Thinking Of Selling Your House To A Real Estate Investor? Here’s What You Need To Know

You’ve decided to sell your house and need to figure out which avenue to use. Will you opt for a traditional market sale or work directly with one of the “we buy houses” people you’ve found online? My name is Jake Knight and as a full-time investor and Realtor I’m here to give you the insider scoop from both sides.

 

Let’s start with the main question: what is the difference between selling with a Realtor vs. selling to an investor?

 

Selling with a Realtor means publicly broadcasting your home with the primary goal of maximizing your exposure to obtain the highest price. Selling to an investor typically means trading a bit of the price for some other benefits such as privacy, not dealing with repairs, a guaranteed quick sale, more flexible time frame for moving, and leaving all your unwanted items behind. Selling on the market means buyers are ready to move in once they close and it can sometimes feel adversarial with the two agents fighting for your interests. Not always, but sometimes. This may be worth it for you.

Pros And Cons Of Selling To A “We Buy Houses” Company

Pros: less paperwork, private, no open houses, no need to clean or fix things, leave junk behind, flexible time frames, no commission.

 

Cons: may sell for less, need to look out for yourself, paying commission.

How To Find Direct Homebuyers

If you haven’t already received postcards or letters simply do a web search for “we buy houses (city)” or “sell my house fast (city)” and you’ll get a long list of potential suitors.

5 Tips To Sell A Home On Your Own

You’ve decided to call some investors and generate some interest. Follow these pointers to help protect yourself and walk away feeling good about your decision.

 

  • Get references and read their reviews online

Many direct buyers these days have websites and some have reviews from past clients. I recommend asking the buyer to provide a few references of either sellers they’ve worked with or Realtors they’ve closed deals with. Don’t be afraid to do a little digging to ensure your buyer is reputable and reliable.

 

  • Fill out disclosures and be transparent about property defects

Many sellers want to avoid more paperwork or disclosing all of the home’s little annoyances but I recommend against that. Filling out property disclosures can better protect from future liability. Disclose any material facts about the property, in writing, so that it doesn’t come back to haunt you. I also recommend being transparent to avoid a buyer later discovering the issues on their own and coming back with a price change. Research your state’s disclosure rules.

 

  • Ask for proof of funds

Any credible buyer will be able to provide this. Some buyers use “hard money” loans and these are loans for fixer-uppers. They’re simpler than mortgages and it doesn’t mean your sale has to be dependent on loan or appraisal contingencies. A preapproval letter from a hard money lender, or bank statements, should suffice.

 

  • Ask if the buyer is going to close on the home or find another buyer

A little industry secret is that some “buyers” are only looking to assign the purchase rights to another buyer for a slightly higher price (aka wholesaling). It’s legal in most states but adds a layer of complexity to your sale (e.g. what if the buyer’s buyer backs out at the last minute?). It’s not that you should outright reject this proposal, but it’s usually a little easier and cleaner if the buyer is the actual buyer.

 

  • Work with an escrow company

Always use an escrow company and connect with the escrow officer to ask for help ensuring the transaction goes smoothly. They’re an independent party but certainly can help facilitate a smooth, legal closing. You’ll also want to make sure the buyer’s earnest money deposit is submitted.

 

A Hybrid Approach

You can always ask a trusted Realtor to help you find an investor “off-market.” Selling your home to an investor does not automatically mean you can’t use a Realtor. Many Realtors have investors on speed dial and can quickly generate offers for you. This structure helps you with paperwork and due diligence but also allows you to stay private and not deal with the market pressure.

 

Money-saving tip : I would ask your Realtor if you can pay only one side of the commission instead of the normal 5-6%. Most would be happy to oblige.

Let’s Talk About Price

Don’t sell unless you feel it’s a win for you. If your only goal is to maximize your price (and your home is clean and livable) consider selling on the market. It can be helpful to get multiple offers but even if you are selling “off-market,” multiple offers can function as a market itself.

 

Are you trading convenience, privacy, or other goals for a bit of a discount? Is the price you’re getting worth the trade-offs? That’s the question only you can answer.

 

If you’re in Northern California and would like to learn more about selling on the market or getting a direct offer, visit www.skyehomes.com or call Jake Knight at 866-207-1940.

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Jake Knight

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Jake Knight

Jake Knight has been a residential real estate investor since 2016. He specializes in acquiring and renovating houses in the Bay Area, Sacramento, eventually expanding to over 15+ states. Jake’s prior experience in lending, going back to 2003, laid the foundation for solving complex real estate issues.

Drawing upon his background in assisting sellers with the task of transitioning from a home they have lived in for decades, Jake launched a “senior move management” business in 2021. This company provides valuable support to seniors during the process of packing, coordinating their moves, and downsizing as they transition into senior living communities.

In 2022, Jake expanded his services by becoming a licensed real estate agent in California, providing comprehensive solutions to his seller clients.

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On the other hand, there are some sellers who need a custom solution due to either the property’s condition or the seller’s personal situation, or a combination of the two.

When the property is in really bad shape, they’re likely going to sell to an investor, so it may make sense to save money on commissions and find their own investor.

Some examples of personal situations that we can help with are: hoarding, pre-foreclosure or other financial issues that require a fast home sale, house with non-paying tenants or squatters, severely delinquent property taxes, homeowners who want to rent back the home longer than normal, or sellers who value privacy and/or are embarrassed by their home.

If your seller lead meets these criteria, you should propose the idea of making an introduction to me. You can simply suggest to them that your partner or colleague buys houses and ask if they are interested in speaking with me. Remember, you are not performing real estate agent duties. See our disclaimer below. The main thing to keep in mind at this point is to qualify them as a good fit or not. I can help you with the documentation and process things.