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Discount for Cash
Many real estate investors are looking for houses to flip, or buy and hold with instant equity. They must get this discount, often between 50-60 cents on the dollar. Such a purchase price allows an investor to pay the closing costs and take the home in as-is condition.
A fixer upper is a house that needs repairs that usually incudes more than paint. These can include houses with foundation issues, vandalism, bad furnace and water heater, roof needs replacement or patch work, water damage, fire damage, or drywall holes. Other cases may not have a direct impact on the condition of the home such as hoarding, or junk in the yard causing code violations.
When a property needs work, there will always be costs associated with it. These costs must be managed by the equity that the cash home buyer is stepping into, and still be able to make a profit for their efforts.
Many homeowners don’t understand the work involved by active house flippers or real estate investors, and can become offended by such an offer. What you must understand is that cash home buyers are fast purchasers. They eliminate the need to hire a Realtor, which will also need to roll their profit into the deal. In the case of a real estate agent or broker, their profit comes in the form of a commission. A cash home buyer does not make a commission, or charge fees. They simply allow the homeowner to sell their house fast for cash, and close quickly.
Lease with Option to Purchase
Lease options are a great way to sell a home. The homeowner can roll basic updates and repairs into the agreement, often up to $500, to the person holding the option to buy.
If at the end of the term on the lease agreement that the option holder decides not to use their option, the seller than take possession of the house and do it all over again, making a profit from the option fee plus the monthly rents until someone exercises the option.
Using a lease option is a chance to hold onto some power of equity while eliminating some of the costs or activities of being a landlord. It’s an amazing and fast way to sell a house.
Contract for Deed (Land Contract)
Land contracts also known as contract for deed or abbreviated CFD, are a way to keep the deed to the home while officially selling it. With a CFD, the deed is placed into escrow. When the buyer finishes making monthly payments to you, often through escrow, a closing takes place and the title switches hands.
Different states have different laws on how these contracts are treated. Some of them are geared toward the buyer, while others are favorable to the seller. This is often in reference to how easy it is to recover the property in case of a buyer default. In some states, that can mean a foreclosure versus a simple eviction.
No matter what, it is recommended and standard to keep the clear title in escrow for the entire process to protect both buyer and seller. The CFD is a fast way to sell a house by acting as the bank in a way, enabling you to receive a larger pool of potential buyers.
With a seller financed home sale, you are doing something similar to the contract for deed except that the deed is actually changing hands now. You are acting as the bank, and have the full power of foreclosure rights in the case of a buyer default.
The seller financing route comes with its own rules and regulations. The biggest obstacle being Dodd-Frank laws, which make it harder to sell to owner-occupants. However, the law until it is repealed, does not have any effect on sales to companies and non-owner occupants. This will be a real estate company which often uses LLC or INC at the end of their name.
Investors love to buy houses which include seller financing, because it gives them a lower upfront cost to building up their income property portfolio.
Subject To (Sub2)
Subject to financing is a method of purchasing that investors use when a mortgage is owed on a house, and it has little equity for a fast cash offer. The Sub2 will allow the buyer to take over payments on your mortgage, leaving the existing financing in place.
Sub2 allows for the deed to change hands, while the loan stays in the name of the seller. Often times, a person who cannot afford the mortgage payments anymore will take this option, because the investor will pay every month on time and build the seller’s credit. It alleviates the monthly mortgage costs, allowing the seller to get their finances in order and recover their life.
What should you do to sell your house fast?
Your situation will tell which offer or offers you can receive. The only sure way to find out if you qualify for a fast cash offer, or an offer of another nature, is to fill out the form on this page or give us a call. We buy houses fast, nationwide, as-is, and take care of closing costs. No need to make repairs, or worry about fees and commissions. We are cash home buyers.
Fill out the form on this page, or give us a call toll-free at (888)519-3721.
Learn more about selling us your home. Read the FSBO Quick Sell Guide!
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