What are the downfalls of a Home Investor,comming to buy your home.?

Question

I know they say they will buy your house as is, but do they accually buy your house at a fair price?

Answer 1

Usually way below fair market price. They will take advantage of a person they perceive as desperate to sell. Some investors will pay fair prices for a multi-family house, if they want to gamble on the thought that the area is desirable, and that they could get enough rent roll. But in the greatest reality, nobody will buy a house if they think they will lose money.

Other investors will buy houses that they feel can be remodeled, and sold for a profit. But for the most part, investors will ALWAYS want to profit, so in most cases they will under bid the value of the house in the hopes of you taking the bait.

Answer 2

This comment comes from a professional home investor:

Why Should I Sell My Home To An Investor?

The simple answer is, because you need an immediate solution to your situation. You may not have time to wait for an agent to sell your home. Or, perhaps you want to sell without worrying about getting it ready to “show” by making repairs, painting, or adding landscaping.

Why Do I Only Get 65-90% of the Value of my House?

The answer to this question is a little more complicated than it seems as investors consider several points prior to making you the offer. Depending on the area and market conditions, investors pay between 65-90% of the fair market value for your house. While this may seem like quite a haircut, let’s consider the costs associated with buying/selling a house.

First, investors take into consideration what costs will be incurred in order to prepare your home for resale. Most homeowners overlook or don’t consider these costs. Typically, the range of these costs is around 2-3% of the value of the home. Investors use the term, ARV, or after repair value.

Second, concerns semantics. In this case, the difference between “net” and “gross”. The investor gives a “net of all costs” offer with the exception of mandatory seller costs such as, taxes. Homeowners think in terms of the “gross value” of their home. For example, “my house is worth $150,000” is a “gross” term. In today’s buyers market, with more property in inventory than buyers to absorb them, houses may only sell for 90-95% of the asking price.

Other costs related to a sale may include the real estate fess of 4-6% and closing costs of 3%, which are the seller’s responsibility.

Here’s an example of how an investor arrives at the “net” offer:

$150,000 Listed Price $150,000
Less 10% market conditions/competition (15,000)
Less 3% repairs/maintenance (4,500)
Less 6% real estate fees (9,000)
Less 3% closing costs (4,500)
Total Offer $117,000

So, when an investor offers $117,000 which is 78% of the $150,000 asking price and agrees to pay all the closing costs, fees and repairs associated with the sale, and complete the transaction within a week it is a great deal. After all, it is probably very close to what the homeowner would “net” had they gone the traditional route.

Homeowners who have purchased a second home based on selling the first often fail to consider the “carrying costs” of both of the mortgages in their decision to accept an offer.

Why Do Some Homeowners Only Receive 40-50% of the Value?

The reality of the situation is that these offers are VERY RARE! The homes that sell for .40-.50 cents on the dollar are run down, dilapidated or in need of serious repairs. They may also be in an area that has suffered a devastating experience such as, a plant closing or environmental disaster.

Another alternative for selling your house quickly is to contact the people at HouseBuyerNetwork.com to see if they have a professional home buyer in your area. The service is free to you the homeowner.
A longwinded answer to your question...the pitfalls to selling to an investor? You sell your house quickly at a fair price?

Answer 3

Are you in an absolute bind with no way out? Have you explored every option? Have you spoken with your lender before making this move?

Here is the plain truth:

If you are talking about the type of investor I think you are, they ARE the scum-of-the-earth.

They will come into your home a paint a picture so frightful that you will want to run out of the house without even packing.

Generally they offer about 50% of the value based on a very conservative estimate. The offer usually comes in at 40%.

Doule caution if you are dealing with a firm that is offering to let you stay in the house and rent it from them for a year with the condition you wil buy it back. Even if you are able to get out from under you won't be able to afford the buyout price. I've even heard of cases where the firm will let you think you sold then the house when all they do is negotiate a forberance agreement with the mortgage company.

Please, please, please, speak with your lender to be sure you have explored all of your options. When you call ask to speak with a "Work-Out Counselor" or a "Loss-Mitigation Rep"

If you find that the only way to go is to sell to one of these sharks, find yourself a good "Public Interest" lawyer to look the deal over before you sign.

Note: Several states are taking steps to "watchdog" this practice but unfortunately quite a few more people have to get robbed before any decisive action will be taken.

>>things are NEVER as bad as they seem<<

Answer 4

It will be fair for them. Not so fair for you. They need to turn a profit so will pay less than FMV. That may be a LOT less than you think your home is worth in today's market!