Services that offer to buy your house?

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rgs92
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Services that offer to buy your house?

Post by rgs92 » Sun Apr 29, 2018 12:02 pm

Has anyone had experience with those services who offer to buy your house for cash?
If so (or even if you just know anything about such services from realtors or other entities), can you provide any opinions?

What kind of research or preparation should be done before contacting or dealing with these people?
Thank you.

nyclon
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Re: Services that offer to buy your house?

Post by nyclon » Sun Apr 29, 2018 12:11 pm

rgs92 wrote:
Sun Apr 29, 2018 12:02 pm
Has anyone had experience with those services who offer to buy your house for cash?
If so (or even if you just know anything about such services from realtors or other entities), can you provide any opinions?

What kind of research or preparation should be done before contacting or dealing with these people?
Thank you.
I recently tried to find such a service. Generally, the ones that called me back offered "cash" at roughly 50% of market value. My observation was that they are available for folks who are desperate for cash.

The second flavor I found were flippers. They tend to offer a more competitive price, albeit at a discount since they need to flip and make money to stay in business.

Keep in mind that that unless you sell to a party that intends to occupy the home as their primary residence, generally whoever buys your home will need to make money in the short term and that discount will be baked into the offer you receive.

chevca
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Re: Services that offer to buy your house?

Post by chevca » Sun Apr 29, 2018 12:12 pm

Pretty much all you need to know is, they will offer you the least amount of money possible. They're in it to make a buck flipping the house, not to help you out as a seller.

About the only time I can think it would be worth it is, if one inherited a realtive's house, didn't want to do anything with it, and was willing to take any amount of money even a lowball offer for it.

rgs92
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Re: Services that offer to buy your house?

Post by rgs92 » Sun Apr 29, 2018 12:17 pm

Thank you very much for the quick responses. Any more opinions or reports would be welcome. Thanks in advance.

jminv
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Re: Services that offer to buy your house?

Post by jminv » Sun Apr 29, 2018 12:26 pm

My opinion is that you shouldn't use them if you want to maximize the amount you receive from your property. They will typically max out at 65-70% of whatever price they think they will get when they turn around and sell it using a real estate agent minus all of the repair costs to get it to that price (so you might receive around 50% of whatever they end up selling it for).

They target people who are desperate and those who recently had a spouse pass away (which they get from death and probate records) or beneficaries of someone who owned a property and who has since passed away.

adamthesmythe
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Re: Services that offer to buy your house?

Post by adamthesmythe » Sun Apr 29, 2018 1:25 pm

If you want to sell a house- pretty much in any condition- the way to get the most money is to expose it to the largest number of prospective buyers.

The exception would be as part of a relocation package, where a guaranteed payout roughly at market value is guaranteed.

delamer
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Re: Services that offer to buy your house?

Post by delamer » Sun Apr 29, 2018 1:27 pm

Timely article; there are different types of services.

https://www.washingtonpost.com/realesta ... ae3703f250

JoeRetire
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Re: Services that offer to buy your house?

Post by JoeRetire » Sun Apr 29, 2018 2:19 pm

rgs92 wrote:
Sun Apr 29, 2018 12:02 pm
What kind of research or preparation should be done before contacting or dealing with these people?
Figure out why you are turning to these people. Because you want to get out of your house quickly? Because you want to leave while the house is in tough shape? Because you've already tried and failed to sell your house through more usual means.

Either of those are valid if you are willing to accept a haircut on the value of the house.

But if you are looking to get market rates, either sell it yourself or enlist the services of a more traditional real estate agent.

cherijoh
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Re: Services that offer to buy your house?

Post by cherijoh » Sun Apr 29, 2018 2:39 pm

jminv wrote:
Sun Apr 29, 2018 12:26 pm
My opinion is that you shouldn't use them if you want to maximize the amount you receive from your property. They will typically max out at 65-70% of whatever price they think they will get when they turn around and sell it using a real estate agent minus all of the repair costs to get it to that price (so you might receive around 50% of whatever they end up selling it for).

They target people who are desperate and those who recently had a spouse pass away (which they get from death and probate records) or beneficaries of someone who owned a property and who has since passed away.
They also target markets where the housing supply is low. I get 1 or 2 postcards per week offering to buy my house as is. I also had someone stop by and knock on my door - although I think they were actually looking for a primary residence not a house to flip. I frequently get phone calls and postcards from realtors as well. According to Zillow there are currently 5 houses on the market out of our 350+ house development.

montanagirl
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Re: Services that offer to buy your house?

Post by montanagirl » Sun Apr 29, 2018 6:35 pm

chevca wrote:
Sun Apr 29, 2018 12:12 pm


About the only time I can think it would be worth it is, if one inherited a realtive's house, didn't want to do anything with it, and was willing to take any amount of money even a lowball offer for it.
I would consider going this route with my house, because it so badly needs updating and I don't want to do the work.

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whodidntante
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Re: Services that offer to buy your house?

Post by whodidntante » Sun Apr 29, 2018 6:37 pm

Bottom fishers. Do not call.

CedarWaxWing
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Re: Services that offer to buy your house?

Post by CedarWaxWing » Sun Apr 29, 2018 7:10 pm

I have had a bunch of pesty postcards from these folks... there is nothing helpful about what they do, nothing that resembles a "fair price", and their goal is to find people who are easily victimized. I called a couple out of curiosity, because I will be selling a rental house in the Portland area soon.

They are "straightforward" in the way payday loans are straightforward.

I would not recommend it to anyone.

02nz
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Re: Services that offer to buy your house?

Post by 02nz » Sun Apr 29, 2018 7:20 pm

montanagirl wrote:
Sun Apr 29, 2018 6:35 pm
I would consider going this route with my house, because it so badly needs updating and I don't want to do the work.
Even a house that in bad need of updating has a fair market value. That will be lower than a comparable house in good condition, but it's still way higher than what these guys will offer. If you price something well (discount it 5-10% off of fair market value), you're likely to attract more interest, and thus more competitive bids. That's the only real way to get the most you can on a house, regardless of how much work you're willing (or not) to put into the house.

HIinvestor
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Re: Services that offer to buy your house?

Post by HIinvestor » Sun Apr 29, 2018 7:24 pm

Realtors can generally get you a better sales prices and higher net amount after they take out their commission than these folks. They generally want anyone who will sell it to them for quick cash and then they can re-sell it at s nice profit. I’d avoid them myself, though we received fairly steady mailings from them and realtors offering to buy our properties for very low amounts. :-(

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Watty
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Re: Services that offer to buy your house?

Post by Watty » Sun Apr 29, 2018 7:47 pm

montanagirl wrote:
Sun Apr 29, 2018 6:35 pm
chevca wrote:
Sun Apr 29, 2018 12:12 pm


About the only time I can think it would be worth it is, if one inherited a realtive's house, didn't want to do anything with it, and was willing to take any amount of money even a lowball offer for it.
I would consider going this route with my house, because it so badly needs updating and I don't want to do the work.
Even in those situations it is better to just list it at a low price and sell it the normal way. The flippers will still look at the house but know that they need to pay market value. It varies with the market but if you price it low you may be able to get multiple bids and they may bid the price up a bit.

You rarely get 100% of your remodeling costs back when you sell a house especially for things that just need updating but are not actually broken. Many flippers are able to make the numbers work since they do a lot of the work themself to get sweat equity.

In a sellers market there will also likely be people that would love to buy an unremodeled house because that is all they afford. For example my first house had avocado green countertops and appliances about 20 years after avocado green was popular. That was probably a textbook definition of "dated". The rest of the kitchen matched but it was functional. It was at the top of my price range and if the owner had upgraded it I would not have been able to afford the house. I lived with the kitchen then remodeled it myself a few years later when I had the time and money. That allowed me to buy a house in a better neighborhood and location than I could have afforded

adamthesmythe
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Re: Services that offer to buy your house?

Post by adamthesmythe » Sun Apr 29, 2018 7:51 pm

02nz wrote:
Sun Apr 29, 2018 7:20 pm
montanagirl wrote:
Sun Apr 29, 2018 6:35 pm
I would consider going this route with my house, because it so badly needs updating and I don't want to do the work.
Even a house that in bad need of updating has a fair market value. That will be lower than a comparable house in good condition, but it's still way higher than what these guys will offer. If you price something well (discount it 5-10% off of fair market value), you're likely to attract more interest, and thus more competitive bids. That's the only real way to get the most you can on a house, regardless of how much work you're willing (or not) to put into the house.
Exactly. Too much television leads you to believe that you must update before selling. Not true.

Price it right and be willing to deal and you will still come out ahead.

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jfn111
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Re: Services that offer to buy your house?

Post by jfn111 » Sun Apr 29, 2018 8:50 pm

adamthesmythe wrote:
Sun Apr 29, 2018 7:51 pm
02nz wrote:
Sun Apr 29, 2018 7:20 pm
montanagirl wrote:
Sun Apr 29, 2018 6:35 pm
I would consider going this route with my house, because it so badly needs updating and I don't want to do the work.
Even a house that in bad need of updating has a fair market value. That will be lower than a comparable house in good condition, but it's still way higher than what these guys will offer. If you price something well (discount it 5-10% off of fair market value), you're likely to attract more interest, and thus more competitive bids. That's the only real way to get the most you can on a house, regardless of how much work you're willing (or not) to put into the house.
Exactly. Too much television leads you to believe that you must update before selling. Not true.

Price it right and be willing to deal and you will still come out ahead.
+1

rgs92
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Re: Services that offer to buy your house?

Post by rgs92 » Wed May 02, 2018 7:00 am

Big Thanks to everyone for all the input. The Washington Post article link was great, along with the comments there on the article.
I'm starting to think the best alternative is to sell as-is and stop trying to bother getting any net profit from fix-ups.

Grt2bOutdoors
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Re: Services that offer to buy your house?

Post by Grt2bOutdoors » Wed May 02, 2018 7:45 am

whodidntante wrote:
Sun Apr 29, 2018 6:37 pm
Bottom fishers. Do not call.
I have another word in mind for them, house flippers or cheapskates. You have to be desperate to do business with them.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Tal-
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Re: Services that offer to buy your house?

Post by Tal- » Wed May 02, 2018 8:20 am

rgs92 wrote:
Sun Apr 29, 2018 12:02 pm

What kind of research or preparation should be done before contacting or dealing with these people?
First, I want to echo the comments above. Do not sell your house in this way! There is no harm or shame in listing a fixer-upper house on the open market.

Second, you asked about research. These buyers (called "wholesalers") typically follow a standard formula: They pay an absolute max of 70% of the after repair value (ARV), minus repairs. This means that if your house is worth 100K after 12K in repairs, that their max would be around 70% of 100K (70K) minus the 12K repairs, or 58K. They will start negotiations well below the 70%, but that is a hard cap for most wholesalers.

But, it gets worse. Wholesalers have a reputation for re-negotiating after the house is under contract. Meaning that even if you got the max 58K offer, a week before closing, they may say "actually, I found out that you house has a flaw that means I can't offer what I thought I could. I need to lower my offer to 53K."

I bring this up because it informs what research or preparation you should do, if you want to enter negotiations with them. A few things:

What is the house worth, after repairs? Zillow is not accurate enough for this. Instead, find a way to look at recent home sales. Find houses that had recently been updated, and ask "how much per square foot did the house sell for?" Apply that price per square foot to your house.

Next, you need to find out the repair costs. You don't need a new kitchen or new bathroom - this isn't HGTV. Instead, how much do you need to put into the house to make it move-in ready for an entry-level buyer. Get the house functional and clean (not modern and sexy).

And third, you need to be a pretty great negotiator! Wholesalers make their money getting people to sell the most expensive thing they have ever owned for way less than it's worth - and they are amazing at it!!!! And, the sale process means that they hold all the chips in the negotiation (especially once under contract). Short of selling/buying a private business, I can't think of a more difficult negotiation that you will ever need to do. If you aren't familiar with the rules of human persuasion and negotiation, you probably shouldn't even enter into these negotiations. Hell, I'm familiar with those rules, and I still wouldn't enter into these negotiations.

If you can do all of this well and get a 100% accurate price and repair estimate, you're still behind the 8-ball because of that 70% rule. Going back to the previous example, even if you do everything right and get the maximum from the purchase that you can, you're selling your 100K house for 58K.
Debt is to personal finance as a knife is to cooking.

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Watty
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Re: Services that offer to buy your house?

Post by Watty » Wed May 02, 2018 8:27 am

Tal- wrote:
Wed May 02, 2018 8:20 am
But, it gets worse. Wholesalers have a reputation for re-negotiating after the house is under contract.
There is also a subset of "flippers" that have no intention of actually showing up at the closing and buying your house.

What they do is get your house under contract and then try to resell the contract to buy your house before the closing date. They will only give a small amount of earnest money, or there will be some "poison pill" which is a clause in the contract that they have which will allow them to get out of the sale if they cannot find a buyer.

spectec
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Re: Services that offer to buy your house?

Post by spectec » Wed May 02, 2018 8:47 am

A local realtor says in his ads that if he can't sell your house, he will buy it from you. One of his competitors was being interviewed on a call-in radio program and a caller asked if he could give any details about this promise. He explained how the other guy wasn't promising that he would buy the house at anything near the listed price, but at some prearranged lowball price. (And there would be other conditions as well). He said the price his competitor would offer would be so low that HE would be willing to buy the house. He paused for a second and then he added, "But keep in mind the price will be so low that YOU would be willing to buy your house."
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

gouldnm
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Re: Services that offer to buy your house?

Post by gouldnm » Wed May 02, 2018 10:11 am

My husband and I are seriously considering doing an auction when we sell our house. I did some research, including posting to a forum on real estate. Several people wrote in describing how auction worked successfully for them. It's not for everyone, but IMHO, it's worth doing the research to see if it might work for you.

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