Are any of these companies legit or do they quote a price on the phone and then lower it once they have seen the house?
Often they underbid, to begin with. Neighbor was offered 200k on a home he later sold for 300+. Afaik, they’re speculators.
Thank you. Underbidding is my expectation since they want to make money. There is an element of fast and easy but not worth 100k certainly. @coralbrook do you have experience with these companies actually giving you the price they say on the phone before seeing the house?
I have never had to sell to these guys. But heres how they work:
Most of these guys are wholesalers, although some are direct flippers using people they have trained at seminars to be their scavengers for a fixed fee. They want to lock your house into contract and then they will shop it to their buyer list. So they are middlemen making a fee to find a final buyer. There is a big chance they will put a clause in the contract that gives them an out after a certain nbr of days if they cannot find a buyer. Unless they are the flipper themself.
When you are on the phone and give them your details they will be looking in neighborhood and give you a somewhat low fair price over the phone. That is not going to be the final price.
At the inspection they will find a ton of issues. They will put big dollar amounts on those issues and negotiate a much lower price with the sales pitch All Cash (which honestly doesnt matter to you because you dont care whether buyers need to get a loan) but more importantly Fast. That does make a difference, depending on the circumstances.
The only time I think there is an advantage is if
Squatters in house and you just need to unload and give buyer the headache
House is falling down and hard to sell As Is
Real estate commissions eat at least 6% of profit anyway. Avoid commission cost.
House is vacant in a dangerous neighborhood and/or you have to move out in less than a week. You can negotiate that they have to haul out a bunch of crap left behind instead of you having to clear it out.
You need to pay off huge IRS liens or other debts ASAP
Thank you for your comments. I felt the phone offer was higher than expected and I figured there was an angle. Another local flipper refuses to go first with a price and I don’t want to throw one out either. Is it usually better to do some repairs and go with an agent?
I did hear that some of the similar companies keep the house for rental.
I just heard from a local agent the same thing, some keep the house as a rental. This house is in a good location near a place where people rotate in/out every couple of years.
I think they will pay lot less than you can buy in auctions.
One of the article I read was an old lady thought she “sold” the property to one of those only to find they try to flip it under the contract and they will drag their feet when their buyer is in trouble.
I got an ‘offer’ on my mother’s home recently, when I ran the numbers, given no down time without rent, no commission, and no repairs it was pretty darned good. I called them to see. They did a walk through and came back 13% lower. But then as I continued to discuss with them the details, I was told there needed to be a full inspection and the “we will take it subject to the lease” became, “we will inspect after the tenant moves out” so I stopped talking to them as I presume the inspection would find all sorts of reasons to lower the price.
Very interesting. I have been told price A if close in 30 days and price A+42k if close in 60 days with the contingency they have to come and see the house first. That’s a big difference for 30 days.
If it’s to good to be true…
Never believe anything until a walk through and inspection. Probably better just trying to sell yourself.
Not sure about your area but we get offers from builders. They want the land to knock down the house to build multi condo units in the same space… If your area supports this you could approach a builder yourself. Might be a much better offer.
The McMansion craze is just arriving to this neighborhood
If the neighborhood is somewhat desirable you should be able to sell As Is through an agent on the market. Find a low cost agent with lower commission (you don’t need big name agency, international coverage, fancy photos, open houses, etc). There are investor buyers out there. If it is priced right (at least 20% off the fixed up houses in neighborhood) it will sell. Just make sure you find the right agent that doesn’t start with “you need to do xyz to sell.”
If 20% off the neighborhood value is less than these guys or gals are offering maybe you can go to the next step to see what they will offer after viewing the house.
Reason they are offering 42k to hold 60 days is because it gives them a long time to wholesale it and find a buyer.
@busyparent Interesting about the McMansions. Where I live, those houses don’t sell well at all. Younger buyers want smaller, more efficient homes in more urban areas; older buyers find them too big with too many stairs. I have a buddy with a McMansion in a subdivision of McMansions. Even in the hot real estate market in the area, those homes are a tough sell.
Thank you for the feedback. The McMansions 6 miles away sell quickly. Original houses are selling for 650-675 and mansions sell for 1.4. Lots of two professional couples in the area. Where the house I am dealing with is located, is not in as good a school district, and the McMansions sit on the market longer. I’m convinced now that using an agent is the better path. I could pay to do some fixing up, but am having trouble getting people out to even bid, and I work full time, so it won’t be easy to handle repairs. I’m told that workers are usually free between Thanksgiving and Christmas. I like a project, and this is definitely a project.
If it’s listed 20% lower than the fixed up comps and then subtract 7% for real estate costs that’s pretty low for what I was hoping to get. Reality check I guess.
What fixes are best? House needs a new bathroom for sure. Needs gutters and roof but only gutters are obvious. Paint. Floors. What about the wood stove in the living room? The list is endless.
IMO, and my area, infrastructure fixes offer comfort to the new younger buyers (if that’s your target). New roof, A/C, heating upgrades takes the worry out of ‘what might go wrong?’ Then fresh paint. I wouldn’t add a wood stove, that would deter any allergy/asthma sufferers.
If I were to sell my house not “as is” I’d have to paint inside and out (probably siding on the outside) redo floors, redo bathrooms, at least reface cabinets in kitchen, replace windows, and possibly structural issues. It’s so daunting, and would add up to so much money, that I am really thinking of trying “as is” and moving to Cash Buyers if necessary once we decide to move. Which could be in the next year or two. My neighborhood has suddenly become a flip or tear-down area, so I would probably get decent offers.
Start with interviewing some local realtors. Ask for a market analysis. They should also be able to tell you what you would get for your house “as is”, and where to spend the money to get the most bang for your buck if you want to do some fixes. This is very market dependent!