What’s the deal with these “We Buy Houses” companies?
Is it a scam?
If you are thinking of selling to one of these companies it would be in the your best interest to keep reading. We will be pulling back the curtain and unveiling the truth (and ins and outs) behind “We buy houses” companies.
- After reading this article you will have the answer to each of these questions…
- How these companies work
- What type of homes they are looking for
- What type of homeowners do they typically work with
- How can they buy YOUR home for cash
- Is it really worth it for you to sell your home to them
- How to know if a “we buy houses” company is a scam
- Is selling to one of these companies the right option for you
What exactly do these companies do? How do they work?
First of all it is important to understand these are companies, and they DO aim to make a profit. We will get more into this later.
“We buy houses” companies search for properties, typically distressed (in need of renovations) in order to buy a home directly from the seller. They invest a lot in marketing including postal mail, online ads, TV, Billboards, and other mediums all with the intent of getting in contact with the owners of these properties. In short, instead of buying homes in the traditional way through a Real Estate Agent they go direct to YOU the home seller.
But Why? Great questions deserve a simple answer….
“We Buy Houses” companies(buyer) can engage and negotiate directly with YOU the seller to broker a deal without a “middleman” (Real Estate Agents are typically the intermediary).
I hope i didn’t lose you there. Here are the dollars and cents…
On a $200,000 property value, “We Buy Homes” Companies (and sellers) can save around $16,000 between themselves by cutting out the listing agent.
How is that?
Seller typically have to pay Real Estate Agent commissions (usually around 6% PLUS closing costs of around 2%). That’s 8% less a home buying company can pay just dealing direct with the homeowner (and yes, the seller walks away with the same amount).
I know some people like numbers and that’s why I mentioned it. If you want more info on that you can shoot us a quick email and I will send you REAL LIFE examples on how we have saved homeowners thousands in fees.
To break it all down. These companies look for homeowners who might want to sell. They work with them to negotiate directly so there are no hidden fees or commissions. Then they purchase the home with the intent to fix it up and put it on the market, OR fix it up and rent it at top market value and keep it for a few years.
All that sounds fine and dandy, but…
What kind of houses do they look for?
What if my house is not in that bad of condition? Another excellent question!
Homes are an interesting asset class, because there are so many ways that someone can modify it to earn a couple dollars. Homebuyers look for homes with opportunity; Opportunity to add value to them so they can earn their stripes in the local community AND at the same time make a living.
As mentioned earlier, whether it is to fix it up and resell it to a new family, or rent it, all homes have potential and just needs some extra love (and experience) to find it.
See below some examples of before and after pictures of the type of homes that we have bought in our career. These are only a few, but we are proud to say we have spent over 20 Million in just a few years buying and rehabbing local communities all around the Miami Area.
We helped make our neighborhoods just a little prettier 🙂
What kind of Homeowners do they work with?
“We buy houses” companies around Miami buy homes with cash, and since they go direct they can close quickly and with more flexible terms and conditions on the deal. Therefore anyone that is hoping to sell their home quickly, and typically for a small discount is the homeowners that we can service the best.
We put together a pie chart below showing some homeowner statistics on the last 50 homes that we purchased around the Miami area. We outlined the types of situations and homeowners that we worked with.
As you can see there are all shapes and sizes: From investors to people who recently inherited a property and everything in between. This service is better for someone who is OK with taking a bit of a haircut on the price to get direct access to the buyer, pay $0 in fees, and not have to spend any money to fix up the place.
This part is important to understand because it is very possible that this is not your situation and that is perfectly “ok”.
Since were experts, we have many options that we can advise for you which don’t involve direct home buying to get you MORE money. Just shoot us an email or quick call, and we can hook you up.
How can they buy YOUR home for cash?
Cash for my home; What does this mean? Well, usually we show up at your house the same day and give you a bank bag filled with cash (all $100 dollar bills)!
I’m kidding, i’m kidding…
If we were in the 1920’s, then maybe, but this is the new age, and what a wonderful world it is!
That means no financing AND all the headaches that come with it.
NO Chase bank!
Wells Fargo… NOPE!
Bank of America…you guessed it… NONE OF THAT!
When financing is required (aka a mortgage) there are many procedures that the bank MUST take. If your house is not in “financeable” condition this is almost always a deal killer!
When financing a transaction, appraisals must be done, as well as inspections, constant Buyer Credit Checks, and typically a 45-60 day waiting period before closing.
An All-Cash Investor already has the funds in his/her own bank account (or a money partner that does). On the day of the closing they will wire it to the Title Company –literally skipping all of those banking procedures.
This is what allows the famous “Quick closing”…
Revolutionary… I KNOW!
Is it worth it for you to sell your home to them?
I don’t mean to get all deep and philosophical here, but you have to know your goal(s) and determine what is important to you.
It all comes down to 4 things:
Okay, yes, that was only 2 things.
Selling to an investor might not be your best option if you are ok letting your property sit on the market with a real estate agent or on a for sale by owner site. If your sole objective is to walk away with this highest dollar amount than you must be comfortable dealing with the more lengthy and complicated process of listing traditionally.
Selling to a professional Miami Home Buying Company (like ours) will allow you to avoid dealing with unproven agents, flakey people, or the complicated home selling process. Keep in mind, in exchange for all of those benefits we would pay a slight discount below the retail value of your home.
The price a home investor will pay is based 100% on the fair market value of your home relative to comparable homes in your local Miami neighborhood.
Here is short video showing how we strategically analyze properties to determine the maximum price we can pay for each homeowner. (if you want us to do this for your home fill out the form on this page… it’s free)
If you need to sell your home faster (Less Time) then giving up a few dollars is expected. There is no right or wrong answer, it all comes down to what your goal(s) are and how long you can wait (or want to deal with) to achieve that.
How to know if a “we buy houses” company is a scam?
SCAMS are everywhere on the internet! I am going to share a few pointers on how to determine if the “we buy houses” company you are looking up is a scam or not.
These are your “ninja questions” to ask each buyer.
PRO TIP: They will crumble to their knees if they are not for real!
- Do They have an office? Beware of PO boxes addresses. This often means that they hide behind a computer or their phone but have no physical location in which you can visit or see. (Insert office team picture here)
- Ask them if they actually close on your home. There are many so called “homebuyers” that don’t actually close and try to sell contracts. This can be frustrating and time wasting. You can see our before and after pictures above to show that we like to make house look nicer, which requires us to close.
- Do they have testimonials. Although this is not a deal breaker it is important if you are going to trust someone to buy your home. Make sure they have done it (successfully) before. Avoid the newbies that just left a Real Estate Seminar and think they know what they are doing.
- Do they have a LEGIT company or LLC. In florida you can look this up on sunbiz.org and verify that they are registered with the state. This shows a lot about their willingness to conduct business professionally because there are expenses associated with keeping this up to date.
- They don’t respond quickly or at all. Although this may seem like an obvious one. It is sticking point that is crucial. If they are a one (wo)man show that is fine; however, if this one man show does not respond to you and provide the service you expect on your transaction… RUN. We have a professional team, phone system that ring everyone, email, and text messages. The only way we wouldn’t answer is if the world is coming to an end, and even then I might still respond to a text 😉
I hope so far this article has been helpful and entertaining, I try to inform and keep it as light hearted as possible. This is meant to share knowledge and with this it is important to know that this is not for everyone. Selling your home to a “We buy houses” company requires a specific type of motivation to sell at a slight discount in exchange for an easy process in way less time. We speak to tons of sellers and go on many appointments all over Miami, and we really don’t buy every house we see because we understand that not everyone is on the same page when it comes to it. It is a big decision to sell. We want to make sure you are as informed as possible because the goal is for you to be happy with your decision and tell all your friends, aunts, uncles and even your mother in law. Yeah I know that’s a tough one.
However if you find yourself thinking of selling, just ask yourself these questions to help determine what you should do…
- What is condition of my home compared to a new home on my block?
- Do I have extra time to deal with agents and showings for a few months?
- Do I need the money quickly for a new chapter of my life?
Depending on your answers, it should give you a good idea of what direction you should take. If you’re completely lost, call us, we’ll share a bunch of options. No obligations, no sweat.
These “We buy houses” companies are they real Do they do business legit? Where is the ca$h money?
At this point, you have top industry knowledge on how these home buying companies work, what homes they are looking for, who they work with, how they get cash in your bank account.
Moreover, you are now armed with questions to ask each company to make sure you are dealing with REAL professionals.
There is no denying that this is a transaction. Money will be made for both the buyer and the seller.
Get out there, get things done and now that you have insider info make sure you use it for good, not evil!