Selling a house can be stressful. Oftentimes the process can take months (or years) before you find the right buyer. One important thing to consider when selling your house is whether you should sell it to a real estate investor. Selling to an investor can be a lot quicker, and — if you play your cards right — more profitable than selling to individuals. Read on to figure out whether you should sell to an investor and how much an investor will pay for your house.
What Is a Real Estate Investor?
Investors are people who make their living from the purchase, management, rental, and resale of real estate properties. They will typically be looking for properties for a number of reasons. Foremost, they may see the potential in your house as a rental property. Otherwise, an investment property may build value over the years from renovation and general works which increase its market price.
Why Should You Sell Your House to a Real Estate Investor?
In the majority of cases, selling to an investor can be a great move for a homeowner.
First off, many investors will be searching for properties that can be rehabilitated and resold for a higher price in the future. If you were selling to an individual buyer, you may need to put a lot of time and effort into renovations which would make your home more appealing. This can be a very costly process and may cut into your overall income from the sale of your house. With real estate investors, however, many will be willing to look beyond the current state of your house, and focus on the improvements they can make.
Along the same lines, real estate deals with investors tend to be closed a lot quicker. Homebuyers will typically need a lot more time to make a decision on their purchase since it will dictate their lives for years to come. By contrast, closing a deal with an investor can sometimes take as little as two weeks. The sale process tends to be a lot smoother with real estate investors.
While this is not always the case, many investors would be willing to cover the closing costs of your real estate transaction. This can contribute greatly towards your bottom line, and how much you pocket at the end of the sale. Be sure to bring up this option during your negotiations.
How Much Will an Investor Pay for My House?
Real estate investors purchase property for a living, and as such typically know when a property is of good value. Investors will run complex analyses of the home’s market value, and compare it to their projected income. Thus there is a delicate balance to be struck when selling your home to a real estate investor: if you underprice your property, investors might take advantage of the opportunity and you’ll lose out on significant profit. Alternatively, if you overprice your property, you risk alienating investors as they won’t consider your home a good real estate investment.
One good way to go is to conduct a property appraisal. This is a service wherein a licensed professional will evaluate the market value of your property. This can be a fantastic starting point, but this shouldn’t necessarily be your asking price. Before deciding on your asking price, it is recommended that you familiarize yourself with the basics of real estate investing, and the metrics which matter most to investors. This will put you in a favourable position, and allow you to figure out how much your home is worth to an investor.
To this end, what you should look into is real estate comps. This essentially means looking into properties of comparable specification, and within your same region. This typically will give you an idea of what the market value of your property can be.
For a more advanced insight into your property’s worth to investors, consider performing a real estate investment analysis, based on a given asking price. The results of your analysis will show you how much you can ask for, while positioning your property as a good investment.
Related: Ultimate Beginner’s Guide to Real Estate Investment Analysis
How Do You Find Real Estate Investors?
Marketing your house is one of the most important steps you need to take. You need to focus on reaching real estate investors in the places that they look, and with the message that will resonate with them.
Investors want to know why your property will be a great investment for them. As such, you’d be in a great position if you run real estate investment analytics in order to supplement your listing. Finding your property’s capitalization rate, cash on cash return, and return on investment — all based on your asking price — can go a long way to attracting investors. Providing peace of mind and easing the research process on investors can work significantly to your favor.
When searching for real estate investors, you’ll need to list your property very strategically. One great resource for this end is Mashvisor. This platform is a favorite among investors, as it provides them with sophisticated metrics that make it easy to find and compare investments. By listing on Mashvisor, a home seller can position their property right in front of thousands of potential investors, and greatly improve their chances of finding the right buyer.
Create a listing in the Mashvisor Property Marketplace now.
Furthermore, you can look into the local resources available to you, and figure out which would be geared more towards real estate investors. Things like rental publications and certain newspapers can be a great resource when marketing your property to real estate investors.
Related: Selling a Real Estate Property: How to Market Your Home for Sale
What Should You Do Once You’ve Found an Investor?
Investors will always try to minimize their costs in order to make their real estate investments more profitable. Therefore, if you feel that you’ve been offered too little, you should always negotiate.
If you’ve run the analytics, and you’re certain that your property is a good investment, then you’re in a powerful position when negotiating an offer. Use online resources to learn more about investment analyses, such as cap rate, and use your knowledge to assert your property’s investment potential.
Related: 10 Best Real Estate Negotiating Tips for Sellers
Bottom Line
Selling your house to an investor can be a very good idea, if you do it right. By familiarizing yourself with what matters most to investors, you’re already halfway to a successful, profitable sale. Most importantly, be sure you’re using the right tools to so that you can find a price that works for you and for investors.