You may have heard of the “We Buy Houses For Cash” people and wonder what it’s all about. You may be wondering who they are and just exactly how does it work. In this short article we will give you the answers to these questions.
Who Are The We Buy Houses People?
Just who are these companies? Typically they are local companies that want to buy houses that are in need of repairs or updates, or more familiarly know as “ugly houses”. They want to purchase your property, make the needed repairs and updates, then turn around and sell it to another buyer at full retail price. Sometimes they purchase properties where there is a landlord that is tired of renting out a property, nicer homes where couples are getting divorced or even have to sell because of a new job in another city.
Typically these companies do pay with cash. As we covered in our previous article “Who Will Buy My House For Cash?” we explained that no matter how you sell your property, rather it be to an investor or conventional buyer, whatever equity you have in the house you will walk away with cash. Whatever loans, mortgages or liens you have against the property will be paid out first. Whatever is left, you get, usually in the form of a wire transfer to your bank. The nice thing about these companies is that by paying with cash there is no waiting on mortgage approvals, so they have the ability to close in a fraction of the time that it takes with a conventional buyer.
You may have seen their signs on the side of the road “we buy houses” or “we buy houses any condition”. Before you choose one to do business with we highly suggest that you research them online first and make sure they are a legitimate company.
How Does We Buy Houses For Cash Work?
Down to the nitty gritty 🙂 Just how does it work? Instead of making you take our word for it we found a good article from The Truth About Realty that explains it very well, and then some:
How We Buy Ugly Houses Works
I checked out their website, read their FAQ, and think I have a pretty good understanding about how the process works. It seems fairly straightforward.
Basically you ask them to make an offer on your home and they’ll show up to take a look at the property. They’ll conduct a walk-through, and probably do some appraising once they get back to the office to better understand the property market where your home is located.
After all, the property itself is just one piece of the pie – its location is also key to valuing it properly, especially since the home’s current state will likely be improved before it is resold by the company.
From there you’ll receive a “no-obligation all cash offer” to purchase your home that you can consider, accept, or reject. If you agree, they will apparently pay “most normal closing costs” and you won’t have to worry about things like real estate commissions or make repairs.
So the upside here is that if you need/want to sell your home ASAP, you might be able to with a buyer like We Buy Ugly Houses with little or no work.
How They Define an “Ugly House”
Interestingly, it’s not just outwardly ugly homes that are considered “ugly.” Sure, those are ugly too, but it’s much more than that. They also consider homes ugly if they have foundation issues, if they’re in undesirable neighborhoods, or simply in an area you no longer feel is convenient (such as a long commute to a new job).
They also offer to buy homes when the mortgage financing isn’t ideal, perhaps because of a high interest rate and the inability to refinance, or an adjustable-rate mortgage that becomes too expensive. Someone facing the prospect of foreclosure could also potentially own an ugly home.
Oh, and let’s not forget homes that are simply ugly because of some bad memory, such as a divorce or something much worse.
They also seem to target homes with problematic renters, or homes that were inherited that the family doesn’t want to deal with.
Then there are the typical ugly houses, such as those in disrepair, those with water damage, termites, roof damage, or simply those that have been neglected or aged terribly.
A lot of good information there.
Pros And Cons Of Using We Buy Houses Companies
It’s important to note that there are some real pros and cons to selling your property this way. As we stated earlier you have to do your homework and make sure you are dealing with a reputable company.
Some real pros and cons were covered in a good article from The Money Advice Service:
Quick house sale companies can provide a useful service for homeowners who need to unlock cash in a hurry. Some companies are able to buy your house within days and pay all fees (such as for solicitors and searches) for you.
For example to:
- Avoid repossession, clear debts or sort out financial issues
- Dispose of inherited property
- Move for age or health related reasons
- Sell as a result of divorce or relationship breakdown
- Relocate due to a change of job or to emigrate
- Try a different route if unable to sell through a traditional estate agent – get around issues that have made a property hard to sell, for example with a short lease or if a property has a high risk of flooding
- Some companies agree to buy a house, but then reduce the price at the very last minute
- Fee structures are not always made clear to the customer
- Some companies make false property valuations
- Some contracts tie customers in, preventing them from selling to anyone else who might come along with a better offer
Again, it’s really important to do your homework and make sure you know who you are dealing with and they have simple to understand contracts.
Summing It Up
Selling your house to one of these companies may be of interest to you, especially if you haven’t kept up with repairs and maintenance. Most “we buy houses for cash” companies are legit. However there are a few out there that give the industry a bad rap. Just make sure you know who you are dealing with. Research them on the web and make sure they have an established presence and no bad reviews.