Selling Your House to an Investor (Real Estate Cash Buyer) — All You Need to Know

Written by: Jerry O'Reilly
Posted on: June 10
Selling Resources
Selling a Home to an Investor

This article details how to sell your house to a cash buyer. We’ll cover all the basics so you can determine if selling to an investor meets your needs.

We’ll identify the types of investors, explore the advantages and disadvantages of this type of sale, and outline the process and timeline you’ll follow to complete a sale.

We’ll also cover some tips to help you find an ethical investor.

Let’s start with outlining the type of investors who buy real estate.

Types of Real Estate Investors

Real estate investors focus on making money from property purchases.

Some investors make money as the real estate appreciates, while others earn regular revenue from lease and rental contracts for the property.

Some groups of investors focus on earning profits through buying houses in disrepair and remodeling the homes to sell to others at a higher price.

Most of them advertise buying properties:

  • fast
  • for cash
  • with minimum hassle (no appraisals or inspections)
  • without you paying real estate agent commissions
  • without you paying closing costs

House Flippers

“Flippers” and “rehabbers” are terms used to describe investors who buy homes in disrepair with the intent to repair and then resell the rehabbed or remodeled house to other buyers.

Some house flippers work on a tight calendar of a month or two, while others buy a house that they’ll live in for two years while doing repairs, restoration, or remodeling.

The two-year residence allows these flippers to take the federal homeowner tax exemption on the proceeds of the sale.

Landlords

Landlord investors, sometimes known as buy-and-hold or buy-and-rent investors, purchase houses to rent or lease.

They profit from the rental fees, and, eventually, from the appreciation on the property — if and when it’s sold.

Like flippers, they often prefer homes in bad condition that can be bought cheap and repaired to rent.

iBuyers

iBuyers are companies that offer cash buyer programs online. After you contact them, the iBuyers make an offer on your property over the phone.

These offers are made by using local resources, including property tax records and images of your house from Google Earth or similar online mapping websites.

The iBuyer rarely has personal knowledge of your house, and typically has no knowledge of your neighborhood when making an offer.

There is often a catch with these companies. Their first offer is preliminary. After you accept it, they’ll send an inspector to assess your home.

After that, they’ll adjust the offer for the price of required repairs. Many times, it will be way lower than the one you accepted initially.

In addition to that, such a cash buyer program, unlike most “we buy houses” companies, will also charge you an agent fee. That’s typically 1.5-3% of the selling price.

That percentage is in addition to the commissions and fees charged by each vendor involved in the sale: a title company, escrow, and others, depending on your state.

The iBuyer commissions typically aren’t itemized in their advertisements.

Real Estate Wholesalers

Real estate wholesalers make a profit by signing a sales contract with a seller as if they were the buyer themselves. Then, they sell that contract to a third-party investor at closing.

Many wholesalers advertise their services by using the same terms as cash buyers: “we buy houses fast and for cash, no realtor fees, no closing costs…”

This makes sellers think they’re cash buyers, while they aren’t. They don’t have the cash to pay for the property. Instead, they will try to find you an investor who’ll eventually buy your home.

For their services, they charge the investor an assignment fee, which is factored into the wholesaler’s offer on your home. This means that if you dealt with the investor directly, you could save a hefty sum of money.

However, it may be difficult to find a house flipper or landlord who is looking for a home right now.

Many true investors aren’t easy to find because they prefer using wholesalers’ services rather than advertising their business to make it easy for you to find them.

Hedge Funds

A real estate hedge fund is a group of private investors operating as a limited partnership to buy real property.

The funds hire professionals to handle the buying and the management of the properties.

The profit for hedge fund members is realized by purchasing property cheaply and then selling the same property for a significantly higher price.

Some funds purchase residential property for the land value.

In geographic regions where rents are high — and will continue to remain that way — purchased properties are kept by the fund for the rental income.

Pros and Cons of Selling Your Home to an Investor

Investors want to move quickly. There are also multiple advantages for the homeowner when selling to a real estate investor.

Benefits of Selling Your Home to a Real Estate Investor

There are a number of monetary benefits of a cash offer on a house, but selling your home to an investor can also offer owners a convenient sales approach.

Once the sales contract is signed, the investor takes the lead to handle all the details of the transaction.

Cash Sale

A cash offer on a house means your buyer isn’t a borrower who needs to qualify for a loan at a bank. Consequently, a bank won’t require them to order an official appraisal of your home, which also takes time.

Many investors who call themselves cash buyers actually borrow loans from hard money lenders or private lenders. But those loans take two-three days to qualify for, unlike traditional lenders.

Speedy Transaction

Investor sales offer the perfect opportunity for homeowners also desiring a rapid closing. Owners facing foreclosure and people selling to pay off tax liens typically want speedy transactions.

Selling to an investor is extremely attractive to some homeowners, including out-of-state heirs who inherit a property they don’t want to keep or even repair to sell for top dollar.

A sale to an investor eliminates the time required to vet a local real estate agent, complete the required listing paperwork, and then wait for a sale while the property is marketed.

Less Hassle

Selling to a seasoned investor means less time spent on arranging appointments for a home inspector and an appraiser.

Cash sales don’t require appraisals for lenders. Some investors may order a professional home inspection, though. But when dealing with an experienced investor, it’s rare.

Most investors have the expertise to tour a home and quickly assess the cost for repairs or remodeling.

No Realtor Fees

Cash buyers (except for iBuyers) typically don’t use a real estate agent in the transaction. This means you don’t have to pay agent commissions.

No Closing Costs

Most investors advertise that they’ll pick up the tab for their closing costs and also pay the seller’s closing costs. That’s a significant savings for the seller.

Additional Arrangements

Many investors work with sellers facing a variety of situations, including arranging closings so sellers have time to move.

Investors also generally handle disposing of any unwanted furnishings left in the house by the seller.

Drawbacks of Selling Your Home to a Real Estate Investor

Below Market Value Offer

Investors won’t offer you market value for your home. They factor in the time and effort to fix your house as well as the profit margin.

Wholesales, on top of that, factor in their assignment fee that the investor pays them.

No Professional Representation

Selling property to investors means you won’t have professional real estate advice from an agent or broker.

You can always hire a Realtor or an attorney to advise you, but that cost will offset the proceeds you receive from the sale.

Especially on top of the discount you’re already making for an investor, hiring an agent would make little financial sense.

Let’s now discuss how to sell your house to a real estate investor.

How Does Selling Your Home to an Investor Work?

Flippers and Landlords

A typical sale to an investor who plans to use your house as a rental property includes these steps.

  1. The cash investor will tour your property and make a cash offer.
  2. Once you accept and sign a sales contract, the investor will open escrow and arrange for a title search on the property.
  3. The escrow officer will then follow the terms of the sales contract, and conduct a title search. Any liens or title clouds are taken care of by the buyer during this step.
  4. Both parties then sign the final paperwork to close escrow. Some states require a real estate attorney to close the sales transaction. Flippers generally have a local attorney who regularly works with them to handle the closing. Some states require both seller and buyer to attend the closing to sign the paperwork in person.
  5. Sellers then receive any cash proceeds from the sale.

Wholesalers

A wholesaler never intends to buy your property. They plan to resell the right to buy your house to another buyer during the escrow process.

While the property is held in escrow, the wholesaler markets your house to other cash buyers.

Once the wholesaler has transferred the contract to the new buyer, they’re no longer the principal buyer, and the sale follows a traditional closing calendar.

At closing, the wholesaler and the end buyer are typically both present so that the wholesaler assigns the contract and gets paid their fee by the investor.

iBuyers

iBuyers partner with a local real estate firm or agent, and many also partner with local escrow or title companies.

Once you request an offer online, the iBuyer presents a cash offer. Usually, this takes from a few hours to a day.

The iBuyer’s real estate partner then comes to your house to inspect it. After the inspection report is complete, which takes a few days, you are presented with the final offer, which is likely far lower than the first one.

Once you accept the offer, the transaction follows the same process as a traditional home sale.

How Long Does a Cash Buyer House Sale Take?

A traditional property listing with a real estate agent takes a day or two to appear on the online listing forum.

Many real estate brokerages have a preview of new home listings. It can take a few days or more for your listing agent to reserve a slot on the broker’s preview caravan of new listings.

Most real estate agents have a number of listings and a collection of people who are looking to buy houses.

Your house will be one of many directions that require your agent’s attention and professional services.

Selling a house to a cash buyer is much quicker than that. Selling a home to a cash buyer with years of experience in the field means your sale will move quickly to close.

Every sales market is a bit different, but most cash sales close within a week or two. Some cash sales require only a few days to finalize.

Now, how to get a cash offer on your house and how to make sure it’s fair? Read on!

Where to Find an Ethical Investor?

You might now be wondering how to sell your house to a cash buyer. Fortunately, that’s an easy process.

However, you have a large field of prospective investors to research. You must find an ethical investor, preferably one who also has at least three years of experience dealing in real estate investments.

Sellers can ensure they’re getting a fair offer for their property by reviewing a number of offers from a few investors or investment companies.

That process is made easier by asking a company that has done the preliminary investor vetting for you to connect you to investors.

Request a cash offer from Cash Home Buyers Crew, one of the best cash home buyers resources on the internet.

Our online directory contains a list of professional and ethical local companies working throughout the country.

Jerry O'Reilly

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About the Author

Jerry O'Reilly is a seasoned real estate investor known for helping homeowners sell their properties quickly, especially in challenging situations. With a deep understanding of the diverse reasons that prompt a fast sale, Jerry offers customized solutions tailored to each homeowner's unique circumstances. His empathetic and client-focused...

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