Real Estate Instant Buyers: Who Are They, What Do they Do?

Many of us have bought and sold homes for personal use….but investors look at real estate differently. It’s about providing housing for others and about the numbers and making a profit on the transaction or the hold.

What is an instant buyer or cash buyer? It could be an individual buying to fix a property and resell it. Or many real estate buyers today are companies buying properties—usually houses–to make money. And they have become very profitable using sophisticated systems that make it relatively easy for people to sell in a short time, and lucrative for the companies making acquisitions.

“Instant Buyers” have been around for a few years. But if you think you’re seeing an increase in the number and types of “I-Buyers,” you’re absolutely right.

You’ve seen the names: We Buy Ugly Houses, Homestead Road, Opendoor, Redfin Now and more. Zillow was even in the game until they recently chose to stop buying and renovating houses.

How does it work to sell to an I-Buyer company?
The process varies with the buying company, but often goes like this:
⦁ Sellers fill out an online form with information on themselves and the property.
⦁ Buying company representative does a walk-through to determine condition of the property and amount of renovation or repair needed.
⦁ Buyers will often conduct comparisons (comps) with similar homes in the area. They then use an algorithm to come up with an offer amount after subtracting repair and resale costs, commissions, and profit margin. They typically select homes under a certain price point, built after a certain year and in relatively good condition.
⦁ An offer is presented to the seller including price, closing timeframe and other details.
⦁ Seller and/or seller’s agent may choose to negotiate.
⦁ Once a deal is agreed upon, seller and buying company sign an agreement and the closing date is set.

Advantages of selling to a buying company:
⦁ Most property investors buy houses with cash, thus no bank financing or time-consuming appraisal is needed.
⦁ They buy AS IS, relieving the seller from the work, time delay and cost of doing repairs, cleaning, and staging the house.
⦁ Showings are not necessary, as the buyer is already chosen.
⦁ Move out date may be more flexible than with a typical home selling transaction.

Disadvantages of selling to a buying company:
⦁ Generally, the home owner will get a lower price selling to a buying company that is paying with cash and is committed to buying below market value. These companies often fix up the property quickly and resell it fast to get the cash back plus a tidy profit.
⦁ Sellers will lose out on bidding wars and multiple offers that could sweeten the sales price.
⦁ While most house buying companies are legitimate, there are scam artists out there. Always do your research and read reviews from past customers.

I-Buying is a rapidly expanding business model throughout the country. For some home sellers, it’s a quick and easy way to get through the otherwise more cumbersome process of selling a home in the traditional way. Yet, there are risks and almost always less money in your pocket than putting your home on the market for competitive buyers to consider. ______________________________________________________________________________

If you want to sell your home quick or AS IS, the Encore Investment Team can help! We are experienced with quick sales, homes that aren’t fixed up and will give you the numbers so you can decide which method of selling works for you. Sometimes…it would be a better option to rent it. Let us do the research and help you decide.
It’s simple ...reserve a time slot for a FREE Strategy Session with LeAnn and together we’ll figure out the next step.

We can help you find deals if you are a fixer too. We have plenty of investors looking for just that type of property.