Boston Real Estate for Sale
The Truth about “We buy ugly homes” companies
You’ve probably seen the signs offering cash for houses or condos. Those cash buyers were referred to as “equity purchase” companies (EPs) before the boom of social media. Now they’re sometimes referred to as “opportunity investors”—for good reason.
These offers often seem like lifelines to owners who are desperate to get out of their homes and loans as quickly as possible. Is working with one of these companies worthwhile? Learn more about “cash for homes” companies and how they work.
What to Expect With Cash-for-Homes Companies
If you decide to call, the buyer will most likely make a prompt appointment with you to come to your home. They’ll want to know early in the meeting how much you owe on your mortgage. Everything begins with that number. If you still owe your mortgage lender $50,000, that is likely exactly how much the fast-cash buyer will offer. They won’t budge and go higher. You’ll get just enough cash—maybe—to cover your loan balance.
If any outfit proposes fees and wants them upfront, that is a warning sign. Real estate agents take their commissions at the end of the deal, so it’s important to determine why this person wants money in advance.
Generally, these companies will point out that you’ll pay no real estate commissions, but sellers usually net more by hiring a listing agent. An agent may be able to sell the home for more than its fair market value. You likely won’t get that from a fast-cash buyer.
How Much Do Real Estate Cash Buyers Pay?
The strategy used by cash-for-homes companies is to negotiate the lowest price possible for your home. They’ll typically offer 50% to 70% of a home’s fair market value.1
Consider listing your home for sale with a reputable, full-service brokerage if you aren’t truly desperate. Fast-cash buyers don’t care about the finer details of the transaction, and selling a home involves so many potential legal pitfalls that you could be leaving yourself wide open for disaster if they go unattended.
Getting a more traditional, solid, and lucrative deal can involve as little as finding the right real estate agent and making some minor repairs and cosmetic adjustments to your home. You’ll receive cash either way, whether you sell to a fast-cash buyer or a conventional buyer. The difference is that a conventional buyer will probably pay more for your home, and occasionally you even may find a conventional buyer who is paying cash instead of using financing.
In cases where you’re truly struggling to sell, you might want to consider alternatives to home selling. You might want to rent your home for enough money to cover your mortgage payments or offer a lease-to-own option. A fast-cash buyer is not your only option.
Key Real Estate Takeaways
- Opportunity buyers purchase homes from sellers who are in distress and want to sell their property as quickly as possible.
- These cash-for-homes companies try to negotiate the lowest price, typically 50% to 70% of a home’s fair market value.
- Look for red flags, including up-front fees, advertising that doesn’t list the company name, and lack of web presence.
- Consider alternatives to fast-cash buyers, including full-service brokerages, renting out your home, or offering lease-to-own options.
