Sell Your House in 7 Days - Deal Or Scam?
Sell house fast - I'm sure you've seen these advertisements on bandit signs by the highway. Alternatively, in the real estate section of the newspaper. Perhaps you've wondered if they are realistic - or are they just a scam?
Sell house fast - Well, the truth is that the better ones are genuine. They are placed by private investors that have immediate use of funds and will afford to close on your property quickly. They are going to often cover the closing costs, and will certainly arrange all of the paperwork. Sounds too good to be real? Well, it isn't, but there is a snag - I bet you guessed that!
If a person is ready to purchase your house, for all cash, and close in 1 week, they are not likely to pay retail market value. That's a well known fact - they can't afford to. These people are certainly not philanthropists - they are doing this to produce a profit (even though the reputable ones like to think these are helping folks distress). So, somewhere below the retail market value is what you can expect to see on their offer. How much below market value? It could be around 70% of the retail price, even though it depends on the condition of the property, its location, and a number of other factors.
Prior to deciding to think this is simply a plain rip-off - consider it. You would pay them at least 6% if you sold the property through an agent. Add on closing costs, inspections that you might purchase, along with a small discount on the sales price, and it can easily stand up to 10%. Then you can certainly aspect in your holding costs. If this goes 6 months to market your house and that's pretty good in today's market), you have your monthly costs - loan payments, insurance, tax and utilities etc - to taken into account also. Over a house valued at $250,000, the monthly outgoings could easily be $2,500 monthly. Over half a year, that is another 6%.
Add-on the expenses of preparing your house for retail sale - maybe another $5,000 and the situation could seem like this:
Selling price $250,000
Discount for sale (2%) 5,000
Agent's commission (6%) 14,700
Closing costs (2%) 4,900
Net sales value 225,400
Holding costs 15,000
Sale preparation 5,000
Total costs $20,000
Cash available $185,400 (74%)
So, if the house sells in 6 months, and you only have to discount by 2%, you might walk away with about 75% of the asking price. Or you have to cut your price for a sale, that could soon be below 70%, if the market continues to decline. I think which makes a proposal of 70%, immediately and cash look attractive.
Needless to say, you can attempt to market the home yourself, saving the cost of a broker, but market statistics demonstrate that over 80% of FSBOs (For Sale By Owner) find yourself using an agent anyway, and those that do sell the house themselves, achieve a discounted price than the agent could have done. This is partly as the buyers realize that the owner is saving agency commissions and discount that from your offer price.
Whenever a private investor discusses buying your property in 7 days, this is just one of the ways that they can get it done. At first glance the offer may not seem to be very generous, once you take into account the variables we have discussed, it can start to look like a good deal, even though but as you can see.