While driving you may have seen the signs along the highway with the words we buy homes inscribed on the sign and a telephone number. These are local private investors looking to the real estate market as a better way to increase their investments. Right now banks are only paying about 1% for money deposited in the bank, and the stock market is very volatile right now. The interest rate that the banks are paying is not very attractive to most investors so the real estate market has become a better place for them to invest. Real estate investors purchase houses from distressed homeowners at a discount and then resell them at a higher price to potential homeowners looking for a home to purchase.
As a homeowner at first you might think that this is not a good deal for you. For years you have worked hard to keep your home, and now you are being asked to give away your home’s equity to a stranger. For some homeowners, this might be the only buyer option available to you. The current real estate market is as tough as it has been in years buyers are picky. They know the state of the market over the last few years and they are looking for the best properties. These properties need to have an upgraded kitchen, bathrooms, and the latest styling throughout the house at prices that are about 10% to 35% less than what they were five years old.
The problem is that your house does not have these upgrades and you need to sell immediately. There might even exist some deferred maintenance problems associated with your home. While you do have options you could invest money into upgrading the property like painting, new flooring, yard work, and adding new appliances. The most value comes from refreshing the kitchen and bathrooms. A remodeling job could run you from $25,000 to $80,000 to get that increase in price from today’s buyers. Other options to consider is to simply sell to an investor without having to remodel at a discounted price. Before deciding to call a local Realtor asks him/her to run a comparable sells report on your home. This will give you a good idea of what the prices of houses are that are similar to your property in your area.
Once you have the comparable sales report have the real estate agent visit your home to make recommendations for selling the property. An agent could provide you with a Broker’s Price Opinion on the property. Which is an estimated valuation of your specific home? The agent will provide this information for you with the hope of acquiring a listing agreement from you to sell the property on the open market. Some agents might charge a slight charge for that service from $50 to $200. This report will give you a better idea of what is needed to sell the home and at what price. Then you can make your decision as to what is best for you and your family.
If you are considering the remodel you will need to get some estimates from a licensed general contractor in your state. A good contractor will provide you with the information necessary in making the decision as to whether you want to move forward with the remodel. It is best to get more than one estimate. A good number is three contractor estimates. Compare the contractors repair estimate with the Realtor’s assessment of needed upgrades for the house.
Before moving any further now that you know what a remodel will cost decide how you will be able to pay for it. In the past getting a home equity line was easy not anymore so that option may not be available to you anymore. Conventional lenders are not interested in making short-term loans that would be needed for doing the remodel. If the home has a lot of equity there are high-interest lenders called hard money lenders that will provide you with short-term loan funds, but they are very expensive. They will charge you high upfront fees and a higher interest rate for this kind of loan.
The investor’s offer is starting to look not so bad anymore after all. If you have been in the home for 10 years or more than your home value should have appreciated. What this means is that the home should be worth more than what you paid for it ten years ago without a current upgrade. This appreciated value is called equity to get it you will need to sell the property. The remodel might just be out of your reach at this time. So, selling the home to the investor might be your best option.
From the beginning of this article, you have had the need to sell your property. Unfortunately, you may not have been aware of the pitfalls necessary to sell in today’s market. A real estate investor has become aware of your need and has made you an offer to purchase the home. The offer was at a price that you originally thought was very low, but with this new information, you may be considering it. Now you must make that decision. It is best to look at both scenarios and to make your decision based upon the facts as they are presented. If selling the home to the investor is the best solution to meet your needs don’t allow others to sway that decision. This is your family’s home to make the decision that best suits the needs of your family and good luck.