The Hidden Costs of Selling Your Home to an “iBuyer”
You may have seen ads for companies that give you an instant offer over the internet for your house. These “iBuyers,” short for instant buyers, buy and sell homes the “Silicon Valley way”—using high-tech computer algorithms to generate fast offers. Many of these companies promise a quick closing and hassle-free process. But, often, selling your home to them comes at a price. From low offers to high fees to rushed contracts, these instant offers can include many hidden costs. According to a June 2019 Marketwatch iBuyer study, on average, you’ll earn 11% less on the sale of your home with an iBuyer than on the open market. Low-ball offers Local real estate professionals know your market well. That means they can provide expertise to get you a fair price for your house. Many iBuyers use general information about your area and don’t take into account your unique home. Some may not even make you an offer if your home is too old or isn’t deemed valuable enough by their algorithm. These iBuyers also have to leave enough room to make a profit on the resale of your home. According to a 2019 Collateral Analytics study, this means they’ll generally pay you 3-5% less than your home’s market value. Hidden fees and repair costs Even if you get an offer that seems fair for your market, you have to consider any additional fees. Most iBuyers will still charge a fee or commission on the sale of your home. Real estate agent fees on a traditional sale are typically 6%. Sales through iBuyers can come with an additional 2-5% more in fees to sell your home. Be cautious of iBuyers who add on fees at the last minute too. Most iBuyers will send an inspector to your home after they make an offer. Sometimes, the iBuyer will then come back with numerous repairs that need to be completed and lower your offer. In some cases, sellers have run into inflated repair prices, where iBuyers deduct much more off the sale price than it would cost to make the repair. Inflexible closing Many traditional real estate deals give you the flexibility to close later or stay in your home until you find another house. With iBuyers, this is often not an option. You may be forced to sign a contract and pick a closing date before you have plans for your next home. Some sellers may feel rushed to secure their next house, instead of taking the time needed to find the right one. Above all, these predetermined closing dates can end up costing you even more money. You may have to pay for a short-term housing option or pay for multiple moves. No human interaction There’s a lot to be said for the ability to pick up the phone and talk to someone. Selling your house to an online iBuyer means you may find it difficult to talk with a real person. Unlike a traditional seller, you won’t have a dedicated real estate professional as your single point of contact if you have questions. Even more, the lack of human contact often means less motivation to treat you fairly. Most iBuyers are only focused on quickly turning houses and maximizing their profit. You may find it’s worth the extra time to work with a real, local person who will find a win-win situation for all involved. Choosing your best option In the end, the convenience of selling the “Silicon Valley way” may be appealing. But many sellers find out the hidden costs of iBuyers mean it isn’t for them. If you’re in a tough spot with your house or need to sell quickly, you have many options. Our trusted, local real estate professionals can help you find the right choice for your situation—without all of the hidden costs.
Top Reasons for Selling Your House In Divorce
If you’re going through a divorce, it can be hard to navigate the many ramifications of keeping or selling your house. It’s likely that your home is one of the most valuable financial assets you have as a couple. Plus, your home carries a lot of emotional and sentimental value too. You may consider finding a way for one of you to keep your home. If you have children, some couples even arrange to temporarily keep the house together. However, many couples find that legal, financial, and emotional considerations mean selling the house is their best option. Legal Ramifications While some couples peacefully come to an agreement where one person keeps the house, it isn’t always simple. If one person gets the house, you still have to figure out how to value the home and split other assets accordingly. When you can’t agree, the legal ramifications can be complicated. You may end up in court, where a judge will decide for you. Typically, selling a house during a divorce is the cleanest way to divide your assets without a legal battle. When you choose to sell, you pay off the mortgage, taxes, and any other related expenses and split the funds that are left. Financial Considerations When you initially qualified for your mortgage, it’s likely the amount was based on both of your annual incomes. If one of you plans to keep the house, you may decide to refinance the mortgage. This process allows you to pay off the old mortgage with both of your names and create a new loan in only one name. During this process, you will need to qualify for the new mortgage based on your income alone. Paying for the mortgage, taxes, and insurance can be hard for one person to manage—even if you had the highest income. You also have to consider that you’ll be solely responsible for repairs and upkeep in the future. For many, these factors make keeping the house too much to handle financially. Emotional Reasons Whether you’ve been in your house for a couple of years or decades, you probably have many memories in your home. It’s also likely you made decisions about the style and decor of your home together. Beyond the financial and legal concerns, these emotional reasons are often deciding factors for couples. If you’re considering keeping the house, think about how it might affect you emotionally. Many people find it hard to be surrounded by a home that reminds them of their former marriage. Selling the house and starting out in a new place often makes the most sense. It lets you get a fresh start and create a space of your own. Help Selling Your House During a Divorce If you’ve decided to sell your house due to a divorce, you need a fast, easy process. During an already stressful time, you don’t want to worry about expensive repairs or months of trying to get it sold. We specialize in helping homeowners like you find the right option for their complex home situation.
Multiple House Offers: Consider These 7 Factors
Do you have multiple offers to buy your house and need to figure out which one is best? Congratulations! Often, this means your house is in demand, and you have some negotiating power. However, reviewing all the offers can be difficult, and it’s tough to determine which one will actually leave you with the most money at the end. Many buyers have complicated contracts and various hidden fees. These make their offer far less compelling than the initial offer price you see. Here are a few factors to consider when reviewing your offers. 1. Closing Costs Closing costs can be expensive, especially in more advanced real estate transactions. Many buyers will offer to pay them in full, others will split them equally, and others will put them all on you. Closing costs can be thousands of dollars, so it’s important to know how much you’re paying! 2. Title Insurance Fees Most sellers pay title insurance when selling their house the traditional way. If an investor offers to buy your house and pay “all closing costs,” ask if they will pay for title insurance fees. Some investors may still add this in as a cost to you as the seller, which usually amounts to about 1% of your home’s value. 3. Realtor Commissions Realtor fees can really eat into your profits when selling a house. These fees usually add up to 6% of the total sales price of your home. Even if you don’t use a realtor, many buyers will add a realtor fee in their offer, and you may not even know it. That’s an extra 3% deduction you’ll take on your final cash payout! 4. Concessions & Contingencies Most offers come with a variety of contingencies to close, such as an inspection, appraisal, or financing contingency. Not only do these contingencies bring uncertainty that a buyer will actually close, but they also become great negotiating strategies for the buyer. Many buyers give you a higher offer and then come back to reassess the property. When they find new issues, they lower their offer and reduce your proceeds. 5. Close Date Flexibility Close date flexibility is immensely important. It can be expensive to pay for two homes at the same time. Or even worse, you could have a gap in your housing, forcing you to deal with multiple moves and short-term rentals. Closing on the date you choose can reduce your home overlap, save you thousands in costs, and eliminate unneeded stress. 6. Service/Marketing Fees Many online home buyers will give you an offer only to reduce it by a service or marketing fee that amounts to more than the cost of using a real estate agent. These buyers often try to hide the fees in your offer or lump them in with other costs. So proceed with caution when you’re “Selling to an iBuyer.” 7. Buyer Reputation WE SAVED THE MOST IMPORTANT FOR LAST. Beware of the person or group that is buying your house. Do research to make sure they have an online presence and a good reputation with positive reviews to back it up. Many buyers will do everything they can to win your business. Then, at the last minute, they change their offer when it’s too late for you to do anything but accept it. It’s a terrible thing and why many investors get a bad reputation. Make sure you work with someone you can trust. As you can see, many factors go into evaluating your offers and picking the best one for you. If you have multiple offers and need help understanding which one is best, we would love to help. Or, if you just have one offer and want a second set of eyes to make sure it meets your expectations, we can help you with that too. We want to ensure every family we work with maximizes the value of their equity and has the most pleasant selling experience possible.
6 Benefits of Doing a Short Sale
Are you having trouble making your monthly mortgage payments and owe close to or more on your house than it’s worth? A short sale can be a great option for you! With a short sale, the lender agrees to accept less money for the house than what you owe. Banks are willing to do a short sale because they can usually sell the property for more through a short sale than at the foreclosure auction. But a short sale isn’t just a better option for the bank. It has many benefits for you, the homeowner, as well. 1) Get more time in the house, FREE. The short sale process can take anywhere from 2-6 months to complete, or even longer in some cases, depending on your lender and how fast they work. During this time, you can stay in the house completely free of charge. If you’re in a tough financial situation, this can be a great time to get back on track and start saving money! 2) Prevent foreclosure and save your credit. A short sale has much less of an impact on your credit score than a bankruptcy or foreclosure. Additionally, you can potentially qualify to buy a new house 1 year later, although 2 years is more typical. The wait time is usually 7 years or longer with a foreclosure. It is also much easier to rebuild your credit, buy a car, rent another home, and much more with a short sale than a foreclosure. 3) Wipe out unnecessary debt. If your house sells for less than it’s worth with a foreclosure, the bank can come after you for the difference. With a short sale, the deficiency is almost always waived. You can walk away free and clear, assuming it’s a first lien only mortgage. Your mortgage will show a balance of $0, and the bank can’t seek any recourse. If there is a second lien, it will depend on your situation and the amount owed. 4) Get great service at no cost to you. The short sale process is completely free to you. All of the costs are paid for by the bank, including commissions, home repairs, our fee, and any other fees. We don’t make money unless the short sale goes through, so we are more than motivated to put our very best foot forward to get the best outcome for you. 5) We do all the work. Once you decide a short sale is right for you, we will take care of all the rest. You’ll have one of our agents representing you and serving as an intermediary between you and the bank, so you no longer have to worry about dealing with them. While there is no guarantee the bank will accept the short sale agreement, you can have peace of mind knowing that you are in good hands. We have a lot of experience with short sales and a proven track record of success. 6) Have the potential to receive some money. You won’t receive any money as part of the short sale, but you may qualify for a government relocation program. The amount of proceeds you qualify for can vary in amount between $1,500-$3,000. VA loans can typically qualify for $1,500, and FHA loans can usually qualify for $3,000. Conventional liens, HUD liens, and other liens vary depending on a variety of factors. The bank will make the final determination. Restrictions apply. Time is of the essence. The consequences of foreclosure are severe, and you should do everything in your power to avoid it. Most banks only allow a certain amount of time before the foreclosure date to enter into a short sale agreement. If you think a short sale could be a good option for you, please reach out to us as soon as possible. We will evaluate your situation, answer all your questions, and help you find the best solution.
Beware of Novice Real Estate Investors
If you’re in a complex situation with your home or need to sell it fast, selling to a professional real estate investor can be a great choice. Reputable, experienced real estate investors can give you a fair offer and make selling your house quick and easy. But buyer beware: Not every real estate investment company is created equal. While many real estate investors are trustworthy, novice or dishonest investors can leave you in a difficult situation. Some so-called investors promise a great price but don’t have the funds to back it up, wasting months of your time and money. Here are some questions to ask yourself to make sure you’re getting a fair deal. Is this a genuine, physical company? Real estate investing doesn’t require a license. That means anyone could call themselves an investor, even if they have no previous experience. Be cautious about individuals who claim to be investors but do not have a legitimate, registered business behind their claims. They may not have the know-how or funds to actually close the deal. If the company is online-only, do your research too. Some companies simply gather your information with no intention of buying your house. They then give your information to another real estate investment company for a price. How are they advertising? You may have seen signs on the side of the road claiming to buy houses. Often, online real estate investment classes will tell their students to use these tactics for advertising. However, in many places, these signs aren’t even legal. If there’s no company name and just a phone number, that can be a red flag. Reputable real estate investment companies will put money into legitimate branding and advertising. Look for a company name, website, and other online marketing, like social media. What do people say about them? You can learn a lot about a company with a quick online search. If you’re dealing with an experienced investor, you should be able to find testimonials or reviews from past sellers. These reviews will help you have confidence that others have successfully sold their house with the investor. Often, companies will have reviews for you to read on their websites. But see what people say about them on other sites too. Most commonly, you’ll find honest reviews on places like Google or the company’s Facebook page. Are there a lot of conditions you don’t understand? While real estate can be complex, you shouldn’t feel pressured into signing something you don’t understand. Professional real estate investors know the business. They partner with you to make sure the terms of the sale are clear and a win-win for both parties. Unfortunately, some less-than-honest investors will take advantage of your urgent need to sell. They may offer you one price but leave it open so they can lower the price later on. Or they may add on fees or hidden costs. When they switch the deal at the last minute, it can leave you in a hard spot with fewer choices than before. Is the offer so good it’s hard to believe? In the end, deals that are “too good to be true” probably are. If you receive an offer that’s significantly higher than another investor, be sure you understand the terms. Even if they aren’t intentionally dishonest, novice investors may make promises they can’t keep due to inexperience. Then, you end up months down the line having to start over because they are unable to close on your house. If something just doesn’t feel right, trust your instincts.