Selling a House to an Investor: Pros and Cons

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  Written by Steve Nicastro

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  Edited by Galina Velgach

Pros and cons | Who should consider it | How much investors pay for houses | FAQs

Consider selling a house to an investor if you need to sell ASAP and want a convenient, low-stress transaction. Investors can close in a week or two and usually don’t require a home inspection, financing, or appraisal contingency.

But selling to a real estate investor, a “We Buy Houses for Cash” company, or iBuyer isn’t for everyone. You won’t get fair market value from an investor, though you might get close. But if saving time and hassle is important to you, then it could be a good idea. 

Thinking of selling your house to an investor? Contact Clever Offers first. Clever matches you to a top local realtor, who will bring you offers from local and national cash home buyers. You’ll also receive a free home valuation to see if the cash offers are fair or not. Get cash offers from top local buyers now!

Pros and cons of selling a house to an investor

Pros	Cons
✅ Fast, flexible closing	❌ Lower sales prices
✅ Smooth process	❌ Potential for scams
✅ Minimal extra costs

✅ Fast closing

It takes sellers about 50 days to receive and accept an offer and another 30 to 45 days to close on a traditional home sale nationwide. But real estate investors can get you an offer within 24 to 48 hours and close in as fast as seven days.

Consider a cash buyer if you need to sell ASAP, whether it’s due to personal situations like relocating for a job, a divorce, a death in the family, or financial difficulties forcing you to sell.

✅ Relatively smooth process

Real estate investors can also make the home sales process relatively painless compared with the traditional home sales process.

• You don’t need to clean, repair, host open houses, or upgrade your home before selling it.
• Cash buyers usually don’t require contingencies that would delay the transaction. Instead, they’ll often use inspectors and contractors to estimate repair costs and deduct those costs from their offer.
• You don’t need to worry about financing issues since real estate investors usually pay in cash.

✅ Flexible closing time frame

Real estate investors are usually flexible when it comes to setting a closing and moving date. That’s especially useful to sellers who need to move out by a specific date.

Traditional home buyers have their own moving plans — they may have a lease expiring or a home closing on a specific date, for example — and may request a closing date that doesn’t jive with your timeline.

✅ Lower costs of selling

Real estate investors often pay less than fair market value for homes. But selling to an investor means you may avoid having to pay realtor commissions or closing costs, which cost up to 9% of a home’s sales price.

You also won’t have to spend a dime on repairs or improvements to get your home ready to sell. This can save you hundreds (if not thousands) of dollars, depending on your home’s condition.

❌ Lower sales price

You’ll probably get a higher sales price by listing your home on the open market with a realtor.

Real estate investors often pay 70% (or less) of a home’s after-repair value, which includes the sales price of the house plus its estimated repair costs. For example, a home that’s worth $500,000 that requires $50,000 in repairs might only sell for $300,000 to an investor.

The 70% rule is just a starting point for investors and not a hard rule — some investors might be willing to pay a bit more for a property if the numbers work. You can always shop around and compare offers from multiple investors to negotiate a higher sales price.

❌ Irreputable cash home buyers

There is no shortage of real estate investors that buy houses for cash. Unfortunately, not all investors are legitimate. Some “We Buy Houses” companies are a rip-off and only make lowball offers, while others may engage in scams, like phishing emails or equity skimming.

» MORE: Are ‘We Buy Houses’ Companies a Rip-Off?

How to avoid cash home buyer scams

Carefully vet each investor or home buying company before contacting them. Here are a few quick tips:

Read online reviews

Most legitimate cash home buyers have dozens of online reviews from actual customers. A quick Google search of the company name should surface the reviews and any complaints.

Check Better Business Bureau (BBB) accreditation

Businesses must meet ethical standards to qualify for BBB accreditation. The BBB also rates companies on an A+ to F grading system. It may be a warning sign if a cash home buyer isn’t BBB accredited or carries a low BBB rating with unresolved complaints.

Screen for legit bids

Clever Offers can help you avoid falling for a real estate scam. You’ll get offers from reputable investors and We Buy Houses for cash companies.

Who should consider selling a house to an investor?

Homeowners who need to sell ASAP

Selling to a real estate investor is worth considering if you value speed and convenience over profit. Cash home buyers can make you an offer and close in about 2 weeks, compared with the 3–4 months it typically takes to sell a home on the open market.

Common reasons to sell your house fast

• Moving due to a job relocation
• Inheriting an unwanted property
• Liquidating assets because of a divorce
• Impending foreclosure

» MORE: How Can I Sell My House Fast Without Losing Money?

Homeowners with properties in poor condition

It’s harder to sell a house in poor condition vs. one that’s move-in ready. Home buyers typically prefer homes that require little to no repairs.

Poor condition means your home has serious issues that likely cost thousands to fix — not minor cosmetic items or maintenance needs. Examples may include:

• A roof that requires replacement
• Major structural damage
• Black mold

Investors actually prefer to buy homes in poor condition, so selling to them off-market allows you to avoid common roadblocks, like buyers backing out of the deal because of a poor home inspection or low appraisal coming in low.

Expect investors to hire an inspector and contractor to estimate the cost of repairs and then factor those costs into their offer price. If they don’t overestimate their rehab costs, there’s a good chance they’ll make money on the deal.

» MORE: How to Sell a House in Poor Condition

Homeowners in financial distress

A quick sale to a cash buyer might be desirable if you’re behind on your mortgage payments and need to sell ASAP to avoid foreclosure.

Investors usually don’t shy away from buying a house in financial distress because they pay all cash for houses. This allows them to close the deal before a bank or lender puts the home up for auction.

Why sell to avoid foreclosure?

• Get out from under your mortgage. Selling to an investor allows you to repay your mortgage and cash in some of your home equity (instead of losing it to the bank).
• Protect your credit score. A foreclosure can seriously damage your credit score and stays on your credit report for seven years, according to the Consumer Finance Protection Bureau. Foreclosure makes it hard to qualify for new loans and buy a home in the future.
• Avoid bankruptcy. Selling to an investor could make sense if it helps you repay creditors to avoid filing for bankruptcy.

How much will an investor pay for my house?

Real estate investors usually follow the 70% rule in real estate, meaning they may only pay up to 70% of your home’s after-repair value (ARV).

Here’s what the formula looks like: 

Maximum purchase price = (ARV × 70%) – repair costs

Let’s say an investor believes your home is worth $500,000 before repairs and improvements. If they determine your home needs $50,000 in repairs, they’ll pay you no more than $315,000.

Keep in mind that the 70% number is just a guideline and not every real estate investor follows it strictly. Each home is different, and an investor may decide to pay more for your home if it’s in fairly good condition and located in a hot housing market. 

Looking to get the highest ARV for your home? Connect with a realtor to get a professional estimate of your home’s true fair market value. Our friends at Clever will match you with top local agents from well-known brokerages, who can provide you with a free home valuation and can help you compare cash offers from investors.  

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