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“Should I sell my home to an investor?”

If you need to divest yourself of a property, this question has probably crossed your mind more than once. After all, when you sell your home to a real estate investor, there are several obvious advantages: a cash purchase, a quick transaction, and an experienced buyer who has seen it all before. That being said, it’s not always the right move for everyone in every instance. Let’s take a closer look at four situations where you probably shouldn’t sell a home to an investor, and probably want to look elsewhere instead.

#1 – You have a strong sentimental attachment to the home

Whether your house has been in your family for generations, or you haven’t lived in it that long but you still feel an intense emotional connection to it: selling a highly meaningful property to an investor can be tough.

For starters, much of the “fun” for sellers during the selling process revolves around seeing the excitement of the next family who can make their own memories in the property. In today’s mostly disposable economy, homes are one of the few things that stand the test of time, and can be truly great and full of character despite their years of prior use.

A common element in the bidding process for a highly desirable home involves potential buyers writing personal letters to the sellers, making an emotional argument as to why the property is a perfect fit for them. This is often a fantastic “tiebreaker” that helps the seller make their final decision when there are multiple similar bids to choose from.

There’s also the consideration that when you sell your home to an investor, they may plan to make major changes to the property, and quickly. If you’re into the idea of preserving a home’s original state, no matter how outdated it is now, it’s probably not a great idea to start looking up how to sell your home to an investor.

From renovations to total tear-downs, investors may have plans for your property that you feel might erase a part of your family history. And if you feel that strongly about it, there’s no hard feelings when you decide that you don’t want to see the home drastically change under a contractor’s hammer right after it’s sold.

#2 – You aren’t sure how to avoid “sell home to investor” scams

Not all real estate investors are created equal. Unfortunately, there are plenty of bad actors out there who seek to take advantage of your sale, from ripping you off on hidden terms to full-on scamming you out of your investment.

If the person making the final decision on who to sell the property to is susceptible to scams, or seriously entertains offers from shady characters who can’t offer up references or a track record, alarm bells should be going off. You probably need a real estate agent to protect you from playing so fast and loose with your property — one of the most major financial transactions an American will ever make in their life.

Of course, if you select your investor with an ounce of common sense, there’s no worry about this one. But if you’re equally as likely to pick a buyer from a telephone pole sign as from a professional website, then you’re opening yourself up to potentially being taken advantage of.

#3 – You hope to sell your home to an investor and rent it back

“Can I sell my home to an investor for less than what I owe on the home?”

“Can’t I just sell my home to a real estate investor, and then rent from them?”

Unfortunately, complicated scenarios in which you hope to offload your mortgage but still enjoy your present lifestyle are usually doomed from the get-go.

Situations in which you find yourself immediately renting your property back from an investor are ill-advised at best, and likely predatory at worst. Of course, there are the rare cases where this arrangement can work, but generally speaking it’s a recipe for financial disaster as you bleed interest without building equity.

If you’re underwater on your house, you should seek out appropriate avenues for help rather than trying to devise a scheme in which you sell your home to an investor for less than what you owe. Don’t try to reinvent the wheel: real estate transactions are complex, high-stakes actions that can have downstream consequences in your life for years to come. This is not an area of your life that you want to “wing it”, or play by your own rules. 

#4 – You’re not in any particular hurry to sell your home, and the annoying quirks of the traditional home buying process don’t bother you

One of the top benefits of selling your home to a real estate investor, and perhaps the main reason why most people choose to do it, is the speed and convenience of selling to a cash buyer. Investors have done this before, countless times. They’ve got this complicated transaction down to a science, and they don’t have any of the naivete of first-time home buyers or wishy-washy married couples.

Of course, the price you pay for this guaranteed cash purchase and no-fuss experience is worth considering. Typically, a real estate investor is going to come in on their offer a bit lower than what the general market might put forward. It’s understandable: an investor is here for one reason only, and that’s to make their living buying, selling, and fixing up real estate. That’s not a bad thing — real estate investors play a crucial role in the market! But, you’ll never get an investor to overpay because they can envision themselves in the home, in the way that a regular home buyer might.

The other major consideration here is the traditional listing / open house / offers / negotiations / inspections rollercoaster that accompanies most real estate transactions. Some people find dealing with this process to be an absolute nightmare; and for them, opting out of the carousel of flaky buyers and intrusive open houses makes selling to an investor look really appealing. However, there are some people who find a measure of comfort in the traditional buying and selling process, as flawed and drawn out as it is. They like doing things the old fashioned way, even when that way isn’t necessarily the most efficient or linear.

Weighing the pros and cons of selling to an investor

At the end of the day, you can find as many different selling philosophies as you can house styles. Everyone is different, and everyone is looking for something unique from their real estate transaction. Some people are pressed to seek liquidity as quickly as they can, making a sale to a real estate investor look extremely enticing. Others aren’t particularly concerned with offloading the property in any kind of hurry, and may even weight the personality of the buyer above the dollar amount.

Every approach is OK – the key is being informed about the pros and cons of each type of buyer, so that you can save yourself all the frustration and heartache that comes with a selling process that doesn’t match your original intent.

At the end of the day, selling to an investor is a fantastic idea if you don’t mind seeing the house potentially remodeled, and you need the cash from the sale quickly. If you’ve ever been through the traditional selling process, you know just how slowly the sale can proceed — and how often a wrench gets thrown in your plans at the last minute, sometimes forcing you to start from scratch. If you can’t afford delays, or the bottom falling out of your deal at the 11th hour, consider selling your property to a cash buyer real estate investor who can swoop in and make the exchange as seamless as possible.

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