Home Selling in 38125>Question Details

Voniss Johns…, Home Seller in 38125

How much do "house buying" companies offer for a home?

Asked by Voniss Johnston, 38125 Sun Oct 14, 2007

This very slow market is making me wonder if it is time to cut my losses and move on. I wonder if anyone has an idea of the target value these companies offer...30% below appraisal? More? Less?

Going this route may free up my equity and let me buy a new home at a time when prices are really good. Like everything there are trade-offs. Would love to hear some thoughts on this topic.

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Darlene Blaleslee’s answer
At ERA we offer a promise "ERA will sell your home or ERA will buy it." There are some conditions that apply, but if you are at least 20% vested in your home and the home is not over $700,000 after 180 day listing we will buy your home for 90% of the appraised value.
Web Reference: http://www.darstours.com
1 vote Thank Flag Link Wed May 14, 2008
BEST ANSWER
Hello Voniss. A house buing company will definitely buy well below fair market value as they want to have instant profit so that they can turn around and sell the properties quickly. 20% - 30% below fair market value if possible. Many sellers don't have that much equity these days. I would definitely not go that route without first trying to sell your property the conventional way. It would be better to start below market value and then offer a generous credit towards the buyer's closing costs. I think you'd net more that way than selling to a house buying company. Good luck.
Web Reference: http://www.theMLShub.com
0 votes Thank Flag Link Sun Oct 14, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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Hi Voniss,
You guessed about right 70% of your homes value is all you can expect from this type of sale. They have appraisers that appraise the property. Then they calculate the needed repairs to sell the property at a profit. They then subtract the price of the repairs and all additional cost to them from the appraisal and then mulitple the results by .70 (70%) and this is what they will offer you. My suggestion to you is give your home great curb appeal (whatever it takes) - you must get the buyer inside the home first - pretend you are a very concerned buyer and look at your home from that prespective - you want good value for your dollar - make a list of turnoffs (some could be cosmetic others more critical) - repair all these items. Then find you a REMAX agent to sell it for you at a market value price. Homes that look good and are priced right are selling in today's market.

Don't be too greedy, if you have equity, and you really want to move to a different home. I will be happy to look at your home and complete a fair market value for you, if you are not currently listed with another broker. Here's a link to my website http://bobbrown.maar.mlxchange.com or http://bobrbrown.remax.com.

Call me or email me 901-233-3313 bobrbrown@remax.net
Web Reference: http://bobrbrown.remax.com
1 vote Thank Flag Link Wed May 14, 2008
Leg pulling time Voriss? - You are thinking of giving up 30% of your homes value for convenience?

House buying companies do not care about a your appraisal. They care about buying at ridiculously low prices from ignorant consumers.

If you have an appraisal that claims your property is worth 30% more than it is really worth, the house buyer is not going to be so naive as to pay you a 30% discount from the overinflated "appraisal"

They WILL be willing to take your property for 30% less than you could sell it through a Realtor on the open market. If you sold it on the open market through a Realtor and paid closing costs you would still net 90% of the value or more. Compare to 70% of value or less to house buying company company?

Wow you would have to just hate money to take the house buying company offer!
1 vote Thank Flag Link Mon Oct 15, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Bob's pretty much correct. The formula most "We Buy Houses" folks use is: Maximum Allowable Offer (MAO)=(After Repair Value *0.70) - Repair Costs.

So, if the after repair value of a property is $500,000 and it needs $20,000 in repairs, the numbers look like this:

$330,000=($500,000 x 0.70) -$20,000.

And remember: $330,000 is the maximum they'll pay. In some areas, the multiplier is 0.65, not 0.70, so the offer will be even lower.

That's how it works.
0 votes Thank Flag Link Wed May 14, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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From what I've heard they sound real good, but there's always a catch. Every infomercial on late night tv shows dozens of folks that have become millionaires using this or that system. Or the billboard We Buy Houses Guys are generously going to take this house off your hands with no repairs required on your behalf. I have not talked with one person that has felt like they were treated fairly, and that the deal turned out the way it should. These folks are in business to make money, and If they weren't making money they wouldn't be able to stay in business. As a business they invest in property at prices far enough below market that they can price the home below market themselves and still turn a good profit. Not many people will invest $100,000 or even more with only $10,000 margin. They also want the purchase price to be far enough below market that they can put their margin on top of that and still be below market value, so the house will sell quickly. It just doesn't make sense for a homeowner to give their equity away when they could make more by hiring an aggressive agent pricing it well and selling it outright.

chris
0 votes Thank Flag Link Mon Oct 15, 2007
I would suggest that you meet with a few Realtors and ask for their pricing opnions and marketing strategies to obtain a quick sale on an aggressivley priced property.

If you market to a large pool of buyers with an attractive price, you will most likely net a higher number thatn you would if you dealt w/ a "house buying" company.

No one can tell you that for sure here, as a local Realtor would need to review your property, the comps, etc. I wlll venture to say that the odds will be in your favor you would net higher on the open market, even after Realtor fees. The key will be aggressive pricing with a strong marketing campagin.
0 votes Thank Flag Link Sun Oct 14, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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The answer to this question is not very much different than the answer I give to an investor who states he's going to NOT exchange and just take his captial gains. My reply to them is to consult with their tax professional and to consider this: the tax you pay, or in your case, the discount you pay, is very much like money saved and in the bank. I then ask my client, "How long will it take you to "save" that amount? Most folks who have equity in their homes/investment properties, sometimes think it's not REAL but "funny money"!! They glibly state, "I"ll pay the $20,000 or 30,000 or 40,000 as I'm making all this big money!" With the marginal propensity to save at something like: -.5% why give this up when you can either work with a professional Realtor to stop the IRS tax bite or NOT sell to home flippers who are going to take 20-30% off the top of THEIR appraisal!!?? Even if you had to reduce the price initially from a market analysis of say 15% and pay a 5-7% brokerage fee--you're still ahead!! And if you're an investor selling and not exchanging you can kiss even more profit good bye!! Too much equity can make us Stupid!! Not enough desperate AND stupid!
0 votes Thank Flag Link Sun Oct 14, 2007
Not much.
It all depends on how hungry you are. Do not do like most people if you can afford to...most regular folks who invest in the stock market buy high, and sell low because the make emotional decisions on the whim of the evening news with out ever thinking that most reporters never took calculus or know enough math to be able to decifer the stock market. Using this basis of reality with the Real estate market, don't make any rash decisions because of what appears to be a market reaction per news reports.

Your trade off is your personal needs and desires long and short term, and the tax implications thereof. Consider this with your CPA, then act on this decision incorporating your needs with the real estate buy, sell or hold decision.
Web Reference: http://www.iansellsnola.com
0 votes Thank Flag Link Sun Oct 14, 2007
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