You’re here because you want to know everything about cash buyers. You’re comparing options to sell your house fast in a competitive market. 

Welcome to propertywriting.com. This blog will cover a lot about selling your home to a real estate investor. We’ll talk about “we buy houses companies,” “real estate investors,” and, behind the scenes, offer calculation procedures. 

For easy navigation, I’ve divided this guide into 4 sections. You can click on your specific question to skim right to the answer. 

Sell My House Without a Realtor

Can I sell my house without an agent? 

I hear you!

Many people are frustrated with the real estate process. In my experience, most people are not worried about the cost of hiring an agent. But, yes, the price is an issue because it runs in thousands of dollars. 

The real estate market is not in the best condition. We’re hearing about a recession, so buyers are hesitant about the purchase. You’re in trouble if your agent doesn’t know how to navigate the situation. 

Another problem begins even before hiring an agent. How do you find the best agent to sell your home? You can ask friends and family members. You can search online. You’re lucky if you know a trustworthy agent. Otherwise, you’re relying on online reviews and BBB ratings. I am not saying you can’t find a reputable agent. The issue is that it takes time. You can expect to spend a couple of weeks before you can start working with your realtor. Even after hiring, I can hear questions in your head: 

• Did I make the right decision? 
• When will my house sell? 
• What’ll be the price? 
• How will we find the buyers? 
• Do I have to do a lot of work along with my agent? 

These questions remain unanswered until your agent successfully sells your home and you receive the amount. 

Now, let’s say you want to try FSBO. You want to sell your house by owner without hiring a realtor. How do you do that? 

You have two options left: 

• FSBO websites
• Cash sales (real estate investor buyers)

Real Estate For Sale By Owner: 

How do I sell my home without a realtor? Or how do I sell my house by owner? In this post, we’ll compare both options to help you decide. 

FSBOs have a reputation for getting you a lower price. However, an FSBO property doesn’t necessarily sell for a lower price. You’ll often find twisted statistics on the internet. 

For example, you might read that a certain percentage of people end up hiring an agent. Or FSBO properties sell for ….% less price than agent-assisted properties. 

There is a problem with those statistics. Before I explain the issue, let me ask you a question: 

Scenario #1: Joe has a small income and a small property worth $50k. He works full-time, but he wants to relocate to a different area. Now when he’s planning to sell, he doesn’t want to spend $3,000 on realtor commissions.

Furthermore, his house doesn’t have market appeal. So he won’t get too many interested buyers even after hiring an agent. 

Scenario #2: Barbara owns a home worth $300k in a lovely suburb. She and her husband are planning to move into a better school town, so they are planning to sell the house. The property is in good condition but could use some updates. 

Who do you think will hire an agent? Who will end up choosing FSBO? What’s your opinion? 

Please share in the comments. 

I am waiting for your answer. 

Maybe you’re waiting to hear from me. The truth is we don’t know. However, I can predict that Barbara will choose to hire an agent. In contrast, Joe is a handyman and might decide to sell by owner. 

That’s the issue. Most low-priced properties are not listed with agents. So an agent will sell a house worth $300k. An FSBO property is priced at $50k. When stats come, you’ll see that FSBO properties sell for a lower price. If you want to sell your home by owner, you don’t have to lower the price. 

So, Should I Sell My House by Owner? 

I hope you get some encouragement from the pricing truth. Now, let’s talk about your saving and why FSBO is a bad idea. 

Buyer Agent Commissions: 

That’s the point I hate about FSBO. What’s the point of all effort if I have to pay commissions? I want to sell my house by owner to avoid commissions. However, sometimes, you’re responsible for paying for buyer’s agent commissions. Now, you can negotiate with the buyer, but the result is not guaranteed. 

So, your actual savings become 3%. 

Listing on the MLS & FSBO Websites: 

You can market your property on the MLS using flat-fee services or marketing packages offered on the FSBO sites. You can get these services for a small fee. 

Suppose you pay 0.5% (of your home value) on marketing packages, open houses, and advertising. Now we just need to talk about the 2.5% commission. 

Should I spend another 2.5% on hiring an agent to sell my house fast? Or can I save 2.5% and still sell my house fast for a reasonable price? The answer will vary from situation to situation. 

Some FSBO websites also offer agent services for a small commission like 0.5%-1%. 

In my experience, that’s the sweet spot if you want to sell your home by owner. You can receive support from an agent without paying a hefty fee. 

Is It Better to Sell My House Fast for Cash? 

Maybe, maybe not. That’s where real estate investors play their part. This section will give you a detailed review of working with real estate investors. We’ll discuss: 

• Should I sell my home to an investor? 
• How do “we buy houses companies” calculate your fair offer? 
• How and why do real estate investors work with you? 
• How much do cash buyers pay for houses? 
• How can you find a trustworthy & reputable real estate investor? 
• How do you differentiate between a reliable and wannabe investor? 

Should I Sell My House to an Investor? 

Is it better to list your home on the MLS? Or is it better to get a direct cash offer? 

What’s the answer? 

I suggest going with the method that pays you the most. So you need to calculate the cost of time, marketing, effort, and repairs, and then the answer will guide you. In a moment, I will show the actual sample calculations. Real estate cash buyers in your area use this sample calculation. They are running a business, so they need to understand the profit/loss analysis before they can buy your property. Even if you’re planning to sell with an agent, the estimate is helpful. 

How do “we buy houses companies” calculate your fair offer?

Always ask for this calculation before selling your home to a real estate investor. Doing so gives you two benefits. First of all, you can see the analysis. Second, you can see if you’re working with a wholesaler or an investor. 

After-Repair-Value: Most real estate investors begin their calculation from this number. So, ARV is the value of your home after it has been renovated according to market standards. That might mean getting new appliances, roof, and boiler. 

How do I calculate the ARV of my house?  You can ask any real estate expert in your area to give you the estimate. Please don’t rely on cash offers because the numbers can be misleading. Instead, I will suggest talking to 3 real estate agents in your area and getting a free home valuation report. Ask them to guide you about the ARV. Those 3 calculations will definitely give you an idea of the average value. You can decline a cash offer if it proposes a low ARV. 

For the sake of calculation, let’s say the ARV of your house is $200k. That means, after remodeling, you can sell your home for $200,000. 

Sounds good? 

Let’s see how a cash offer is calculated from this process. 

Cost of Repairs: 

What’s the cost of remodeling your property? 

You can request quotes from contractors in your area. You’ll see the cost mentioned if your investor gives you the calculation. However, “we buy houses” companies have a dedicated crew. They work with a team of contractors, so they usually get discounted quotes. The company provides consistent work to its team to receive a better price. You won’t get the same price if you’re repairing the property. 

Let’s assume the cost of remodeling is $15k. 

$200,000 – $15,000 = $185,0000

What’s the Cost of Selling Your Property? 

You sell your house fast for cash without involving a real estate agent. However, after, buying the house, the cash buyer will remodel the property. And then they want to sell the house with the help of an agent. 

Average commission = 6% of the selling price

$185,000 – $12,000 = $173,000

A cash buyer also incurs closing costs. Roughly speaking, closing costs are 2%-3% of the sales price. That includes the closing costs they pay for buying your property. 

$173,000 – $6,000 = $167,000

Now, these are the costs you will bear even if you’re selling with an agent. Let’s move to the next section. 

Investors must hold your property before they can sell it. Holding any house will cost you money (maintenance, security, insurance, utilities, and interest-rate). Every home is different, but you can expect that cost to be around 1%. 

Business Profit: Businesses need to survive and they need a profit. Any genuine investor will tell you about the profit margin. (Wannabe investors might say, we’re not keeping profit. That’s not true and shouldn’t be. Serious investors have a business plan and they work accordingly.) Now the profit margin can vary from investor to investor. Some investors are doing 50+ deals each year and they might operate on a reduced margin. However, I have seen that the profit margin is 10%-12%. 

So the 12% profit will be $40k. 

$167,000-$20,000 = $143,000

The result is $143k which can be your cash offer. Some real estate investors go by the 70% rule. According to this rule, maximum cash offer can be 70% of the estimated value. In our case, that’ll be $140k which is quite close to our original calculation. 

Back to the question: should I sell my home to an investor? Is it worth selling your house to an investor? 

Read the online forums and general articles. You’ll hear that investors only pay 50% of the property’s value. (Not true unless the property is completely damaged).  You’ll hear that you lose thousands in the game. 

Yes. It’s going to be a financial loss if you sell your house to investor. In this calculation, our financial loss is $24k-$27k. That’s not 50% of your home’s value. You’ll have to pay for commissions, closing costs, and utilities if you list on the MLS. So I am not counting that in our calculation. We need to determine the exact numbers and then compare those numbers with the service provided. 

Can I refuse to sell my house fast to an investor? 

Of course. Most real estate investors will ask for a contract. However, there also an exit clause or you can add one. It happens with foreclosure properties. You are negotiating with your bank, but you’re also talking to a real estate investor. You don’t want to lose your home but in the worst-case scenario, you want to protect your credit score. 

Let’s say you reach an agreement with your bank and the foreclosure stops. Now what? You don’t have to sell your house to a cash buyer. You can refuse to sell your home to an investor. The exit clause must be a part of your real estate contract. Please don’t sign the contract without first reading it 3 times. Real estate investors are quick with legal procedures. They have their drafts ready and know where you need to sign. However, you must sign only after a thorough review. Folks are scammed when they transfer the home title, yet they are responsible for mortgage payments. These scams happen because of a lack of information. You cannot transfer the property title until you’re at the closing table and receiving cash from the escrow company. Last, go with a local title company to close the deal if you sell to an investor.