“We buy houses in any condition,” you’ve undoubtedly noticed signs along the side of the highway – “We buy houses for cash in Southern California.”
Who are these people? And why do they buy houses, regardless of the condition or repairs that may be required, when there’s a lot of competition in this market? House buyers and cash home buyers are individuals or companies who buys houses without examining it first.
We are real estate investors who buy properties and then either flip them or lease them as landlords after making necessary repairs to make them “rent-ready.”
Cash home buyers obtain homes at a discount off their retail market value, but selling to one has several non-monetary benefits.
Cash home buyers who use a cash purchase to invest in real estate can generally complete the transaction much faster than someone who uses a mortgage to buy a property. For example, at A Good Neighbor Home Buyer, we can close on properties as quickly as 3-21 days depending on the complexity of the situation.
Foreclosure is a term that refers to the process of selling a home at an auction. When homeowners are facing an inevitable foreclosure, they have only days to sell their property before it is sold in county auctions. Foreclosure has the potential to damage one’s credit and qualify them for future house purchases for up to four years.
Someone may have inherited a home with a hefty mortgage payment and property taxes that they are unable to pay for long enough to sell the property on the market. Cash purchasers can provide a degree of urgency that other buyers might not be able to match.
The speed at which a cash buyer may close is determined by the intricacy of title, as well as the number of parties and liens involved. If the owners are a married couple in agreement on what to do and there is only a mortgage lien on the property, closings can take anywhere from 3 to 7 days.
If the property was inherited and has six heirs, a mortgage, and a tax lien, it might take longer to sell. However, experienced house purchasers such as A Good Neighbor Home Buyer have the expertise and staff to handle such difficulties while still closing on time.
The worse the condition of a house, the more interested a cash home buyer will be in purchasing it, according to most experts. The numbers game of real estate investing is intense. They don’t care if the property has a leaky roof or fire damage or is infested with termites.
Because real estate investors are repeat clients to their contractors, they frequently get price cuts on house repairs and improvements. These reductions, in combination with the lack of normal buyer interest in properties that require significant work – which depreciates the property’s market worth – provide investors a chance to make money. They buy the home below market value and make it presentable for less than a typical homeowner could earn by renting or reselling.
Investors in real estate will generally purchase houses that require little to no renovation, which is why they prefer houses where the owner wants or needs to sell the house as-is.
As previously stated, house buyers must purchase houses for less than their market value. They also don’t charge Realtor fees on the sale. Typically, cash buyers pay all closing costs, which is something that the seller generally covers in an on-market transaction. Closing costs can add another 1-3% to the selling price.
However, house purchasers are seeking for a 10 percent to 20 percent discount on the property’s retail value. While you won’t have to pay any commissions or closing fees, your net profit from the sale may be lower than if you put it on the market commercially.
However, you don’t have to do anything to prepare for a sale. You won’t need to wait weeks or months for an offer while paying your mortgage, taxes, utilities, and HOA dues. You also don’t risk losing out on the opportunity to receive buyer financing because it might fall through.
Do cash house buyers really pay cash?
Finally, you may be wondering how these investors are able to acquire such properties. Are they actually buying them for cash? The answer is yes and no.
Hard-money lenders and private money lenders generally fund real estate investors. While it is still technically a loan, it is not in the traditional mortgage sense. Conventional mortgages necessitate underwriting, appraisals, and time to finalize everything and authorize finance for the loan. After the buyer contracts on a property, conventional mortgages can range from 21 to 45 days until closing.
Many individuals find that they need to borrow money from a variety of private lenders in order to make a down payment on their property. These lenders provide them access to greater loan amounts at higher interest rates, allowing them to acquire a home quickly using the cash from their lender. Cash home buyers are eligible for these deals since they allow them to purchase a property without the same amount of paperwork as a traditional mortgage. Then the investor either resells the house or later refinances it to become a rental, reimbursing the private lender in full plus interest.
When an investor has shown to be successful, lenders will typically have faith in their numbers. The investor will give their proposal to one of their personal lenders, who will usually respond within hours with a loan approval to use lender money to buy the property.
In terms of the homeowner selling their home, it’s practically the same as if someone was purchasing it in cash. Cash home buyers with good connections to their lenders don’t need to undergo appraisals or have home inspections done.
We submit the offer to our lenders, who respond favorably almost immediately. The private lender then sends the money to the title company for their investor partner so that they may purchase the property. As soon as their title company is able to clear the sale, the investor may buy it.
However, keep in mind that not all individuals who claim to be a cash home buyer are trustworthy or have solid links with private loan lenders.
Need to sell fast?
We can assist you. For a free consultation, contact us. We’ll give you with a number of different options for liquidating your property depending on your specific circumstances, including giving you a free, no-obligation cash offer. We buy houses in the Houston area and try to create win-win situations for everyone involved.
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