If you are thinking about selling your home, you may be deciding between selling to a traditional buyer or to a home investor, especially if you have received offers or seen advertisements promising to buy your home quickly and for cash.
Professional home investors make offers to sellers who are willing to sacrifice some profit in exchange for a faster and simpler sale process. In recent years, “iBuyers” have emerged too – internet companies who use algorithms and proprietary valuation data to make no-obligation, all-cash offers to sellers.
Your Better Business Bureau offers information and tips to help you review those options before you move forward. What should you consider before selling your home to a home investor?
– Think about your time constraints. With traditional home sales, buyers can require a 45-day escrow period to allow time for appraisals, mortgage approval contingencies, inspections and the like, which means completing a sale could take several weeks. On the other hand, home investors can usually close in a month or less and iBuyers can give homeowners a tentative offer within 24 to 48 hours and close in as little as a week. If time is of the essence, it may be worthwhile to consider one of the faster options, although you’ll likely sacrifice profit for speed.
– Determine how much profit you need to make. The biggest downside of working with a home investor or iBuyer is that you will almost always get a lower offer than you would from a traditional buyer. Traditional buyers may be willing to pay even more than market value for a home they’ve fallen in love with, while home investors are buying your home solely as an investment. That lack of emotional connection can cost you profit you may be counting on. Determining how much profit you need to make on the sale of your home ahead of time can help you make a sound decision when you receive an offer from any kind of buyer.
– Factor in prep work. When marketing your home to traditional buyers, you’ll need to do a fair amount of prep work. Cleaning, decluttering, painting, staging, landscaping, photographing and listing your home are all vital tasks when getting your home ready to sell. When you sell to an investor, you won’t need to invest time and money into that kind of prep work. Forbes adds, “Typically, investors offer to purchase a property ‘as is,’ many times sight unseen. As a seller, that allows you to avoid any costly repairs that would normally be considered your financial responsibility.”
– Research investing companies before you do business with them. Always look up businesses on BBB.org before you share personal information or agree to services with them. Make sure the company has an official name, phone number and physical address. Look for companies that are Better Business Bureau Accredited and have made a commitment to uphold the Better Business Bureau’s standards of trust. In addition, you may want to read customer reviews, keeping a close eye on any complaints or reports of dishonest dealings.
– Don’t fall victim to a home investor scam. There are scams that can pop up when it comes to home purchasing. Those scammers prey on a seller’s desire to make a quick sale by offering deals that seem too good to be true. They also take advantage of the fact that home investors don’t need any credentials to buy property. When considering an offer, ask plenty of questions and don’t settle for vague answers. Never give money to an investor before the closing date. Complete all transactions through a closing or escrow agent and don’t let anyone pressure you into making payments “off the books.” Make sure all terms and conditions are put in writing and that you review them carefully before signing any documentation.
– Consider your alternatives. If you aren’t pressed for time, consider working with a full-service brokerage. You’ll need to do some prep work and it will take more time, but you’ll likely make a much larger profit on the sale of your home. You can also think about renting your home for an amount that covers your mortgage payments or setting up a lease-to-own agreement.
Reminder: Better Business Bureau’s shred days are just around the corner.
Your Better Business Bureau is partnering with River City Shredding, Coca-Cola, Resource 1 Tier 3 Data Security and the Hamilton County Coalition to bring you the free events.
The public is invited to bring up to three trash bags of documents to be shredded on the spot by River City Shredding, a local professional document destruction company. You can also bring hard drives for destruction, computers and monitors for recycling and unneeded prescription drugs for safe disposal.
– 9 a.m.-11:30 a.m., Friday, April 22, in Hixson at the Clear Creek Church of Christ, 5612 Hixson Pike.
– 9 a.m.-11:30 a.m., Saturday, April 23, in Chattanooga at the Coca-Cola bottling plant located at 2111 W. Shepherd Road (near the intersection of Shepherd Road. and Highway 153). This is a new event location.
Please note: you’re encouraged to come during the earlier hours for document shredding, as that portion of the event could stop earlier than 11:30 a.m. if the shredding trucks fill to capacity. More details are available at bbb.org/chattanooga or by calling the Better Business Bureau’s team at 423-266-6144.
Michele Mason is president of the Better Business Bureau in Chattanooga.