Selling your house direct to a real estate investor is not a new idea, but for many homeowners it is not considered a viable option, if it’s considered at all. There are a lot of similarities between acting as your own agent and selling your house yourself, also known as FSBO, and selling direct but instead of marketing a house to a broader audience (like with traditional real estate agents), home owners work directly with the end buyer or real estate investor. Traditionally, when you list your house for sale, you have to wait for buyers to find you. Selling direct is a more pro-active approach in which you (the seller) find the buyer. (The Definitive Guide To Selling A House Direct To An Investor. 12 Things You Must Know To Be Successful.)
Real estate investors represent a smaller but much more capable pool of buyers. Investors are typically “all cash” buyers and can quickly move through the buying process, skipping over traditional lending options which tend to lengthen the entire process significantly. Investors are not hard to find these days. A simple internet search like, “Sell My House Fast For Cash In Indianapolis,” will provide you with multiple companies to choose from; it’s picking the right one that can be difficult. We’ll get into how to choose the right investor later on in this article.
Real estate investors or direct buyers are looking for houses that need a little TLC, alleviating you from having to make costly repairs or upgrades. You won’t have to wait to close either as most can typically close in two weeks or less. When working with a real estate investor you get the benefit of working with a knowledgeable partner who can help guide you through the process without any out-of-pocket fees.
If you find yourself asking the question “what’s the best way to sell my house,” you may want to consider selling your house direct and working with a real estate investor who can buy your house fast and pay cash. Now let’s take a closer look at selling your house direct and things you should know before you go!
The Definitive Guide To Selling A House Direct To An Investor. 12 Things You Must Know To Be Successful.
1. Your house, your rules!
Always remember that this is your house, your equity and that you make the rules. Don’t feel the need to work with an investor that is pressuring you. Take your time and consider your options carefully. The right real estate investor will take all the time you need and be flexible with the terms of the sale. For most, selling their Indianapolis house fast to a real estate investor is not something that is done very often. Most don’t have the experience and sometimes find the process a little intimidating. Ask all the questions you want and take time to process the decision. Consult your friends and family and discuss the terms of the sale and your decision with them.
Remember, not all real estate investors are equal. One size doesn’t fit all. A strong company has multiple solutions they can present you. The more you do your homework the greater the likelihood that you will find the right fit, a company that meets your unique needs.
2. Is direct selling an option for you?
This is not an easy question to answer. You must consider several criteria to know if this is the right direction for you. Some questions you may need to consider include the following: how much time do you have to sell? What repairs or upgrades does your house need? If you need to sell your house today and time isn’t on your side, then working with an investor and selling your house direct is a great option. This option is increasingly more attractive if a house needs some TLC. If you have lots of time and your house is in move-in ready condition, then working with a real estate broker may be the best option for you.
3. Investors versus wholesalers: What you should know before you sign anything!
If you are trying to sell your house fast and are considering working with an investor to sell it direct you need to understand the difference between a traditional real estate investor and a wholesale investor. Both say they are real estate investors, but you must be careful who you work with because there is a fundamental difference in intent and experience.
Most wholesalers have no intention of buying real estate and, more importantly, most don’t have the financial resources available to fund the transaction. We’ve all seen the commercial with real estate gurus proclaiming, “You too can be a real estate investor with no money down.” If you haven’t seen the commercials perhaps you’ve seen the signs around town saying, “We Buy Houses Indianapolis” or “Fast Cash for Your House”. Wholesalers will make offers on as many properties as they can, even though they have no intention of buying them.
If you read the fine print on a purchase agreement with a wholesaler you will notice that they “reserve the right to market, assign or sell the contract to a third party.” Wholesalers don’t plan to take possession of your house, but rather sell the contract to a traditional real estate investor like Ittenbach Capital. For example, a wholesaler might offer a seller $50,000 for a house (even though they do not have $50,000).
Instead of actually buying the house, the wholesaler sells that contact to an investor for $60,000 and pockets the $10,000 If the seller would have sold that same house directly to the investor, that extra $10,000 would have gone into the homeowner’s pocket, instead of to a middleman. In this scenario, the only thing the seller loses is money. The bigger problem occurs when the wholesaler is not able to find a buyer for the contract in 30 days. They will walk away from the deal, leaving the sellers right back where they started.
Why does this matter to you?
If you need to sell your house fast in Indianapolis and are looking for a cash offer, working with a wholesaler could cost you valuable time and prevent you from getting top dollar. If you are facing foreclosure or other financial strain, time is not on your side! If the wholesaler doesn’t find a buyer within 30 days they reserve have the right to walk away from the deal, leaving the seller to begin the process all over again. Unfortunately, this scenario happens more often than you would think, because the wholesaler often will be so anxious for you to sign the contract that he or she will offer you a higher purchase price than an experienced investor will be willing to pay.
The average wholesaler has never flipped a house, and often does not have the knowledge or experience to understand how much money and time it will take an investor to complete the project Moreover, many overvalue a property as they put together the deal.
You Won’t Get Top Dollar Working With A Wholesaler!
4. What is your equity position?
A good first step when considering the sale of your house is knowing how much equity you have accumulated over the years since you purchased it. The more equity you have the more the opportunities you will have to sell it fast. With less equity comes fewer options. Remember, if you are selling with a real estate broker you will have to account for approximately 6% to 7% of the sales price in commissions; that’s $6,000 for every $100,000 sold. If you haven’t lived in your house very long, you may not yield enough at time of sale to even cover the broker commissions. It’s good to reach out to your mortgage company and request a payoff estimate.
Pay off estimates are typically good for 30 days, but it will give you an idea of where you stand and what options are available to you. Additionally, if you decide to sell direct to a real estate investor you need to account for any repairs and updates that need to take place as well as profit for the investor. Selling your house direct to an investor is the fastest and easiest way to sell your house but value has to be created, and it’s typically the individual or entity that is investing the time and money that earns the greatest profit.
Selling direct is a convenience for the seller, but remember, investors are in this business to make a profit. Without profit there isn’t any incentive for a real estate investor to get involved.
5. Is time on your side?
Time is our most precious commodity, aside from equity, it’s probably the single greatest factor homeowners consider when choosing whether or not to sell their house direct. If you need to sell your house yesterday, and you have no time, then working with a real estate investor is likely going to be your best option. Real estate investors can close quickly, usually within one to two weeks. They buy houses in as-is condition and pay all cash. Working with a broker or even selling your house yourself could take four to six months. In some cases, homeowners are facing financial difficulty or even foreclosure. In these cases it’s good to remember this; banks are not on your side! They are working hard to minimize their losses. The faster they can repossess the house the faster they can resell it.
Other factors that impact time include job relocation, divorce, inheritance or health event. For many seniors living independently, a sudden health event may force them to move into assisted living and sell their Indianapolis house fast. Proceeds from this sale go to help pay for the high cost of care. These houses are often outdated and thus are harder to sell. Job relocation and divorce can change your living situation quickly. Most homeowners don’t have the credit or cash flow to purchase a new house before their existing house is sold. Also consider how valuable your time is to you. Do you really want to spend every waking hour of your free time working on your house just to make a little more money?
If you happen to be relocating, your new job may not be willing to wait six months for your house to sell before you begin working. What this typically means is you are forced to pay two mortgages for a short period of time. That may be ok for a month or two but how about six months? This can quickly drain your savings savings account. When the house sells you will recoup the principal you paid (if you get the right purchase price) but all that interest just went to the bank. That could have been your money!
Conversely, if you have lots of time to sell your house then I would recommend you work with a realtor first. Give the open market a chance to buy your house. This may mean more money in your pocket. At Ittenbach Capital, we have our own real estate brokerage company (Ittenbach Realty). When clients come to us with lots of equity and time, we often encourage them to give our retail solution a try first. We can always fall back on a cash offer, and sometimes we have to, but giving it a shot doesn’t cost you anything.
6. Do your homework.
Selling direct takes a lot of the work out of selling. The hardest part is deciding which company to work with. Take time to get to know the companies you are considering; who they are and how they can serve your unique needs. Don’t be afraid to pick up the phone and say hello. You are never under any obligation just for reaching out to a real estate investor.
See what others have to say about the company you are considering. Ask questions like; how long they have been in business and if they have any experience working with houses like yours or your area of town. Ask about special terms or conditions or whether or not they plan on wholesaling your house or taking possession themselves. A good partner will be transparent and have multiple solutions to choose from.
7. Make sure the company you are considering is an accredited business with the state.
Customer reviews and testimonials are a great reflection of company performance. Additionally, company certifications and state accreditations are equally important. These show consumers that they are conducting business within state and agency approved guidelines. As you read earlier, anyone can call themselves a real estate investor, these types of recognitions help validate a company and separate the professionals from the amateurs. Moreover, customer reviews are managed by these agencies, verified as actual customers before being made public. The Better Business Bureau is a terrific source for quality customer reviews.
Many who sell their house to an investor never consider asking what they plan on doing with it, but it’s always a good idea to understand what their intent is as this may impact you. If they are going to pay cash and close themselves, great. But if their intent is to wholesale to an investor, meaning they don’t intend on purchasing it, it could delay the close and even cost you money. Wholesalers act as a middle man, marking up the cost. If you sell direct to the investor you could come out with more in your pocket.
8. Read customer reviews carefully and understand that not all reviews are created equal!
Customer reviews are very important when considering which company to work with. Note: Read through customer reviews carefully, the happier and better served customers will leave lengthy reviews to go along with those stars. Five star reviews are great but what matters more is where you find the reviews. If you find reviews on the company website, by all means read them. But know that companies are only going to pick the very best to show you. All companies want to put their best foot forward but mistakes happen.
Look for reviews on third-party websites like the Better Business Bureau. These reviews are controlled and published by the Bureau and not the company. Good or bad, these reviews and ratings are straight from the customer. Again 5 star reviews are great, but sometimes how a company resolves a problem shows who they truly are. There are many other websites that collect reviews, but most do not take the time to validate them. These reviews could be submitted by friends and family or even employees of the company. To you, they all look the same but now you know that not all reviews are created equal.
9. What condition is your home really in?
Selling your house direct to a real estate investor means you can sell your house as-is. No need to make expensive repairs or updates. But it would be in your best interest to do a reality check. No one wants to think poorly about their house but let’s face it, keeping a house up to date and in great shape requires a lot of time and most importantly, money. If you haven’t done either in a long time, chances are the company buying your house will have to make those updates and repairs before they can sell it. Repair and rehab costs do get factored into how much an investor can offer you, but hey, at least you don’t have to do the work!
When taking stock of your home’s condition there are a number of things you should consider. We find that the age of a home will likely have the single greatest impact on value. Older homes are inherently more expensive to take care of as systems and materials age. Older homes typically have out-of-date and sometimes hazardous materials. Homes built before 1955 likely have what’s called “knob-and-tube” electrical wiring. This is electrical wiring that is not shielded or protected and can lead to fires. Many insurance companies won’t insure houses with this kind of wiring or charge higher premiums. Older homes of this era may also have asbestos for insulation or led piping for plumbing, both are known carcinogens and remediation will likely have to be performed before the house is sold or at the very least disclosed.
Regardless of the age of the home, repairs that tend to be more costly include roofing, heating and air conditioning equipment, siding and windows. The cost of these items can be $3,000 to $8,000 each. If all need to be replaced, then the cost of rehab quickly adds up and will affect the offer an investor can make. You see, a homes value is fairly static. It rises and falls over time but only by a few percentage points. Often times, a house’s value is directly tied to it’s immediate geography. An investor can only add so much value to a house before diminishing returns.
Perhaps your house is newer, built within the past 40 to 50 years. Typically, homes need to be updated every 10 to 15 years to keep up with changing consumer tastes and demands. Cosmetic updates tend to be less costly than structural updates, floor plan or room additions. If you haven’t kept up with the changing times, then your house will likely need a face lift. Family rooms, dens and porches don’t typically cost a lot. But where the cost of rehab can quickly add up are kitchens and bathrooms. These tend to have a greater concentration of expense with electrical, lighting, appliances, cabinets and counter tops. Bathrooms are smaller but with the cost of rehab per square foot, these small rooms can really hit the budget hard.
Location, location, location! You’ve no doubt heard this before. Another thing to consider when sizing up the value of your house is its location.
Is your house in a neighborhood that is growing or declining? What is the condition of your neighborhood? Do your neighbors take good care of their homes and yards or are many of the houses on your street in need of some TLC? These types of expenses are not exclusive to real estate investors. If you were to list your house with an agent as a “fixer-upper,” would-be buyers would also consider the amount of money they would have to invest in the house post purchase to correct any defects and bring it up to date. Homeowners are less efficient than investors when it comes to rehabbing a house. Investors can typically rehab a house 25% cheaper than a regular homeowner as they tend to buy materials in bulk, have strong relationships with contractors and sub-contractors who keep labor costs low. In other words, , a fixer-upper house is going to look like a much bigger and more expensive job to a regular homeowner than to an investor.
Good real estate companies are not in the business of cheating their customers. Most want to put together a great deal, where their customers are happy and willing to tell others. Word-of-mouth is a very powerful influencer. But these types of repairs and updates have to be considered when determining how much an investor can offer you for your house. Knowing the condition of your house, it’s value and what it’s going to take in terms of repair and rehab will help you manage expectations.
10. Do you have any debts?
We’re not talking credit cards or car payments here but rather unpaid debts or financial judgements that may be charged against you. Often times creditors with unpaid balances will put a lien against your house. When a house is being sold, title companies prepare what is called a Title Commitment. This insures the close against any liens, protecting the buyer from any judgements or liens once the property transfers from one owner to another.
In order for the title company to insure a closing it will conduct a title search, using the property address and the owner(s) names. This is a pretty extensive search and 99% of the time covers any liens or judgements. To close the sale, these debts have to be satisfied first. For creditors, this is less costly than hiring an attorney and pursuing legal action. We’ve often seen liens on houses as old as 10 years. In some cases, the homeowners didn’t even know they existed. But when it comes time to sell these have to be satisfied and removed from the deed unless the new buyer is willing to assume the debt.
These types of expenses can be frustrating and sometimes embarrassing but it is always a good idea to share this information with the real estate investor. A good real estate investor will work with you and the title company to try to remove as many of these liens as possible. At Ittenbach Capital, we see this all the time. And have had the opportunity to help sellers eliminate thousands of dollars so that they can keep as much of their money as possible.
11. No Fees or Commissions. You pay no out of pocket expenses.
When you work with a real estate investor you should never have to pay any fees or commissions. This is one of the biggest benefits of working with a real estate investor, besides selling it fast. Most investors will cover all your closing costs, which can typically cost between $1,200 to $2,500. Additionally, real estate investors are buying your house as-is, so no need to pay for any repairs or make any improvements. The only thing you have to do is pack up and move on.
12. Flexible closing
This can be a very big benefit for a seller. Imagine, knowing that your house is sold but you don’t have to move out until you are ready! Typically, when working with a realtor or even selling your house yourself, once an offer is accepted you have 45 days to find a new place and move. This can and typically does add a lot of stress for sellers and even buyers. There’s a lot that has to happen in a very short period of time. Don’t forget, with a traditional retail listing with a broker, you will also have to coordinate some repairs to the house for defects found during inspection.
If you need to sell your house fast in Indianapolis and looking for an all cash offer then give us a call today or go online and fill out our short form.
Ittenbach Capital is an accredited business with the Better Business Bureau with an A+ rating. Average customer reviews are 5 stars. Click Here to see why customers give Ittenbach Capital 5 stars