Quick home buyers - is it worth it?

Asked by Jennifer, Arlington, TX Thu Jan 24, 2008

I inherited a property (along with my sister). It is in a great location, but needs a lot of work done to it but we don't want the stress and hassle. How do we find out what is a good offer from one of the "we buy houses in any condtion" places?

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7
Deborah Madey, Agent, Brick, NJ
Fri Jan 25, 2008
Most of the "we buy houses" offers will come in at 30%-40% or more less than fair market value. If you list your property w/ a Realtor, you might find a buyer, or two, on the open market who may be very intrested in properties at 10-15% under market value.

I would suggest contacting a Realtor, getting a CMA, and getting advice from local RE Pros about maximizing the greaest proceeds.
2 votes
Pat Mulligan,…, Agent, Chesapeake, VA
Fri Jan 25, 2008
Hire a professional Reator! I am always able to sell a "fixer upper" quickly (my average is less than 2 weeks- even at Christmastime!) and for more that those "we buy houses" guys would pay. One of my sellers had "accidentally" signed a sales contract with one- thank goodness we were able to get her out of it. on a technicality. She ended up netting $24,000 more by putting it on the open market than with what that investor was going to pay her. A lot of those guys are wholesalers. They turn around and sell to the same investors that would be looking at yours through the MLS-- why not keep the money in YOUR pocket? With an experienced Realtor, you will get a realistic list price and an aggressive marketing plan.
1 vote
Don Tepper, Agent, Burke, VA
Thu Jan 24, 2008
I know a number of the "quick home buyers" in the DC area. (In fact, I also offer a "We Buy Homes...Quick, All Cash" service. I'm not promoting it here, just mentioning that I know how it operates.)

Your property would be a good candidate for that process. The formula that they/we use in the DC area (and many other parts of the country) is: FMV (fair market value of the home if it were properly updated/fixed up) times 70% minus rehab costs equals the MAO (maximum allowable offer).

So let's say your Alexandria property is a cute little place in Del Ray that would sell for $700,000 in good condition. An investor would take 70% of that. So now we're at $490,000. Then the investor will subtract needed repairs and updates. Let's say it needs new carpets, paint, updated baths, and updated kitchen. Maybe $50,000 in rehab costs. The investor's MAO would be $440,000. That's the most he/she/they would pay. You might receive an offer of $399,000. Or $407,850. Or maybe very slightly higher.

It is possible to negotiate with investors, up to whatever their MAO is. And it'll be slightly different for different investors. Some may think the house would sell for $725,000 nicely fixed up. Others may calculate rehab costs at $55,000. Some now are using a 65% multiplier, rather than 70%.

Can the "We Buy Homes" people do what they say? Yes. Most of them have hard money lenders lined up, who've committed to loan the money so long as the deal works within the parameters described above. A few of the larger ones have their own sources of funds. And some mid-sized operations have private investors--less expensive than hard money lenders.

Anyhow, that's how you determine whether it's a good offer. And feel free to contact several companies. As I say, their offers can and will vary, at least slightly.

And, as Paul and Cindy suggest, have a Realtor do a CMA. Make sure you ask what the property is worth in its current condition and what it would be worth fixed up. The first number will tell you how much less an investor might give you than another buyer coming in off the MRIS. The second number will help you figure out how the investor is coming up with the MAO.

Hope that helps.
1 vote
Jeff Mays, Agent, Richmond, VA
Tue Jan 29, 2008
Sellers receive more money for their property when it's exposed to the most amount of buyers. (An open market) Not just one buyer. Think about this...why don't "we buy houses" companies just buy the homes in MLS? Because they're looking for someone to sell to them for a deal so they can make the profit. Meet with a Realtor first...just to find out what it's worth. Let your agent handle the stress and hassle...that's their job...so you can profit.
0 votes
Keith Sorem, Agent, Glendale, CA
Thu Jan 24, 2008
Jennifer
The best way to get your home sold for top dollar in the shortest amount of time is to talk with a few Realtors and discuss your options with them. The problem with a "quick home buyer company" is that they want to buy and flip your property. So in order to make their profit they need to buy at 10-20% below market.

A properly marketed home, exposed to the world market, I think would yield a more fair price. If you are not desparate, then I'd take the conventional route. If there is a financial crisis, then maybe more innovative measure are in order.

Good luck.
0 votes
Cindy Jones, Agent, Alexandira, VA
Thu Jan 24, 2008
Most of the quick home buyer companies offer you about 40% of the value. However as Paul says having a Realtor take a look at the property and giving you an idea of the value will give you a comparison. Since you inherited the property at a stepped up value you shouldn't have any taxes to worry about. If you need more assistance feel free to contact me.
Web Reference:  http://cindyjoneshomes.com
0 votes
Paul Eakin, Agent, Fredericksburg, VA
Thu Jan 24, 2008
Hi Jennifer.... great question... I would suggest the following:
Research the websites of those "we buy houses in any condition" and see what terms are, then have them come out and see what they would offer you. Then consult a local Realtor to get market value in it's current condition. See what they have to say, and compare the two. Ask the Realtor if they have investors that would be interested in your property. This will give you a starting point on what the house may be worth to different people. Hope that helps.... have a GREAT day! Paul
0 votes
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