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Why Selling Your House to a Real Estate Investor Works

Here’s a situation: You need to sell your house, and you need to do it as soon as possible. How do you do that? You can either do it by working with a real estate agent, going DIY through FSBO or by selling your house to a real estate investor.

Selling one’s home isn’t a simple straight line – it can be a different journey for many people, and it all begins with deciding the route to take when selling. Here are three of the most common options you can consider when selling a home, as well as their advantages and disadvantages.

Working with a Real Estate Agent

Working with a real estate agent is the most traditional way to sell a home, and the process of doing so is fairly easy.

The process of working with a real estate agent is fairly easy. You get in touch with one, they have a look at your home and determine its price. Then, you sign an agreement with them, allowing them to represent and sell your property exclusively. Once that’s signed, they will then list your property, market it and do the usual showings for potential buyers. If a buyer is interested and purchases the property, they will then take care of all the paperwork, and collect a fee.

This process takes about 3 to 12 months, and can cost you around 6% of the total purchase price for realtor fees, plus another 2 to 6% for closing costs, title insurance, and seller concessions. The 6% realtor fees are usually split between both your agent and the buyer’s agent, but as the home seller you are the one responsible for paying this entire amount.  Of the other remaining fees, the only one that is sometimes partially paid by the buyer is the closing cost.  However these are usually only a few hundred dollars, so that doesn’t save you much.  On average, the total cost of selling a home through a real estate agent is about 10% of the sale price.  So, if your house sells for $250,000, you should expect to pay out about $25,000 from that amount, plus whatever expenses you incur repairing and holding onto the property for as long as it takes to sell.

Advantages and Disadvantages:

One of the biggest advantages of working with real estate agents is that they know the market well. They also have access to MLS – which means that your house is listed and exposed to a wide range of buyers. Aside from that, an agent will do most of the work for you, saving you from a host of inconveniences.

While this route is very convenient, it is also quite costly. You’ll have to shell out commission for agent upon closing, and will also have to cover for other costs of keeping the house while you’re trying to sell it. The time it takes to sell a house with a real estate agent can range from three to twelve months – so you’ll have to cover costs for keeping the house during this time. Because agents also focus on retail buyers – or individuals who will purchase your home for the purpose of living there – you’ll also need to stage your home for multiple viewings, which will also entail added expenses and inconvenience.

Selling Your Home FSBO

Another choice is to sell your house FSBO – which is an option that has gained popularity over the years. This process means doing the sale all by yourself.

Selling your house FSBO can be great if you’re knowledgeable about real estate, have superb marketing skills and have free time to do the work on your own. The costs, however, can vary greatly. If you’re thinking of just the basics, you’re looking at about $100 to $1,000 to list your property, and about 3% of total sale price if are willing to offer a commission to a buyer’s agent. Many people who go FSBO tend to enlist help of different providers to help make the house more sellable, from appraisers to house stagers, to lawyers, and these can add up and cost you anywhere from $2,000 to $8,000. The last few services I mentioned are optional of course. Since you don’t get as much exposure as when you list your home with a real estate agent, selling your house FSBO usually takes a lot longer, depending on your sales strategy and the strength of the market.

Advantages and Disadvantages

One of the biggest advantage of selling your house FSBO is that you get to save a substantial amount of money by not having to pay out agent fees.  The downside however, is that it takes plenty of work. Selling your house is a big responsibility and will require time and effort from your end. Lastly, depending on your skills selling your home FSBO, it may take a lot longer than when working with a real estate agent.

Selling Your House to a Real Estate Investor

Unlike a real estate agent who will work with you to sell your house, a real estate investor buys your house directly from you. Investors buy houses as is, and they either fix and sell the house, rent it out or sell it to other investors.

The process can be complete is as little as a few days or can take as long as you need it to. Because you could have your home sold as quickly as a few days – this is the option that many people consider when they need to sell a house ASAP. The cost sell is also very low. In fact it can sometime cost you absolutely nothing if the investor pays for the title insurance and closing costs. Most importantly, you don’t have to pay for any Realtor commissions! That said, real estate investors generally do not purchase a house at full price – they usually look at buying houses for a discount, which will allow them to make a small profit when they eventually resell or rent out the property.

Advantages and Disadvantages

The biggest advantage of a real estate investor is speed, where you get to sell your house and get your money as soon as possible. Plus, you don’t have to go through all the hassle of selling your house by yourself, paying for closing costs or repairs, or any other expenses associated with going through the traditional route.

The main disadvantage of a real estate investor is that you will likely be selling your house at a discount compared to listing with an agent. This discount is often a trade-off given the speedy sale the investor is willing to offer, and their ability to purchase as-is.  One thing to consider is that the longer it takes you to sell your house, the more you end up spending for things like mortgage payments, insurance, and taxes. Also if your house is in anything other than excellent condition, you may end up either spending a significant amount in repairs or your house could take significantly longer to sell.  Only you know now how important all of these factors are, and whether selling to a real estate investor is right for you.

Final points

Indeed, there are many ways to sell a house. What you should note is that there is no “one-size-fits-all” or perfect solution. It will all depend on your current needs and financial capacity.

If you have time on your hands and are willing to exert effort in selling, you might want to consider doing FSBO first.  Or if you have plenty of time but don’t want to go through the inconvenience of doing things on your own, you may want to contact  real estate agent to sell for you.

But if we go back to the question I posed above – “do you sell your house quickly?”  If the answer is yes, then selling your house to a real estate investor might be your best option. There are many investors out there, and the key is simply getting in touch with the right one.

If you’re looking make selling your house as quick and easily as possible, simply fill out the form here, and by this time tomorrow you could have your house sold!

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