How Are Investors Different?
Real estate investors buy property to earn a profitable financial return. Just like people purchasing stocks and bonds, investors take financial risk to gain a profit. Real estate investing includes fix-and-flips, rentals, and acquiring property for appreciation.
There are multiple advantages to selling to a real estate investor compared to the “traditional” real estate agent process:
–No Realtor Commissions. Selling listings on the MLS pay upwards of 6% realtor commission. Real estate investors never charge fees.
–“As-Is” Sale. Investors buy “as-is”. The seller makes no repairs. Real estate investors “earn their profit” by acquiring houses that need renovations that the owner didn’t have the willingness or ability to fix. Regular home buyers haggle about repairs which substantially delays home sales.
-Offers in 24-Hours. Cash home buyers make offers daily (if not hourly!). It takes investors just a few minutes to put together an offer. Unlike regular buyers, there is no lengthy deliberation to figure out what the investor will pay.
-Cash Buyers. One hallmark of real estate investing is acquiring houses for cash (not mortgages). Mortgages take months for approval and banks may decline mortgages on homes in poor condition or an event to disqualify the buyer such as job loss or bankruptcy.
-Fast Closing. Investors close in days. The Mortgage Reports found conventional mortgages take 43 days to close. FHA and VA loans even longer. Since investors control their cash reserves, once there is a price agreement, all it takes is the time for a wire transfer to your bank account. Professional buyers also close quickly because there is no negotiation about the condition on “as is” sales. Fast closing saves you on-going expenses for taxes, insurance, daily maintenance, and utilities.
-One Showing/Inspection. Realtors listing on the open market schedule many showings to generate as many offers as possible. Hundreds of people might walk through your living space. Open houses attract “tire kickers” with no plans to submit an offer. Trulia reports one out of 10 showings gets an offer. Investors just need a single walkthrough to inspect and even buy sites unseen. Professional buyers offer on all kinds of property so are unlikely to decline to make an offer.
Selling to a real estate investor has some downsides.
Owner occupants offers can be higher. An investor’s goal is to earn a profit, while a regular owner occupant’s goal is to find a place to live. Investing large sums of private cash comes with a premium. Buyers utilizing a “traditional mortgage” may offer more because it’s not their money/risk.
