Questions to Ask When Selling Your Home to an Investor
Real estate investors are the most attractive and suitable option if you are looking for quick ways to sell your house for instant cash. Selling your property to an investor is a different ball game than selling it to someone with immediate plans to move in.
In real estate investing, investors purchase the property with no plans to reside. They just wait for the increase in its valuation so they can sell it further for a good deal.
Never indulge in real-estate deals with a no-questions-asked policy. But that doesn’t mean you should just hop on to the first offer you get from a real estate agent who shows interest in buying your home. If you elect to go ahead with an investor, ensure that you sincerely vet their offer by asking them certain crucial questions.
This guide answers the most frequently asked questions when closing the deal. This will help you put your mind at ease and make the best possible decision for your situation.
Let’s First Look at Some of The Reasons to Consider Selling Your Home To An Investor
You should consider selling your home to an investor for many reasons. Some of the most common cases include:
In case you have inherited your house from a relative.
You have listed your home but are not getting good responses from potential buyers.
You are losing money on a rental property.
Quicker closing of the deal.
Little to no risk involved.
No renovations and repairs are required.
Also, investors do not require mortgage approval or a house inspection, for that matter. Owners who sell to an investor thus avoid all the obstacles of a typical traditional sale.
So, no matter why you have decided to sell your house to an investor, always ensure you are getting into a fair deal for both parties. Prepare a list of questions to ask a real estate investor to make a diligent decision regarding your property.
Now let’s hop on to the questions.
Questions To Ask When Selling Your Home To An Investor
What Type of Investors Are You Selling To?
Not many people know, but real estate investments take many forms. Property investments come with different requirements on the seller’s end, which means you.
Buy and Hold
If the investor is buying your house to add it to his portfolio of investments, then you are expected to conduct a home inspection and do minor repairs and improvements if required. Selling to a buy-and-hold investor is similar to selling it to a potential client who has shown interest in your property and will be taking residence in it.
Flipping means renovating your existing property and selling it for a higher profit margin. Companies and individuals flip homes, which means you can do less work to close the deal as they will redo it anyway.
Development investors often purchase your property to tear it down. They then construct a new one right from the ground. They generally purchase most of the properties in a single area, so consider holding on for a little longer, as they will offer a higher price in certain cases.
Wholesale investing is usually done by real estate investment companies as it is a process where homes are bought on a large scale, and the properties get sold very quickly. This happens because real estate investment companies already have a ready list of buyers, so they revamp your home and sell it at a markup. It is considered an excellent investment strategy that fetches investors a lot of money.
How Much Work Needs To Be Done?
This entirely depends on the type of investor to whom you have decided to sell your property, but it is still an important question to ask. Generally, investors do not ask for major repairs; they just expect you to do very little work covering urgent repairs if you sell your home to them.
If, however, they are buying your home to put it on the list of rental properties on the market, they may request several inspections and repairs from your end. If they do, and you incur those expenses, ensure you see the final sale price variation.
Always ensure that you are discussing these crucial points before closing the deal to avoid disagreements at the last minute.
How Will Payment Work?
While selling your property to an investor, always ensure you set expectations clearly from the beginning. Always ensure you are crystal clear on how much you can expect to receive, when you will receive it, and how they came on to that particular figure. You should also ask them if they are covering your additional costs, such as property taxes and insurance charges, to speed up the process.
For them, your home is one of the many investment properties on the market, but for you, it is much more than that.
Most of the time, selling to an investor means you will get your complete payment in cash as soon as you close the deal, but that doesn’t mean a bag full of money will arrive at your door. You are usually given two options on how to get paid:
Wire transfer, it usually reflects in your account within 24-48 hours of closing the deal, or
Paper check, which you will have to deposit in your account and wait for the bank to add the funds; this process usually takes up to 7 business days.
What Will Be The Moveout Date?
Selling your home to an investor is altogether a different ballgame. Here, the timeline moves a little faster, and you can expect the entire matter to get over in less than two weeks.
You want to ensure you have enough time to move out of the house and pack things up.
While getting quick and easy cash is good, you should still know the move-out date. Change of homes is exciting but troublesome. It involves a lot of work and needs an adequate amount of time for completion.
Do They Have Enough Cash/Liquidity To Buy the Property?
Investors often take the property “as is” against a good amount of cash. Still, as an aware homeowner, you should never stop asking a critical question: do they even have an adequate amount of funds to follow through with that promise/contract?
There is no guarantee until the deal is closed and the down payment is received. Therefore, to protect yourself, you should always ask the investor for proof of funds they intend to use to purchase the property.
Are They the Company I Can Trust?
The real estate industry is at its peak, and many new investors are entering the market to follow the trend. Most new investors are inexperienced as they are new to the home-buying process. They need to gain the experience and the knowledge to handle transactions like the other seasonal investors.
Home is considered one of life's significant assets, and you wouldn’t want to trust just anybody for its sale, right? Therefore, we recommend going with a local company with valuable experience and can handle the transactions well. An experienced investor ensures the transactions go as smoothly as possible and per the promised terms and conditions.
Do I Need A Real Estate Agent?
No, you do not need a real estate agent if you are selling your home to an investor. An investor can handle all the paperwork and all the necessary details of the transaction. You just focus on choosing the right investor, deciding on a closing date, and signing the agreement. Also, you are recommended not to approach property agents to avoid paying their commission fees and other hidden charges from your own money.
Do Investors Throw A Deliberate Low Estimate Offer?
The valuation of your property depends on a few things, such as-
Its condition at the time of sale.
The market value of the property.
When do you need to sell?
Type of investor you are selling it to.
There are two types of investors in the real estate market:
House Flippers: They usually pay 70% of the valuation after deducting the repair value. They ascertain the value based on the property’s sale price after the final repairs.
Rental Property Owners: Property investors look for immediate ready-to-move-in residents. Hence, they prefer properties that need minor repairs. They aim to earn a monthly income of 1% of the purchase price. Their estimate is based on how much they can rent it out after deducting the repair cost.
How Does An Investor Make Their Offer?
Investors usually conduct their own research before quoting a price. They determine its value based on the property's location, the latest market trends, and its condition and by comparing it to similar properties in the area.
A Reputable Real Estate Investor That Can Help You Close the Deal
HomeFront is committed to providing our sellers with an easy, effective, and transparent sales process. Our local team of real estate experts is ready to provide hassle-free services that involve no hidden costs to help you save money and involve people who go beyond their ways to customize every aspect of it to suit your needs.
So, if you are considering selling your home to an investor, you should always ask the questions mentioned above. This will ensure you are entering into a fair deal with no last-minute disagreements.
Before you sign any agreements and enter into the real estate business, do thorough research and ask as many questions as required. You don’t want to lose money just because you weren’t prepared, aware, or too trusting through the process.
The more you know about investors, the better you can decide how to proceed with the home-selling process.