How To Evaluate Companies That Buy Homes

There are several ways to sell a home. The most popular method is to list your home with a real estate agent and wait for offers from prospective buyers. With today’s technological advancements, you can quickly sell your house to a company for cash. However, the growing number of cash buyer companies can make it challenging to pick the right one to work with.

In this article, you’ll learn the types of companies that buy houses for cash and how to evaluate the best company to work with.

How Companies That Buy Houses Work

These companies will make cash offers on your current home at an algorithmically determined market price. If you agree to the bid, the company will schedule a home inspection, typically within 24 to 48 hours. After that, you’ll review and accept the offer. Finally, close on the sale and get your payment money in a matter of days. Then, you can use the funds for your next home purchase or what works best for you. 

After completing the real estate transaction, the company will clean up your old house to ensure that it’s in good condition before selling it on the open market. And because these companies purchase homes at a lower sale price than what they would be sold for traditionally, they’re likely going to make a profit on the sale.

How Do They Differ from Traditionally Selling Your Home?

Unlike the traditional way of selling a home, where it can take you long to close on a sale, companies that buy houses for cash make the entire process faster. You can get your house off the market in a couple of days. Plus, you don’t have to worry about renovations and home improvements. These companies buy homes as-is, even if your house is in poor condition.

Types of Companies That Buy Houses

Here are some of the most popular home companies that could buy your home:

Franchise Cash Buyers

There are a couple of national companies that operate as franchises and purchase homes for cash. Some of the most common franchise cash buyers include HomeVestors, We Buy Ugly Houses, We Buy Houses, and I Buy Houses. Franchise cash buyers often prefer to work with local contractors to flip the property or preserve it for rental income. 

iBuyers

iBuyer companies or instant buyers are real estate companies that use online assessment tools to evaluate the value of a property and make cash offers.

House Flippers

House flippers are real estate investors who purchase properties in poor condition, renovate them, and sell them for a profit. These investors usually look for specific home improvements that can boost the property’s value. In addition, they often aim to flip houses within six months to cut down on operating expenses.

Buy-and-Hold Investors

Buy-and-hold companies typically purchase houses intending to keep them for rental income. Like house flippers, these investors acquire properties that require some work, such as renovation, to avoid paying top dollar. Their primary goal is to make an acceptable return on investment. 

Trade-In Companies

Another type of house company you’ll likely come across is trade-in companies. As the name suggests, these companies will offer to buy your current home, freeing up some cash to buy your new home. Working with a trade-in company may be the best option if you’re looking to sell your home quickly and want less hassle on sale contingency. 

Local Investors

Some real estate investment companies focus on purchasing properties in specific regions, states, and cities. The primary target of these companies is the local real estate market and typically have various offices with local real estate agents.

How to Evaluate Companies That Buy Homes

Not all house-buying companies work the same. If you decide to sell your house, here are some of the things to look at when finding the best company.

Offer and Value for Your Home

The cash offer you get determines whether you’ll get a return on investment or not. Whether your house is in poor condition or good condition, make sure you’re getting value for your home.

Selling and Closing Time

How long it takes to close on a house is very important. Therefore, you want to work with a company with the shortest closing date, especially if you urgently need equity on your home. Generally, most cash home buyers close on a sale within 14 days or less.

Fees and Other Costs

House buying companies charge a service fee, typically 5% of the final cash offer. You are also on the hook for closing costs, which may vary depending on the company. Consider companies that have lower fees.

Eligibility Criteria

Every house buying company has eligibility requirements that sellers must meet in order to sell their home with them. While most of these companies have lenient requirements, some have strict eligibility criteria. You may want to go with a cash home buyer with flexible qualifications.

Flexibility

You probably want to work with a real estate investment firm that offers the flexibility you need when selling your house. 

Expertise and Customer Reviews

How many years of experience does the company have? What are other people saying about the company? Reviews don’t lie, so ensure that you check what previous customers have to say about the company you’re about to work with. If there’s a high number of positive reviews and customer satisfaction, you can work with them.

Pros of Selling to Companies That Buy Homes

Selling your home to home companies comes with several benefits, including:

• Quick and Hassle-free Sale: Unlike traditional sales with a complex home sale process, you can avoid the hassle and sell your home faster with a house buying company.
• Certainty of Home Sale: You’re almost sure of your home sale when you work with cash home buyers.
• No Upfront Costs: You don’t need to pay any upfront costs to sell your home since house buying companies acquire as-is.
• No Appraisal and Financing Contingencies: Another advantage of selling to cash home buyers is that you don’t need to hire a home appraiser. Plus, it’s the best way to avoid sale contingencies.
• No Repairs, Staging, or Open Houses: Most of these companies purchase homes as-is, so there’s no need for renovations, staging, or hosting an open house.
• Fast, Flexible Closing, and Move-out Dates: Real estate transactions are quick, giving you the convenience you need to find your new home.

Cons of Selling to Companies That Buy Homes

• You Might Get Lower Offers for Some: The most apparent disadvantage of selling your house to home companies is that you may get lower offers than you would if you go the traditional route.
• Some Have Strict Eligibility Criteria: Not all house buying companies have lenient eligibility requirements. Some won’t purchase your home if you don’t meet specific conditions. 
• Potential for Scams and Predatory Tactics: While cash home buyers are legitimate and operate legally nationwide, scams do exist. Therefore, do your due diligence to ensure that you don’t fall prey to unscrupulous companies that buy houses for cash.