If you want or need to sell your home right now, what do you do?
You will find three different options:
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Option #1: Selling with a Realtor
Realtors are great if you have plenty of time to sell and your house is in excellent condition. There are most likely a large number of realtors in the area, and let's say you were to pick one which has successfully closed some deals and is experienced. The realtors will probably walk using your property and provide you with information on what needs to be fixed, cleaned up or removed.
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Then you'll sign a 6-month to 1-year listing contract and they'll put it on MLS (Multi Listing Service). Inside my home state of Arkansas, agents typically charge 6% or even more depending on the situation for this service. They are going to handle each of the calls, plenty of paperwork, qualifying the possibility buyers, and presenting you offers. 3% goes to the agent that finds the buyer and 3% goes to the agent that listed the property, typically.
Once the property hits the MLS the fun begins! You'll have a lot of people getting into your home, looking around and checking every cranny and nook, seven days a week, and quite possibly at all different times during the day, as all of us have different work schedules and time commitments. This means your property has to be spotless ALL the time. This is very intrusive for most people.
After a buyer is found, that can take on average 4 to 6 months, your agent will open escrow and also the buyer's "inspection period" will begin. During this period, several inspectors can come to your residence and view EVERYTHING! This typically incorporates a home inspector, who will check just about everything that you might think about and more, plus normally a roof inspector, pool inspector, termite inspector, etc... After all of these inspections are completed, most buyers will provide you with an inventory (and we've seen some really long lists! ) of items that expect you to fix, or instead they may ask for a large price reduction. Should you don't agree to accomplish it (or negotiate something they will likely accept), the purchaser can leave and you're back to square one.
Once you work through the inspection period, the buyer's lender will order an appraisal to ensure that the worth and condition from the property is acceptable to the lender. This appraisal process, which was once fairly routine, is currently blowing up many traditional real estate property deals. We recently enjoyed a property that we renovated and had several buyers wanting it for $140,000. That means $140,000 will be the 'market' price, right? Wrong! Although we had multiple offers at or around $140,000, which revealed that the buyers as well as their realtors thought it was worth that price, the appraisal arrived in at just $117,000. The appraiser decided to use bank-owned and distressed sales for comparables when calculating his value, rather than comparing it with other non-distressed remodeled properties nearby. This low ball appraisal will be attached to the property for 6 months. So what do we do? We are forced to wait the 6 months or turn it into a rental property, utilizing the risk that the tenants won't mess up the current renovations we merely spent plenty of cash on.
Now, let's say the appraisal comes in fine than it is possible to visit closing. Usually buyer and seller split closing costs, which can cost roughly 2-4% from the sales price, and therefore are removed from your proceeds in the closing. Success...Sold!
Realtors are great if you have plenty of time, your house is in excellent condition and you don't mind people coming to your house continuously. The MLS will more than likely permit you to obtain the highest gross price for your house (beforerepairs and commissions, closing costs, time on market), and you may most likely be represented professionally, since many realtors take pride and are pretty good at their work.
Option #2: On The Market by Owner (FSBO)
Selling your house "By Owner" is very similar to Option #1; the only real difference is You should do everything. Market the house, find the buyer, show the house, negotiate the sale, write the contract and discourses, and so forth. Most buyers will have to get financing so you will see a danger of appraisal. There is still closing costs and fees that should be paid. This is a great solution again if you have time and are comfortable in handling the sales process.
The process will require longer while you won't have 2000 Realtors seeing and potential showing your house to buyers. Be sure you improve your marketing efforts. There are several great free listing websites you can utilize, like Craigslist. Additionally, there are nationally know FSBO sites. Most FSBO's sell at 86% of asking price. The process may be frustrating as you are responsible for the whole transaction. FSBO's work fairly well for sellers after it is a seller's market (more and more people buying properties than trying to sell them, characterized by a small number of average days on market). Keep in mind that we are not in a seller's market, thanks to the huge amount of foreclosure-related inventory that is on the market and still coming.
Option #3: Selling to some Real Estate Investor
The true secret to selling to your property investor is to locate someone you prefer and trust. There are numerous 'newbie' investors that just finished a weekend seminar and to "get yourself a deal" and prove they are the next Donald Trump. This is NOT the type of person you want to "try" to buy your home. Most are have and broke never purchased a smart investment home within their lives. You want a trader that is not only confident but additionally experienced and competent at buying your property -- like someone who has purchased at the very least 50 homes in the region and has handled both complex and simple transactions.
What are the reasons that individuals sell to a genuine Estate Investor?
*Inherited Property
*Vacant House
*Out of state owner
*Behind on payments
*A lot of repairs needed
*Divorce
*Probate
*Foreclosure
*Need fast cash
*City violations
*Upside down
*Bankruptcy
So what will an Investor pay for my house? Investors will invariably want the best offer they can get. That's why they may be called Investors! The formula which i use is: Current market price, less repairs and renovation costs, less 10%. If fully updated/remodeled, but needs $20,000 in improvements/repairs, for example, lets say your house is worth $100,000. We may typically pay $100,000 - $20,000 - 10% ($ten thousand) = $70,000.
Selling to an Investor won't gross you the most money, but many times can get you close to other means. You'll have to be happy with a lesser sales price, however, selling with an Investor is the easiest and quickest way to sell your home. Even though you don't have enough equity to cover a discounted sales price, Investors can be very creative in helping you sell your house. There are many other options, including seller-financing and lease options.
In summary, only you can choose which route is best for you. With each option, you ought to measure time/convenience with profits. What do you require most of, and what are your limitations? Learn your alternatives, and do what's perfect for you and your situation.
Happy home-selling!
