Traditionally, home sellers work with a real estate agent to show their home to multiple buyers who will make an offer to purchase the home. However, traditional home selling may not be the best option for everyone due to limited selling time or other unforeseen circumstances. If you are selling your home and are thinking of using an investor, consider these pros and cons of selling your home to an investor.
Benefits of selling to an investor:
As-is purchase:
Investors are not planning to live in your home, which means he or she does not care about the recent upgrades and updates you’ve made. On the contrary, many investors look for homes that need a bit of work or are old and outdated so they can fix them up and make a profit flipping them.
Little financial risk:
Unlike most private home buyers who use financing to purchase a home, investors often have cash on hand. Before agreeing to sell to an investor it is wise to ask for proof of funds.
Faster closing:
Closing on a home can be a long process when mortgages and financing concerns are involved. But when you work with an investor who is using cash, your closing will be much quicker. The average time it takes to close an all-cash investor is two weeks while selling to a buyer who is financing their purchase through a mortgage you could be waiting for over 60 days.
Cons of selling to an investor:
Lower sale price:
Investors who flip homes are usually looking to purchase below market value and spend additional money on updates and repairs. These types of investors are generally not going to pay full market price for your home, especially if it needs major repairs. However, investors who are interested in the land your home is on may be willing to purchase above the asking price for your home if you negotiate correctly. Its best to discuss your pricing options with your real estate agent before committing to an investor.
Scams can happen:
Not all investors are reputable, which means you should be cautious of potential scams. There are many highly-reputable investors that provide fair cash offers. However, do your research before signing any paperwork or committing to a sale price. Check with your real estate agent as he or she can give you further guidance.
Foreign investors may take longer:
Many investors are looking for homes around the world, which means you may end up selling your home to an overseas investor. If this is the case your sale time could take longer. Due to tax consequences or overseas account requirements you may be looking at extended wait time to sell your home.
Selling your home to an investor has both pros and cons. It is up to you and your real estate agent to determine what will get you the best sale price and selling timeline.
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