate auction for your house could bring investors to your front door to bid on the property. Working with an auctioneer could help you to find investors who will make competitive bids on your house.
How to negotiate with an investor
Once you find an investor who's interested in buying your house, you'll want to negotiate to get the best possible price.
Investors typically 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:
- Provide utility bills and property tax records. 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.
- Show the investor data on similar properties that have sold recently. Any good investor will already be looking at local comps to determine a price point, but pulling them up yourself helps you to know if the offer is fair and shows the investor that you're aware of the true value of your home.
- Ask the investor to cover some of your closing costs. If the investor won't raise their offer at all, try asking them to cover some of your closing costs, like title recording fees and escrow charges. This will raise your net profit from the sale.
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.
Realtors can often leverage their personal network of cash buyers and local investors to sell a home quickly and at a fair price.
They can also assist sellers through less-conventional options like selling to investors or going through a local real estate auction. Even if you're selling your home as is, a real estate agent can market it as an investment opportunity for the right buyer.
According to Austin-based realtor JC Young, if you buy with cash you can close just a couple of days after receiving a title report. If you've gone through the pre-approval and underwriting process, you can close 14–17 days after signing the contract.
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 make cash offers and can close quickly — sometimes in as little as two weeks.
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 more than minor repairs and upgrades.
How much will an investor pay for my house?
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 the seller in 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 foreclosure. Cash offers negate the need for a mortgage, making the transaction much easier than if a buyer were interested in financing the sale.