Are Cash Homebuyers Credible?
You need to sell your house. You know what it will take to prepare to list it, and you know it’s going to be a lot of work, take a lot of costly repairs and remodeling. You also know it can take a lot of showings before you lock up a contract with a buyer. You wonder if the buyer may also have to sell their own house to buy yours. Hopefully, you won’t have to list it for weeks or months in order to find the right buyer. You know the longer a house is listed, the more concessions you have to make to get it sold. You might not recover the investment you made updating it to list it in the first place. You’ve seen some billboards and signs for companies saying “We Buy Houses for Cash,” or we “Buy Ugly Houses” and you’re curious about how it works. You like the idea of being able to sell your house fast, as-is and for cash – but surely there must be a catch! How do you check into these companies when most of the people you know have only used real estate agents to buy or sell a home? How do you even know if these companies are honest and credible?
Are “We Buy Houses Fast For Cash” Companies For Real?
At first, all cash homebuyers might look alike. If you’re thinking ‘I want to sell my house fast‘ you might be tempted to go with the first company you talk to. But not all offers are the same! There are some things you should look for in a reputable company before you agree to their offer. Just like any other line of work, there’s a small minority of cash homebuyers who put money before the seller’s needs. Despite that small minority, buying and selling houses with cash is a respectable profession which helps buyers and sellers in many different ways. There are investors who are really great, ethical people and who want to help buyers and sellers alike during life transitions which have come everyone’s way at some point. So how do you tell the difference? And exactly how does a cash homebuyer help people?
What Honest Cash Homebuyers are Doing
Most people think cash homebuying is a get-rich-quick scheme. This perception is fueled by various real estate investor/rehab reality TV shows – all of which turn up the drama for ratings. The truth is, most of the work in cash homebuying is just coordinating a lot of moving parts with various people to make sure things happen smoothly and on time. This takes expertise gained from years of homebuying experience, but it’s not very dramatic or entertaining! It’s really just about putting in the hours, having the right conversations with the right people, doing the footwork, and helping out others along the way.
Every day there are people who decide they’re ready to sell a house and, after evaluating their circumstances and options, conclude ‘I need to sell my house fast’. Honest cash homebuyers are just trying to solve problems for everyday people, and by doing so, are helping communities as well. Cash homebuyers are:
- Helping owners get rid of a burdensome property – a property owner suddenly may no longer be able to manage the maintenance, repairs, or upkeep of a property. The house is now too big and requires too much care, and the owner is simply no longer able to do the work or afford to have it done. The owner wants to sell my house fast, and move on to a low-maintenance home.
- Helping heirs with property they inherited – an owner may have inherited a property from a loved one who passed away. Sometimes the property is in disrepair, full of contents, or the heir lives out of state and can’t manage it. Sometimes there are several siblings who have inherited the property and they decide it’s better to sell than to try to manage the property together.
- Helping owners move on to better investments – A landlord who owns rental property, after reviewing the costs and time needed for property management, might conclude the property is no longer profitable. Another owner might take a look at the economic environment, the rising property taxes, and ever increasing maintenance costs and utilities, and decide it’s time to move out of state.
- Helping sellers access the money they need right away – an owner may need to downsize, relocate for a job transition or to be closer to family who will care for them, and the only funds they have access to are from the sale of the house. Sometimes a family emergency develops very quickly, and families are faced with selling quickly in order to help loved ones move on to a healthcare facility.
- Creating work for local tradesmen and other industry professionals – cash homebuyers work with brokers and title company reps, and they also hire local contractors to help clean out and clean up properties. These might include HVAC technicians, plumbers and electricians, flooring installers, painters, and junk-out companies, too.
- Improving neighborhoods – cash homebuyers often purchase homes that are vacant, in disrepair, or have been neglected. When these homes are cleaned out and cleaned up, then sold to a new buyer who makes even more repairs after moving in, this helps clean up the neighborhood and strengthens market activity for all.
- Increasing the tax base – when a new buyer purchases a home, the new assessment, which may also include various improvements, increases the taxes on that property. The increase in taxes contributes to schools, libraries, fire and police, and streets and other infrastructure.
How Do You Know You’re Working with an Honest Cash Homebuyer?
When you interview cash homebuyers to see which one will be the best fit for you, ask some open-ended questions. Read online reviews. Make sure they take the time to talk with you about your specific situation and why you’re selling, not just the property characteristics. You want to sell to a cash homebuyer who is reputable, honest, and knowledgeable. A ethical investor won’t have a problem with you interviewing them to see if they’re a good fit for you to sell to. Some questions you can ask are:
- How do you help the people who sell their house to you?
- How would you describe your house-buying philosophy?
- How long have you been buying houses for cash, what keeps you doing it?
- How can I know you will close on my house when you say you will?
- What, if anything, would cause you to back out of buying my house?
- I want to sell my house fast – but what if I need more than two weeks to move?
- Will you try to re-assign my contract to someone else, or do you take title to my house?
Lastly, look for these red flags and avoid companies who use them:
- Never sign over the deed to your house. A professional company will perform a closing at a title company, with attorneys — even if you need to sell quickly! Just because you’re thinking how do I ‘sell my house fast,’ it doesn’t mean closing can’t be done the right way. A professional will know how to close properly.
- Work with a company who will close on your timeframe. Many reputable cash homebuyers will make you an offer quickly in order to get you information when you want it, and that offer usually has an expiration date due to market fluctuation. In Illinois, cash homebuyers can close on a house in as little at 2 weeks, however, they still shouldn’t pressure you to sell more quickly than you want to. Make sure the company you’re working with will be flexible enough to meet both your and their timing needs. You might think ‘I want to sell my house fast’, but fast for you is two months, not two weeks.
- Work with a company whose contract is not full of small print. The standard real estate contract in Illinois is about 19 pages long, when you include disclosures. That’s plenty of legalese and a lot of work to determine if you will be getting the amount you agreed to out of closing. You don’t want the big print to give you what you want, and the small print to take it away again. A simple one-page contract is really all you need, and the cash homebuyer should be paying your closing costs, outside of property taxes and your attorney fees.