What’s with all these “We buy houses” signs? Is it a scam?
Signs saying “We buy houses” “Cash for your house” ect are popping up everywhere. I’m sure you have seen them and have a bunch of questions.
Who is putting all the signs out?
These signs are placed usually by real estate investors. They are looking to buy homes directly from homeowners. Investors are hoping to get a deal by not having to pay realtor fees and using cash to avoid closing fees. Once they buy the investor either makes repairs and resells the home for a profit, or holds the property as a rental. Investors can be large companies with several investors contributing money or small local buyers that only flip one or two properties a year.
–REIT (Real Estate Investment Trust) are companies that own, operate or finance income producing property. Several large REITs started buying homes after 2008 foreclosures produced a large supply of under market value homes.
–Wholesalers find properties that are for sale for under market value and put together a contract to buy the home. They then turn around the market the contract for sale to other investors “end buyers”. Wholesalers make money in the difference between the price paid and the price the end buyer is willing to pay.
Should I sell my house to an investor for cash?
Well that depends on some factors:
Is your house updated and in move in ready condition? Do you want top dollar for your home?
If so then the answer is no. In 2020, 89% of home sellers worked with a real estate agent to sell their property, according to NAR (National Association of Realtors). For most homeowners, this route is the best way to get top dollar for their home.
Is your home in need of repairs or updates? Is cashing out your equity quickly important? Do you want to avoid paying realtor fees and closing costs?
If yes then working directly with investors might be your best fit.
How do I avoid getting scammed?
Unlike real estate brokers, investors or wholesalers are not required to be licensed by the state, so almost anyone can enter the space and start making offers on homes. Some investors are licenced “like me” and they have to follow the law or their licence could be in jeopardy.
– Do your research! Google the number that is calling. Track down the investors office address. Check with the Attorney General or BBB website to see if there are reviews about the investor or their company.
– Ask for proof of funds. A legitimate buyer should be able to produce a copy of a bank statement or a pre-approval letter from a bank/lender.
– Ask for earnest money. This is a downpayment that helps the seller hold the buyer to his promise to buy. Most of the time this money will be held in an escrow account by either a real estate brokerage or title company.
– Use a title company. It is in both the buyers and sellers best interest to use a title company to facilitate the deed transfer. The title company will check for any outstanding liens and make sure they are paid and that the buyer is getting a clean title. All mortgages should be paid off or transferred into the buyers name at the time of the sale. Do not let the buyer make the monthly payments to your mortgage company on your behalf. If they fail to make timely payments your reputation is on the line not theirs.
You can also fill out the form for a fast, no obligation, “as is” offer. You will receive an offer within 24 hours of your request.
