Should I Sell My House to An Investor Buyer?
In the course of my discussions with many many people looking at selling their house, I have realized that there is a lot of misconception about what a real estate investor is looking for when buying a property.
The first thing to point out is the difference between what we call a “retail buyer” versus an “investor buyer”
a) Selling to a “Retail Buyer”
A retail buyer is a person who buys a house because they want to live in it year round - or sometimes use it as their secondary home.
- A retail buyer selects a property based on their personal and family needs, their personal taste, and their budget.
- A retail buyer is typically not very inclined to do major repairs and upgrades. Most of them prefer properties that are in move-in ready conditions or have minor upgrades to do such as refreshing the paint inside the house.
- They typically need to get a loan to buy the house and this process can take several weeks to get the funds. In California for example, the approval of an FHA buyer can take a minimum of 45 days to approve.
b) Selling to an “Investor Buyer”
An investor buyer thinks differently:
- They buy a property for the potential rental revenue generated, or the potential profit made after re-selling the property down the line, or for potential tax right offs that the property can offer.
- They look at solving the problems related to a property (making repairs, upgrading kitchen or the plumbing, dealing with liens on the property).
- They can also solve the financial problems that the homeowners are experiencing and that require them to sell (such as divorces, probates, foreclosures, liens on the property, etc).
- An investor is looking at helping the homeowners with their property whilst still being able to get a return on their investment of time, money, resources.
c) What’s my best bet?
If your property is in good condition and you have the time to sell it, your best solution is typically to list it with a real estate agent to reach out to the retail buyer market. However, if your house needs repairs/upgrades or if you do need to sell relatively fast, you could benefit from selling to an investor buyer.
Written by Diane Jaquet - Home Buying Specialist. Landlord.
Photo Credit: created by “wonder-ing”, title “always a question lingering #3”,
Comments (1)
Never underestimate an investors valuation. Even if your property is just outdated, investor may just want to throw carpet and cabinetry in and rent it out. Some times but not always, investors can go without a realtor, and without inspections... meaning quicker closings. For retail buyers, yes they may offer more to occupy, but generally might want to do the same updates... make sure you calculate realtor fees, closing fees, holding fees while trying to sell, and all other time oriented costs. Some cases a retail buyer might be more money, but did you do the math?
if an investor approaches you, take the time to listen ... and keep negotiating.
Just cause they give you they're value , doesn't mean you can counter and get what you want. Be open. Be logical. Best of luck everyone!
Alex Young, over 5 years ago