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What You Don't Know About Selling To A Home Buying Company (But Should)

Updated: Jan 26, 2021

Modern interior and kitchen - Contenza Properties
Sometimes a home buying company can make you a more attractive offer than a traditional buyer

Home Buyers (A.k.a iBuyers) Can Be Your Best Friend

It seems today that cash home buyers/investors have developed a bad reputation, and honestly, for some investors out there, it has been rightly earned. I've gone to numerous real estate investor meetings where others have proudly touted:

"I once bought a house for a dollar!"

Is that a great deal for the buyer? Sure it is, but is that a great deal for the seller? I hear real estate investors talk about how they are out there to help people, and for most investors, yes, they do want to help people.

However, when you hear other investors talking about how proud they are to have bought someone's house for one dollar, it makes you wonder:

  • Are they out there to help the seller? - Probably not

  • Did they only want to get a great deal? - Probably

  • Couldn't they have at least offered them a few grand for the house? - Almost definitely.

Not all real estate investors are out to steal your house. Most real estate investors are ethical and want to help sellers by making fair offers. Unfortunately, this is a case where the few have developed a bad reputation for the many.

Let's get into the reasons why it would make perfect sense for you to sell your house to a professional home-buying company/investor.

We'll assume you're selling a home that requires light, moderate, or substantial repairs, or is generally outdated.

Real Estate Investors Are Far Less Picky Than Traditional Buyers

We'll consider the steps of a typical home sale from beginning to end, and how the process varies between selling to an investor and selling to a traditional buyer.

Step 1: An Offer is submitted

Traditional Buyers

Traditional buyers may submit the following offers:

A cash offer (Very unlikely!) - As they say: "Cash is king." - When a buyer provides a cash offer, they are ready and able to move quickly. A cash buyer doesn't have to deal with:

  • Banks

  • Appraisals

  • Financing contingencies

All of the above are perfectly normal parts of a real estate transaction. However, if you need to sell your house quickly, they can easily slow down your progress to the closing table.

FHA offer - FHA buyers may not have a lot of capital at their disposal. FHA loans can require as little as 3.5% down, which is why it's appealing to buyers with low cash reserves, or who want to keep money in the bank. Note that FHA buyers may ask you to cover more of their closing costs if they fall into the "low cash reserves" category.

Conventional offer - Conventional offers can require the buyer to produce up to a 20% down payment. Traditional buyers often have more cash reserves to play around with, and conventional loans have fewer restrictions in place than FHA loans.

USDA offer: In more rural parts of the country, buyers may be able to submit an offer with a USDA loan. USDA loans can allow buyers to receive 100% financing on qualifying property.

VA offer: A VA loan allows veterans to qualify for up to 100% financing if they are eligible.

Each of these offers comes with pros and cons and may lead to confusion when trying to pick the best offer.

Most traditional buyers won't even be able to secure a loan on a property that needs moderate or heavy renovations. FHA and VA loans, for example, come with stringent guidelines from the government that a home must meet before they lend on the property.

Do you want to sell your home, but maybe the dishwasher or range isn't working 100%? An FHA or VA buyer likely wouldn't be able to close unless you fixed it. An investor wouldn't care.

Investors / Home Buying Companies

Investors are likely to submit the following offers:

Cash - Real estate investors may submit an all-cash offer, thus, eliminating the need for any bank involvement and allowing for a faster closing. Investors offering in cash can close in as little as just a few days!

Hard Money - Hard money loans are specialized loans for buying fixer-uppers. Hard money lenders typically are incredibly streamlined and can allow investors to close in as little as 10-14. If you get an offer from an investor using hard money, don't worry, you will still be able to reach the closing table very quickly.

It's much easier to review an offer from an investor, and investors have no problem closing a loan on a property that needs renovations.

Step 2: Offer Is accepted

Traditional Buyers

Traditional buyers often push the closing date out 30 - 45 days. Regular buyers also include a ton of contingencies in their offers. For example:

  • Financing contingency - The financing contingency allows buyers to back out if they cannot secure financing through a lender. You should always make sure your buyers are pre-qualified with a trusted lender to prevent this from happening.

  • Appraisal contingency - The appraisal contingency gives buyers the right to back out of the deal if the home does not appraise at or above the purchase price.

  • Inspection contingency - The inspection contingency allows buyers to back out if they find something they don't like in the inspection report. For example, if a seller tells them the HVAC system is working fine, but the inspector's report says the HVAC is nearing the end of its useful life.

  • Home sale contingency - The home sale contingency makes the buyers offer contingent on the sale of their home. If their house fails to close for any reason, they can back out of their agreement to buy. The home sale contingency offers a safety net to the buyer who's using it but makes it risky for the seller to accept the offer due to uncertainty.

The contingencies are to keep buyers safe of course, and this makes sense, but the more contingencies in an offer, the more hurdles you have to overcome to sell the house.

Traditional buyers may also ask you to pay for a home warranty, which can cost you almost $1,000. Investors are far from likely to ask you to include a home warranty, thus, saving you money.

Investors / Home Buying Companies

Investors can close in as little as a few days with cash, or 10 - 14 days with a specialized hard money loan. Investors may include a financing contingency if using hard money, and they may decide to include an inspection contingency too.

As long as the investor you're working with made you a smart and reasonable offer, they will likely have minimal problems clearing their contingencies.

Sometimes investors have to push the closing date out as traditional buyers do, but more often than not, investors can close much quicker than a conventional buyer.

Step 3: Appraisal is ordered

Traditional Buyers

All conventional buyers have to have an appraisal ordered on the house. If the appraisal falls short, they can back out of the deal, or you'll have to lower your price.

Investors / Home Buying Companies

Investors buying with cash do not have to have an appraisal ordered since a bank is not involved. Investors using a hard money loan will have to have an appraisal ordered, but this typically does not get in the way of the sale.

Step 4: Inspection is ordered

Traditional Buyers

The majority of buyers will order a home inspection before closing on a house. If they find something they don't like, they can back out of the deal, ask you to fix it, or ask for a price reduction.

Investors / Home Buying Companies

Investors may opt for a home inspection to make sure they fully understand the extent of repairs that need to be done on the property. Investors, however, will usually not back out of a deal because of an inspection report.

Step 5: Repair And Replace Period

Traditional Buyers

If regular buyers aren't entirely happy with the home, they may ask you to spend thousands of dollars to fix or replace certain items.

The repair and replacement requests from traditional buyers can quickly run you thousands of dollars depending on what they ask for.

Investors / Home Buying Companies

Typically, an investor will never ask you to perform repairs on the property. After all, investors are buying your home intending to renovate it fully. This will save you a lot of time and money not having to worry about doing any repairs.

Step 6: The Waiting Period

Traditional Buyers

As mentioned above, traditional buyers typically set the closing date out 30 - 45 days. Traditional buyers need time to clear all of their contingencies, in addition to the time it takes their lender to underwrite their loan.

Investors / Home Buying Companies

Investors can close as quickly as just a few days, or 10 - 14 days if they are using a specialized hard money loan. Investors can also set the closing date out 30 days or more if they need time to finish another project, but their goal is to close as quickly as possible.

Step 7: Closing Day

Traditional Buyers

Traditional Buyers will often try to get you to pay some, maybe even all of their closing costs. Crazy, right?! Why should you have to pay for someone else's down payment?

Investors / Home Buying Companies

Investors often offer to help you pay your closing costs, or at least are happy having the costs split fairly between both parties. I've never seen an investor ask a seller to pay most or all of their closing costs.

On closing day, if you worked with a realtor to sell your house, you'll have to pay their commissions, which can go up to 6 percent.

That's not cheap! If you sell directly to an investor who doesn't work with a realtor, you will not have to pay any commissions.

Not paying commission can easily keep thousands of dollars in your pocket. On the sale of a $500,000 house, that's $30,000 extra in your pocket.

When You Work With A Home Buyer Like Contenza Properties, We Give You a Fair Offer

As you can see, there are a lot of benefits to selling your house directly to an investor. There's no reason to believe just because an investor gives you a call to buy your house; they're going to offer you $1.

Now, sure, they might, and if they do, run! An investor like that clearly does not have your best interest at heart.

When you need to sell your house quickly for cash, contact Contenza Properties for a fair offer for your home. You won't have to worry about any repairs, fees, staging, or the typical hassles of working with a traditional buyer.

And one last goodie for you. Did you know that if you sell your house directly to Contenza Properties we'll give you $1,000 cash back at closing? So, what are you waiting for, contact us today!

Subscribe, Share, And Get $1,000!

Did you learn something from this article? If so, make sure to like, subscribe, and share.

If you know someone who needs to sell their house quickly, refer them to Contenza Properties. We'll pay you $1,000 if we buy their house in the next 30 days.


About the Author

Jordan Reid - Founder of Contenza Properties

Jordan Reid founded Contenza Properties in April of 2018 to help homeowners solve their real estate problems quickly.

Since then, Jordan has helped multiple homeowners facing difficult situations such as divorce, property liens, and unwanted property inheritance.

Jordan believes in putting people first, and numbers second, which helps him reach the best possible solutions for the homeowners he works with.


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