Should I Sell My Home to a Cash Investor? Pros and Cons to Selling Real Estate Before Listing on the Market
By Emilio DiSpirito, Realtor, Team Leader, National Real Estate Radio Show Host
Make no mistake, we are currently experiencing a sellers market in Rhode Island and across approximately 98% of the United States. Homes are pending in an average of about 70 days in Rhode Island and around 95% of original list price. Keep in mind buyers are enjoying this market as well because we have seen continued historically low mortgage rates for a few years now and it's more affordable to take out a 30 year mortgage and purchase in many cases.
Rhode Island Real Estate Market News
Will it benefit me to sell my home to a cash investor vs. listing with a Realtor or selling it as For Sale By Owner?
Here are a list of scenarios. Your situation may differ and that's ok. It's impossible to list all of the circumstances that arise that cause a home owner to sell and we can provide a tailored solution to your needs or even track the market over long period of times and send you updates, so when the time is ready, you are ready. Simply leave a comment on this blog or email me direct emiliodiv@gmail.com or send me a message here to ask your question or to set up a consultation.
Scenario 1: Our home has recently been updated. All of the bathrooms & kitchen have all been renovated in the last 5 years and family and friends always comment on how beautiful it is. The yard is well manicured and we've even had people tell us to contact them if we were thinking of selling.
List it or Cash Out? List it!! Your home is perfect for the real estate market. As a turn key property, your home will sell extremely fast and at a very high price during this market. Cash investors need to buy homes lower than fair market value in order to sell and turn a profit! Here are some suggestions to maximize your profit when listing with a Realtor!
- 4 Tips How You Can Win in a Sellers Market! (Blog)
- 7 Ways To Maximize Profit When Getting Ready to List My Property for Sale (Blog)
- Pre List Home Inspections (Video)
Scenario 2: My home is very "lived in". It's been a great place to raise a family, but the kitchen is original to the home, the bathroom as well. The home has carpets throughout. Along the way, some work has been done such as a new furnace about 3 years ago, newer roof 10 years back and some other items to keep up with the structure and mechanical integrity of the home.
List it or Cash Out? Cash Out!! In this circumstance you may want to cash out! Renovations such as kitchen and baths do play a large roll in where your home will appraise in value for a buyer who is financing. Often times, you will not recoup the money you have invested into your property when hiring contractors and making the improvements! Statistics show that buyers will ask for three dollars in credits off sales price for every one dollar in actual cost. On an average home, a kitchen could cost $20,000 to $30,000 to remodel while bathrooms could cost $15,000 to $20,000, depending on size and finishes. Aside from that, the cost to paint, install hardwood and ceramic flooring or something comparable could be another small fortune again that you most likely will not see the return on investment.
Selling your property in "as-is" condition at fair market value with a Realtor in this instance for $150,000 will net you between $120,000 and $130,000 after the property sells at the average market rate of 95%, your brokers fee, transfer taxes, closing cost and repair credits, legal fee for attorney to prepare your deed and review paperwork. It may take several showings to sell your property at this price. A cash investor, may purchase your property around this price and in "as-is" condition. They can often times close in a couple of days, week or when you need them to.
Scenario 3: I'm very handy and have a lot of connections to discounted materials like granite, kitchen cabinetry & flooring through friends or family. Some of my best friends are electricans, plumbers and contractors. My house is in need of a ton of repairs. Not only is it outdated, however the roof has 2 layers and is on its way out, windows are drafty and the electrical panel is fuse boxes and the wiring through my house is knob and tube. I've got money socked away and with the discounted rates on materials and labor I have access to, putting in work and money should not be an issue!
List it or Cash Out? List it! But first, fix it!! By bringing your home up to today's buyers standards and offering a turn key and energy efficient home, you will be able to sell your property for top dollar when listing with a top producing real estate agent in Rhode Island or your area.
Scenario 4: We've inherited a home through an estate sale. We have no need to hold on to this property and do not wish to pay for the upkeep and overhead of the house like taxes, mortgage, insurance, maintenance, etc. The property has some strong points to it, however a buyer will need to do a ton of work to get it today's standards and we just do not have the energy, time nor money to dump into the property for the risk of potentially not getting the return or strong enough return we would like.
List it or Cash Out? Simple! Cash out!! Take advantage of getting a cash offer for your home to close in days and alleviate yourself from the headaches and financial burden this property may impose on you and your family.
Your situations may vary and that is why you should always seek a professional opinion. Call me today to set up a consultation where we can look at bottom line numbers and discuss your goals to see which makes more sense. We can look into what you will net when selling on the market and time on market vs. selling the property to a cash investor and at the end of your meeting, you will have a tailored solution for your needs. Call/Text 401-359-2338 to get started or contact me direct at emiliodiv@gmail.com
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