Who The FSBO Route Is For Selling your own house is really great for people who don’t need to sell quickly and who have no urgency to get out of the house. Also, people who have a certain comfort level with negotiations, working with offer documents, etc usually like this route. If you need to sell quickly and/or don’t want to hassle with everything that goes with listing and selling your house yourself... this isn’t the strategy for you.
The general process of selling your house to a real estate investor is...
1 You connect with the investor and submit your information about your house and situation to them.
2 Investor will evaluate the house, come up with a value for it, determine if any repairs are needed, find out what your goals are, and make an offer that fits their buying criteria and helps you reach your goals.
3 You look at the offer and decide if it works for you.
4 If it’s a fit, closing happens at a title company and the title company prepares the documents... the investor buys with all cash so it’s a quick close and you get your cash quickly.
5 The house sale is complete.
The process can take from 7-30 days (many times investors can close within 7 days if you need it to). It is the option that many sellers go with when they need to sell their house fast with little hassle.
Cost: The cost to sell your house to a real estate investor is very low. There are no commissions or fees and often times the investor will actually pay for 100% of the closing costs as well. This immediately eliminates thousands in costs that you would have to pay when working with an agent or selling the FSBO route.
The main cost with working with a real estate investor is the fact that an investor can’t pay full retail value for a house. They usually look to buy houses at discounts that allow for them of course to turn a small profit on the deal... just like any other business turns a profit. But, for many people... selling at a lower price makes sense in return for the elimination of commissions and fee and the much faster timeline to sell your house.
What many people don’t take into consideration are the “carrying” costs when selling a house with an agent or the FSBO route. Carrying costs are all of the costs associated with owning and maintaining the house. The mortgage payment, taxes, insurance, utilities, HOA fees, etc. These can really add up. If your mortgage payment (including taxes and insurance) is $1,500... and you work with an agent and it takes them 8 months to sell the house at full market value... that means during the 8 months you paid $12,000 in payments on that house (which we all know most of your mortgage payment is interest going straight to the bank). Plus, you’ll be paying the commissions, etc. So in the end, you could net in your pocket less if it takes a long time to sell your house with an agent for full retail value... versus selling very quickly to an investor at a discount today.
A similar situation we’re all familiar with is trading in your car to the dealership when you buy a new one. Most people trade in their car to the dealership to eliminate hassle and headache. We all know the dealership is paying a discounted rate and will turn around and sell your car for a markup and make a profit. But, because of the convenience and speed... it makes sense for you to sell it for less money in return for not having to worry about taking it home, spending money on marketing it, and trying to sell it yourself. Timeline: The timeline to sell your house when working with a real estate investor can be very quick. Since investors buy with all cash (they don’t use conventional banks which take more time)... they can close very quickly. Many times you can have an offer on your house in less than 48 hours... and can close in less than 7 days from the time you accept it (sometimes it may take a week or two).
Pros: It’s less headache, you can have your house sold this time next week if you wanted to, no fees or commissions, many times the investor will pay all closing costs as well, and the closing happens at a title company just like with an agent... making sure it’s done correctly. In addition, most investors will buy your house “as-is” and won’t require you to repair anything, clean anything up, or even remove everything from the house. They’ll pay for those costs themselves after the sale is closed.
Cons: Just like with anything, there are drawbacks. The main drawback may be that you are selling at a discount in return for the speed and convenience that a real estate investor is able to offer. If you’re able to work with an agent and the agent is able to sell your house for full market value within 3 months (and you can wait 3 months)... you may be ahead going that route. But, if it takes longer than 3 months for the agent to sell it... the “carrying” costs we mentioned earlier start to eat away at any gains you may have working with an agent.
Who Selling To A Real Estate Investor Is For This strategy is mainly for people who are willing to sacrifice a bit on the sales price in exchange for a fast convenient sale with no hassles. If you need to sell quickly (days or weeks rather than months), investors can close quickly. If you don’t want to hassle with repairs or cleaning up the house, investors actually will take care of that for you. Investors are able to get a good house at a fair price that leaves them room for a profit... and you are able to get out from under the house and the payment and can move on more quickly.