Are Cash For Homes Companies Legit?
What is often considered a daunting and overwhelming task, selling your home can (more commonly recently) be a low-hassle, quick, and/or even an enjoyable experience. Things come up; maybe there is a death in the family, your income no longer exceeds your expenses, or your newly listed property is the subject of finalizing a divorce. Whatever the case, there is now a seamless and straightforward solution to selling your house quickly and outside the traditional MLS real estate market.
Once you decide on one of the “cash for homes” offers, you would expect to maybe fill out some questions online, potentially via conference, zoom, etc., with a representative of the company interested in purchasing it, then receive and contemplate an offer (or possibly even a few), right? You decide which offer best suits you and your family’s needs/responsibilities, sign a few papers, and collect a check, right? Sounds almost perfect.
That said, selling a home or real estate fast almost always means selling it for less or at a discount. Additionally, sellers shouldn’t always take the first cash offer they receive; there are potential hurdles every seller should consider; we discuss the potential benefits and downsides to cash-for-home opportunities.
What Does It Actually Mean When You Sell Your House For Cash
While the processes of the cash-for-homes industry are relatively similar (regarding guidelines, regulations, etc.), each provides its twist or “competitive edge” to the real estate sales market. When selling a home independently, after you have decided you want to sell your house for cash, you will begin a brief home evaluation process with your chosen company. Following an efficient and quick inspection of your home and property (in many cases, this is entirely online, but in some, it requires an in-person meeting), you will receive a cash offer (possibly more than one, depending on the company of your choosing). The positive is somewhat obvious here, cash in hand asap, but you are more than likely going to take between $0.30 to $0.70 for every dollar the home is worth (if you were to go through the listing process, showing, negotiating, etc.).
Are Cash For Homes Companies Still Popular?
The cash-for-homes trend has been a steadily increasing one prior to the COVID-19 pandemic. Since the second quarter of 2022, the trend has seemingly changed.
That Doesn’t necessarily mean the cash-for-homes craze in real estate is over. Still, it could spell trouble for the future (the data paired with the most recent media coverage of the real estate market suggests that there may not be enough inventory). While trends suggest cash for homes interest is diminishing, several states still show a continued interest. These figures are represented via Google Trends below.
What Types Of Companies Buy Houses & Properties For Cash?
iBuyer – if you were ever curious of what the ‘i’ in iBuyer actually stands for, it means “instant,” which is pretty appropriate for a cash offer of any type. iBuyers are the newest in the cash for homes market.
Buy-and-Hold – these are (more often than not) companies that are focused on turning a purchased home and repurposing (many times remodeling, refinishing and/or adding to) that home into a rental property. This is often done by smaller companies interested in turning a profit further down the road (or creating consistent/passive income for themselves).
Fix-and-Flip – most people have seen HGTV and the “flip or flop” or “property brothers” style shows that have taken the real estate reality-T.V. world by storm over the most recent decade or so.
Trade-in – one of the least glamorous but, often used more than you may believe. These companies will help you buy your new home before you actually sell your existing home (the one you are living in).
Most Common (Traditional) Cash For Your House Companies
HomeVestors – We Buy Ugly Houses
For over a quarter of a century, “we buy ugly houses” has redefined cash for home sales and strategies. In that same period, they built and established an impressive 1,100+ franchises nationwide. Even though the tagline implies that they’ll buy your home even if no one else shows interest, the people at HomeVestors actually focuses on buying homes that are less than up-to-par for the local or national MLS more often than not. The title of the company should really be “We’d rather buy ugly houses and pay far less than they’re worth on an open market.” It’s also worth noting that they don’t just buy houses; HomeVestors has expanded its purchasing power to include properties with higher than desirable interest rates in sort of a get-out-of-real-estate-jail-free card. That said, if you are looking for a get-out of this property quick scenario, then they may be your best bet.
We Buy Houses
One of (if not) the oldest cash-for-homes companies to make a significant splash in the real estate market, We Buy Houses has established itself and its 200+ independent real estate investing offices since the early 1990s. The difference between this company and its somewhat crooked cousin is that you don’t fill in most or even all your most sensitive information online. You fill out a brief questionnaire, provide must-have follow-up information, and a representative will schedule a time to meet with you and provide you with your cash offer. Word to the wise, you get the bid in 48 hours or less, and it does come with a finalized sale promise of one to two weeks, so you don’t have as much time as you may need to vacate the property, but it’s a less complicated kind of solution.
Off-Marketing Listing Options – Cash For Homes
I Buy Houses
This company is similar but slightly different in that I Buy Houses is more of an off-market listing network than a large company or corporation looking to stock its inventory or repurpose the homes they buy as future rental properties. They present more than one (sometimes several) cash offers from their off-market listing network, which often softens the blow of getting several nickels on the dollar for your home.
Some Of The Main “iBuyers” Sellers, Agents, Brokers & Investors May Come Across Regarding Cash For Homes
HomeLight – Simple Sale
HomeLight created what they refer to as “simple sale’” which is more based on the market and mathematics than receiving a personalized quote for your home. HomeLight calculates relevant data and packages it in a simple quote (based on neighborhood medians, school systems, etc. The major draw to Homelight’s SimpleSale opportunity is that you can be paid in full for your home in as little as ten to fourteen days, with a tradeoff of needing to vacate your house in thirty days.
Opendoor
While Opendoor as a company isn’t even ten years old yet, they have made quite a splash in the metro-area markets. Similar to that of HomeLight’s Simple Sale, Opendoor offers an algorithmic approach to the quick or cash-for-homes trend. They are slightly more particular when acquiring homes, though, as they regularly seek/target/are in search of homes that fit a profile of $100k-$600k in total valuation.
Offerpad
Since 2015, Offerpad has become a shining star in the iBuyer world. They present two viable options, two selling your home coined as “flex” or “Express” options. In essence, Offerpad gives you a cash option while allowing you to list your home on a local, regional, or even national MLS service, all while keeping that cash offer option in your back pocket. This (at the very least) makes the seller feel like they’re not being backed into a corner.
What Are The Best Alternatives To Cash For Homes?
Rent Your Home: If you have the financial freedom to wait for the perfect opportunity to sell, renting is (and will continue to become) a growing trend among middle-class families. While being a landlord can be overwhelming it also has great potential to be lucrative long and short-term. If the home or property is located in a major metro area or near a tourist destination it may be advantageous to consider renting over a cash offer.
Sell On Your Own (FSBO): For Sale By Owner is definitely the most time-consuming option but, if you have previous experience selling homes you may avoid a lot of fees and commissions. The processes you pay an agent, appraiser, etc. for are now your responsibility. Before you choose to sell your home on your own, be sure you have the time to complete all the necessary steps the majority of sellers pay real estate professionals to do.
Sell With An Agent: If you aren’t in a huge hurry to sell your home, you have your heart set on getting the best possible offer for your home, or if you don’t have the time to rent or sell your home then hiring and agent and listing your home on the local and national real estate MLS is likely your smartest option.
Should You Sell Your Home For Cash?
This is a question only you and your loved ones can truly help you answer. If you need a quick sale (for any reason) the a cash for homes option may be right for you. If your home needs major repairs and you don’t really have the time or the capital to finance those repairs then a cash offer option may be the best option. If you need money as soon as possible and you can’t afford to wait for the real estate process to unfold, a cash offer option may be best suited for you. Bottom line, a cash sale will always move the fastest when compared to others but, if you have the time, the tolerance or even the financial freedom to stay patient, trust the process and (ultimately) collect the best possible offer for your home, a cash for homes option may not be the best one to take.
