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2 Reasons You Shouldn’t Sell To an Investor
If you are an avid reader of this blog, then you know we are all about that fast, hassle-free, all-cash property sale.
However, we do recognize that this type of sale is not optimal for everyone.
In here, we will discuss two main scenarios where somebody is better off not selling to an investor/cash home buyer.
1) Not Important to Sell Quickly
Not having any urgency to sell your house can be the most important of the reasons you shouldn’t sell to an investor.
Here’s why.
Within the real estate market there exists people who want or need to sell their house fast, and therefore selling with a real estate agent or by themselves is not an option.
According to Zillow, in 2018 the typical house in the US spent around two to three months on the market. This can be an eternity for somebody that needs to sell quickly.
This is where a cash home buyer/real estate investor comes in.
An investor can pay cash for a house, and depending on the circumstances, can buy a house in as little as seven days.
Here are two reasons people might opt to sell quickly:
-Threat of foreclosure
Failing to make payments on a mortgage can lead to a house being seized by the lender.
People try to avoid this by hiring a lawyer and/or coming to an agreement with the lender.
If those options fail, then they can turn to an investor.
The investor can purchase the property quickly, pay cash for it, and thus help the homeowner solve this issue swiftly.
Click here to learn more about the Texas foreclosure procedure.
-Relocating
Sometimes people have jobs that require them to move to another city, state, or even country. This is especially true for people who are part of the military.
What if there is a deadline and it is fast approaching? Well, things can get hasty.
So what options are available?
As mentioned before, hiring a real estate agent might not be the best option because it can take months for the house to sell.
Selling by yourself is also no good if you do not have experience in sales.
So the next option is to sell to an investor, and what does an investor have to offer?
Much like with foreclosure, the investor offers an all-cash quick sale that can help alleviate the problem fast.
2) You’re Not Going Through a Difficult Situation
Another typical reason why people sell to investors is when they are going through a difficult situation.
Some of these hardships include:
-House requiring too many repairs
Selling a house that is too damaged or withered can be really difficult. Not many people want to spend hundreds or thousands of dollars to fix a house.
This can make real estate agents wary of taking on the task of selling a house like this.
Aside from the difficulty of finding a buyer willing to spend a lot of money repairing the property, they know that a house like this will likely sell for a low price, which in turn means a small commission.
A property like this however, is a dream come true for real estate investors.
An investor (a well established one at least) will have funds and connections with contractors who can fix the property.
-Tired of being a landlord
Being a landlord is a hard job.
From maintenance to bad tenants, a landlord deals with a lot.
Some of them decide to hire a third party to take care of things like collecting rent, fixing property damage, and to find new tenants. This, however, can be expensive.
A landlord can also try and sell the property with an agent or to a house buying company, but it also has its downsides. You can read the details about that here.
Finally, the landlord can sell to an investor. Like we have mentioned before, this option is attractive because of the cash offer and the ability to close the sale fast.
The Underlying Issue
A cash home buyer/ real estate investor serves a particular real estate market characterized by “distressed properties”.
What are distressed properties? The answer is: all the properties going through the issues we just covered.
These properties are attractive to investors because, due to the circumstances surrounding them, they can be bought below market value.
This is the market that real estate investors operate in. A market where the property owner is not too much concerned with earning money as much as they are with selling fast.
Is this shady? In it of itself, no it is not, but it can be depending on who you are dealing with.
Which brings us to another point – real estate investors do not require a license to invest.
This means that any person, without much knowledge or expertise, can start pumping money into real estate projects and technically be considered a real estate investor.
No official license means you do not know who this person is; much less if they are qualified to do the job.
To learn more on the topic of avoiding ‘we buy houses’ scams here in El Paso click here.
To summarize, if your house is in a good neighborhood, does not need major repairs, does not have title issues, you have not fallen behind on your mortgage payments, you do not need to relocate, or you are happy with your rental property; then you are better off not selling to an investor.
One Caveat
Just because you are not going through one of the situations described above, it does not mean you cannot benefit from a sale to an investor.
As mentioned before, an investor can buy your house fast and pay cash for it.
This means you can avoid typical nuisances of a house sale like having your house sitting on the market for too long and showing your house to strangers.
If you are looking to avoid contracts and formalities, regardless of urgency to sell, then selling to an investor is perfect for you.
Final Thoughts On the 2 Reasons You Shouldn’t Sell To an Investor
To summarize, real estate investors are looking for people who need to sell fast and/or want to get rid of a property that has become a burden.
These people are typically more concerned with selling their property quickly than they are with making the most money out of it. This makes the option of selling the conventional way, rather impractical.
Evaluate your situation and your options, and make the best decision that conforms to your goals