What you MUST know if you are considering an instant offer from investors to sell your house.
We all see the ads on TV, Newspaper, and Social Media with a message along the lines of; Get an instant offer for your house, no real estate commissions, no selling fees, pick your closing date, etc., etc.” To the uninitiated, this may sound attractive if you are a seller looking to sell fast and you haven’t explored your options and compared costs.
Let’s dispel the myths that these investors are trying to sell in today’s market. We will go over the following key considerations you need to know about instant offers:
- Who really benefits from instant offers?
- Are there really no commissions?
- Are instant offers EVER good for sellers?
While instant offers are mostly not a good option for sellers the vast majority of the time, there are cases in which it may be a good option. We will cover all the relevant facts so you can make an informed decision.
Who really benefits from instant offers?
If we look at the financial side of the transaction, as you can imagine, investors are not in it to make a profit for the seller. In fact, nowhere in their advertisements will they say you will come out ahead financially.
Lots of experience in this industry and basic common sense tell us that in order for an investor to make money, they have to buy low. They have to pay less for the house than it is worth otherwise there is no point for them to do what they do. Financially, the investor WILL come out ahead every time. Not you, the seller. Of course, they will emphasize the virtues of selling fast and with no showings or open houses. But there is never something for nothing. That convenience will cost you PLENTY!
Are there really no commissions?
Technically yes, but again.. Investors will make their money and here is how they do it. Most of the bigger ibuyers/investors have what is called a “service fee” which is usually 5%. So right off the bat, they are charging you a commission disguised as a service fee. In the end, “tomato, tomato” – it will cost you the same no matter what they call it.
But there are other fees as well. Offers that have been reviewed have fees totaling between 9-14%. There are many ways to confuse sellers who have never done this before. Think about it, this is what investors do for a living, make money off other people, plain and simple. The important thing to consider is the bottom line. After all fees and expenses, how much will you get?
Are instant offers ever good for home sellers?
Yes, there are cases in which an investor will offer a seller a way to sell their house when there is no other way to do it. Cases where the title is clouded or when the property has so much damage that it may be a tear-down.
There have been cases in which selling the house is so complicated that no real estate agent is equipped or willing to do what it takes to sell the house and be able to deliver a clear title. In cases such as these, investors who are qualified and willing to do months or years of work to get the house may be worth considering. The good news is, in today’s market that is rarely the case. Most investors are usually skimming off the top. Looking for sellers who just don’t pay attention to the cost of the convenience they are offering in exchange for a huge reduction in price.
What should you do if you are considering an instant offer?
Call a local REALTOR® who you can trust and at least explore your options. If you are in Southern California, I am happy to help you make sense of any instant offer. No obligation or fee to review this with you.
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