A Review of House Buying Companies
For house buying companies residential real estate investing is big business, both here in Utah and nationally. It seems like every other week, there’s a certified house flipping expert on TV dying to show you how they took a home from what could be charitably called “dilapidated” into a virtual mansion. We don’t say this to mock these experts. Some of their restoration skills are nothing short of breath taking. But we also didn’t get into the industry to get on national TV. We did it with one goal in mind: to help homeowners in Utah just like you.
But that doesn’t always mean there aren’t disreputable home buying companies out in the field. And chances are, you’ve seen at least one hastily scrawled flyer stating “We Buy Houses” with no further information than a telephone number posted on a utility pole. Even assuming that these are legitimate entities, you’ll probably find their offer to be on par with the same time and effort they’ve put into marketing.
So how can you tell the good, the bad and the ugly when it comes to house buying companies? Let’s look at some of the pros and cons.
Pro: Selling your home to a house buying company is faster than listing your home on the market.
And for many of you, that’s going to be a considerable selling point. When you sell your house to a house buying company, you receive an offer typically within 3 business days. Listing your home as FSBO typically requires as much paper work as it does marketing know how. And when you’re facing a foreclosure or a property lien, time is of the essence.
Con: You can sometimes give up control during the home selling process.
Ideally, whether you choose to work with a “We Buy Houses” company or a traditional realtor, you’re working as a team; one which has the goal of getting the best offer for your house in the least amount of time. But you can sometimes find national house buying companies to be relatively inflexible when it comes to their terms. They know you need to sell your home and sell your home quickly. And as a result, you may find the terms of their contract to be strictly to their advantage—not yours. A local we buy houses company is almost always the best way to keep control of the process.
Con: You’re selling your house for less than the market asking price.
Yes, you need to sell your house quickly. A house buying company knows this, and they also know you may have to settle for less than the actual value of your home—sometimes as much as 30 percent less. And while a realtor may charge an average commission fee of roughly 6 percent both nationally and in Utah, they’re also motivated to get the best offer they can for your house.
Pro: Selling your house to a house buying company can be more lucrative than you think.
A reputable and customer-oriented house buying company will take a lot of factors into consideration before giving you an offer. The condition of your home. The location. Current market value. But more importantly? Why you need to sell. Yes, they are out to make a profit. But a house buying company can be more flexible than you’d think. It’s not unheard of to recoup anywhere from up to 85 – 90 percent of the value of your home during the process. Which isn’t all that far off from what a realtor might charge in commission fees.
Pro: A house buying company will purchase your house as is, regardless of its condition.
Renovations can be costly. And if you’re facing an ongoing emergency, the upkeep of your home is likely going to be the furthest thing from your mind. In fact, you may have given up on it altogether. But a house buying company knows that they can turn even the most deteriorated property into a considerable real estate asset and subsequently relieve you of at least one pressure when selling your house because they will buy your house as-is.
Con: The condition of your house can dictate your offer.
And the more renovation your house is in need of, the lower you might find your offer will be. It’s a sad truth, but it’s still a truth. Refurbishment takes time, care and above all materials. With that in mind, most of the houses we’ve seen are hardly run down properties with intensive structural damage. In fact, most homeowners tend to keep up their homes in their original state; which means that the recoup they’ll see is typically more than enough for their needs.
Pro: You’ll receive an immediate cash offer instantly.
Selling your house can be a lengthy process, whether you’re going through a realtor or selling it yourself. Sometimes, it can remain on the market indefinitely based on any number of factors—location, seasonal changes and demand, just to name a few. Add in closing costs, lender approval, inspection and appraisal fees and the volatility of the local market in Utah, and you may find that the best offer you get can sometimes be equal to what you’d receive with a house buying company… without having to wait months on end to close the sale.
Con: You may not have the final say over the terms of your offer.
One of the great things about house buying companies is the fact that it’s a one-stop process.Those additional closing costs, inspection fees and renovation fees are included, with no hidden fees or commissions. And a reputable house buying company will be able to itemize and go over exactly how that number is calculated. But ultimately, they’re the ones who are setting the terms of your offer. And if you’re looking to make any last minute renovations to your home to increase value… well, that’s precisely why a house buying company is making an instant offer to begin with.
But there are rigid house buying companies and there are flexible ones. And at Gary Buys Houses, we work with you—not against you. We know how frustrating it can be to find a buyer. And we also know how frustrating it can be to relocate. That’s why we offer a unique solution called our “Sell Now, Move Later” program. Not only will we give you a fair estimate on your house, we’ll even let you stay until it’s time for you to resettle.
Are there companies who are scamming you out there when they say “We Buy Houses”? Yes, but they’re pretty easy to spot. They don’t typically have an extensive history, online or offline. They don’t tend to be registered with the BBB and usually they’re one person overnight businesses operating out of their own living quarters. If your instincts tell you something’s a little suspicious about a house buying company, shop around. You’ll probably wind up being grateful you did.