Beware of "Quick Cash for Your Home" Offers

March 2018

"We Buy Ugly Houses"

"We Pay Cash for Houses"

"We'll Buy Your House for Cash"

"Sell Your Home Fast for Cash"

We've all seen ads that make claims like these. You can find them on TV, on billboards, online, on telephone poles and fences, and you can even receive them in the mail. These ads typically offer a simple way to sell your home, no matter what its current condition is. Some common promises found within these ads are that you won't have to pay closing costs, that you won't have to pay a commission to a real estate agent, or that you can close very quickly because they are paying cash. Sounds too good to be true, doesn't it?

Often times, the businesses and individuals behind these ads are investors looking for properties to buy, fix up, and sell them for a profit. They typically target homeowners that are in financial distress or need to sell their homes quickly.

As you go to sell your home, keep in mind that the goal of these types of investor buyers isn't to help the seller, rather it is to buy the property at the lowest possible price so that they can make the most profit when they turn around and sell the property. It’s also important to note that it can be difficult to determine whether or not the buyer/business is legitimate or if it fraud, so be sure to do your research before committing.

When determining what offer to make, the buyer/business may start by looking at the current market value of the home, the projected market value after it has been renovated, or some other number based on the current condition of the home. Once this research has been completed, they will then subtract the following:

  • Estimated cost of required repairs or renovation.
  • Estimated cost of insurance, utilities, taxes, loan payments and any other expenses required to maintain the home until it is ready to sell.
  • Estimated cost of marketing and selling the renovated home including real estate commissions.
  • Estimated costs of any other expenses they might incur.

Given those subtractions, especially the last one, means that the offer will probably be well below market value.

If a sale is made, unfortunately several problems could arise, leaving the seller responsible for the property, even after closing. Some examples of this could be that the transfer of the title may not occur until the renovated property is sold, or the seller is required to pay off their mortgage from the proceeds of the sale.

To avoid selling your home for far below market value or being stuck with fees beyond the sale, we suggest that you look into listing the home with a properly licensed and established real estate agent. The agent will help the homeowner price the home appropriately for the market. The proceeds of the sale will probably be higher than the cash offer even after paying the real estate commission. A real estate agent will also make sure that the transfer of title, payoff of the mortgage and any other required documentation is completed in a timely manner.

If you have decided to sell your home, take a moment to do your homework. Taking the time to do it right will help you get the best price for your home and put more money in your pocket.

 

 

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