By John Cabezas with LIV AZ Realty
When you decide to sell your home, you want the stress of selling to be over as quickly as possible. There are many factors that contribute to the stress and anxiety of selling. These factors may include: divorce, inheritance, work transfer, new baby, and others.
Once you’ve decided to sell, there are only three choices: for sale by owner, traditional MLS listing, and selling to an investor. Each of these choices has its pros and cons, and each comes with a different set of expenses and net cash outcomes. Let’s review the pros and cons of selling your home to an investor.
If you are experiencing tough financial times, and are having difficulty keeping up the payments on your home, or if your home is in imminent foreclosure, then an investor is the quickest choice.
If for some reason you need quick cash and can’t wait the 30 days for a standard home sale, then an investor can provide a quick close and get you the money fast.
Cons: Market Value
As convenient as selling to an investor may be, the cost for that convenience is rather steep. Let’s face it, why would someone pay cash for your home, go through the expense and time of remodeling, then go through the expense of selling, and not make a large profit? They wouldn’t.
They must give themselves a 30 percent to 40 percent profit margin. Where does that margin come from? It comes from you.
Here is how that works:
Let’s say you have a home that has a legitimate value of $300,000, an investor can only afford to pay you 60 percent of the actual value. This means that for the convenience of selling your home quickly, you’ve given away $120,000. Does that make any sense? Unfortunately, many Americans are doing just that. Not because they are aware of what they are doing, but because they are being tricked into doing so.
There are a lot of Real Estate Investor Scams
House flipping is littered with them. In today’s world, there is a network of large investor groups nationwide. Like most scam artists, they talk a good game, but in the end they just want to steal your hard earned equity.
How does one prevent fraud? That’s easy: do your due diligence. The first thing you should do is contact a licensed realtor and have them do a comparative analysis of your home’s true value. This is a service that all realtors provide at no charge to you.
Unlike real estate investors, realtors are licensed, insured, and are legally required to conduct business in an ethical manner. They are bound by what is called a fiduciary responsibility to their client and potential clients.
The bottom line: inventory in Arizona is at an all time low. There is no reason to sell your home to an investor right now. Speak with a realtor before you sell your home to an investor. It will save you tens of thousands of dollars.
A Cuban born immigrant and businessman, John spent 25 years as an executive in corporate America, has co-written a real estate ‘How To’ book, is a three-time guest on Real Estate Matters (960AM) Talk Show and is currently a partner and Realtor at LIV AZ Realty. In his 20 years as a Realtor, John has been involved in major remodel and renovation projects throughout the valley. View his real estate blog at livazrealty.com.