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Product: We Buy Houses Review
Price: Purchase offers vary
Place to Buy: Online
My Rating: 6 out of 10
We Buy Houses, Product Review
Having to sell your home fast because of an emergency is not easy. Your hard work paid for the mortgage all those years only to get punched in the face by life and have no other solution but to sell your most prized possession, your home.
Your first option should always be to consult with a real estate agent and list it if you have time to put your house on the market. My goal is to help homeowners fix their money problems before a financial crisis happens but sometimes selling to “We Buy Houses” companies may be the only way out. Being in this situation puts you at a disadvantage and you will have to sell cheap. There are a couple of things you need to know before signing a contract to sell your house fast and you will find them in this, we buy houses review.
Note: If you are currently in a financial crisis such as foreclosure read the post, Can I Stop My Foreclosure, immediately and contact us for a FREE 30-minute money coaching session
Companies that buy houses quickly typically fall into several different categories I will cover the most common ones here.
SOME THINGS ARE UNAVOIDABLE
We all have an emotional attachment to our homes especially if they are our first and primary home. The walls tell stories of special moments, anniversaries, birthdays, and a time lapse of kids growing up. These nostalgic moments raise the value of our home in a personal way. Unfortunately, if we put ourselves in a situation where we need to sell fast we put ourselves at a disadvantage in the negotiation process.
Companies that buy houses quickly can offer all cash for your house, but you should expect low offers that may feel offensive to some. It is not that your house is not worth the value you put on it but the company purchasing your home is a business and they are looking at their profits. If they cannot make a profit, then buying your house will not make business sense for them. There are ways around this and if you work with a reputable company you can get some money out of your home.
The calculations used by companies that buy houses quickly vary slightly from company to company and depends on their operating costs and target profits, but the basics are all the same. Some companies base their numbers on the after-repair value (ARV) of your home while others use the as-is value. We will review the numbers with the ARV for simplicity.
Let’s say, after all repairs are made to your house it’s estimated value is US$100,000.
They will subtract the operating costs they expect to incur which vary by company but the norm is about 30% of the ARV. This includes closing costs, holding costs and their desired profit.
In our $100,000 house they would automatically deduct $30,000 from the ARV leaving a difference of $70,000.
Then, they will deduct the repair costs which will depend on the condition of the house. If they estimate their repair costs to be $20,000 they will take this right off the top. This means that their maximum allowable offer will be $50,000.
Let me repeat that, that is their maximum allowable offer. That is the most they will be willing to pay. This does not mean that is what they will offer you. You have to be aware of this. Now that you know how they will calculate their offer let’s cover some things to keep in mind.
Things To Keep in Mind
Time is of the essence when you are stuck between a sword and a wall but you must prepare yourself and be realistic.
- Make sure you are working with a reputable home buying company.
- All cash offers will be significantly low.
- There are other options to buy your house other than all-cash and you can still fix your money problem.
- They will all offer to pay all costs and repairs.
- All processes are similar.
- You make an appointment for someone to go see your house
- Someone goes out to confirm the information you gave over the phone.
- You get an offer to buy your house.
- If you accept the offer you wait for the closing date.
- I recommend since no one is going to look out for your best interest more than you, stay on top of the entire process.
- Fix your money trouble and get a fresh start.
Contact us after you have solved your money problems so we can help you prevent this from happening again. (Ideally, we want to talk to you before or during the crisis).
Now that we have that covered let’s discuss the companies you will likely come across.
NATIONAL HOME BUYERS – HOMEVESTORS
The first type of companies that buy houses quickly are nationwide homebuyers such as Homevestors. They are a well-known nationwide home buying company with local franchisees. They have been in business since 1996 and have a proven track record. You can find a local franchisee at webuyuglyhouses.com.
Homevestors has approximately 800 franchisees across 48 states. With the support of a nationwide franchise, franchisees are very well trained in creative real estate buying strategies. They will have the knowledge and financial backup to buy houses in all price ranges. If the thought of dealing with a national brand makes your uneasy you can relax because the franchisee who visits your home will most likely be local to your area.
Having a local franchisee available to visit your home depends on whether a local investor has dished out the money for a license to use the Homevestors logo and if no one has they may not have someone who is familiar with your local area. The closest franchisee may be a couple hours away but if they are not familiar with your area they may need to research local property values a little more and this may affect their offer.
Nationwide home buyers like Homevestors are very well trained and have the resources available to help you out of a difficult situation but if you they do not have a local representative and you are not comfortable with someone who is not local it may put you in an awkward situation.
INVESTORS/REAL ESTATE AGENTS
There are national real estate investment companies who license their vanity numbers to local affiliates such as 1-800-Sell-Now. Companies like Sell Now license their 1800 vanity numbers that are easy to remember to local home buyers. Unfortunately, they face the same hurdles as Homevestors but the difference is that many of these affiliates are also licensed real estate brokerage companies. They are homebuyers/real estate agents.
Where homebuyers/real estate agents have the edge over Homevestors is that if their profit calculations do not justify them making you an offer, they could list your house for sale. They also have relationships with investors who could buy your house after they list it.
For you to schedule a visit from a local affiliate they must have an office in your area. If the closest one is hours away they could still help you, but it will most likely be from someone who is not local. Additionally, the added brokerage services offered really makes you wonder whether they have your best interest in mind or their pockets.
The added service of a real estate brokerage to a home buying company seems to be ideal but whose interest are they putting first, yours or theirs? Whoever the affiliate is, a good trusting relationship is important to make sure they have your best interest in mind.
INDEPENDENT LOCAL HOME BUYERS
The last type of homebuyer we will cover is the local home buying companies like our sister company, I Buy Houses en el Valle (www.1800sell911.com). You would probably recognize these home buying companies by the yard signs some of them put up across your city. We call them “bandit signs.” These home buying companies come in all shapes and sizes. You have solopreneurs who are one man shows doing all the work themselves from advertising, to visits, offers, and transaction coordination. They get deep in the trenches. Some specialize in finding the property to purchase and quickly wholesaling it to other investors who will make the necessary repairs for a resell. There are also mom and pop shops and small teams who are more diversified with more resources and multiple rehab projects going on at once.
If you value a personalized experience with a local home buying expert who knows the local area, then a local home buying company is the way to go. You will get one-on-one personalized assistance from someone who cares about the improvement of the local community. Additionally, many of these home buying companies have a vast network of investors who they work with that could pull resources together to compete against the bigger national brands.
Unfortunately, because this group of home buyers is made up of everything from rookie investors to the most tenured you may have to call several different we buy houses ads before you find someone you choose to work with. Many of these home buying companies are just starting off and lack reliability, resources, and experience to handle complex situations with your home.
Local we buy houses companies offer a more personalized experience with knowledge of your local neighborhoods and some belong to groups of real estate investors where they have access to resources like the bigger companies. Unfortunately, the small investment needed to enter this business means you will come across many new investors who are unreliable and inexperienced. You may have to speak to several different companies until you find the one you feel comfortable working with.
THINGS TO CONSIDER
- Work only with the home buying company you can trust.
- Do your homework. Research the companies before you sign any contract. Most of the companies have websites.
- Be realistic about the amount of repairs your house needs. There is nothing more frustrating than hoping for a certain amount to fix your money problems only to find out that you grossly underestimated your repairs. Ask yourself, if you were just going to move into your house as a new buyer what would you fix to live in the house?
- Accept that you are not in an ideal situation or on the strong side of the negotiating table.
- Contact us for a free money coaching if you are in a crisis to see if we can get you out of the crisis without having to sell.
- Know what your home is worth. I don’t mean the value the tax man puts on your home, either. This must be done by comparing your house with similar houses that have sold in your neighborhood.
- You can contact a local real estate agent to see what they think a fair price would be. Keep in mind that real estate agents make a living by listing houses for sale and if you are in an emergency you may not have time to put your house on the market and wait 4-5 months for your house to sell. This would be a good time to ask what the average days on market are for houses in your area. What is the average time it takes for houses to sell?
- You also want to know what similar houses are currently selling for in your neighborhood. ARV’s are based on houses that have already sold because anyone can list their house for whatever they want for it but that does not mean that that is what the market will pay for it. Sold prices are what we are looking for but knowing what houses are currently selling for will give you an idea of the price range your house can be sold for after repairs.
Note: You must stay within the same type of construction, size, and age of your home for comparable prices.
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