Charlotte is full of people looking for investment properties, whether it’s to rehab and resell, or to rent out and earn monthly income. It’s tough out there, so investors can be aggressive in finding and purchasing properties. Some will knock on doors and offer cash for a home, others will network to find people who are thinking of listing their home for sale.
Cash offers, sight-unseen, no repairs, quick close. There are definitely up-sides to selling your home to an investor. There are still some things that you’re giving up and some areas to be aware of along the way.
Remember: investors do this all the time. You don’t.
Before entertaining an offer from an investor, know what your house is worth, aka know what recent similar sales in the area closed at. Do your research online, call a few Realtors, and get some price opinions. Be upfront that you’ve already received an offer. Many Realtors will do a full presentation on listing your home including comps to try and win the listing if you elect not to go with the investor offer.
A good Realtor will graciously answer a few quick questions knowing that this is a people business, whether you sell with us or not. Keep in mind that real estate transactions can get very complex without warning, so even though you’ve received an offer it’s still a good idea to hire a Realtor to counsel and represent you in negotiations. If you have more than a quick question or two, I really recommend hiring someone. It won’t be free, but it will be worth it if something goes wrong.
Once you have an approximate idea on what you home is worth, you can better assess an offer from an investor. Some investors will tell homeowners that they’ll pay them the tax value for the home. Know that even though Mecklenburg County increased property assessments last year, this value is still below what a home would sell for on the market. Part of that is because the County struggles to move assessments up too quickly for fear of upsetting taxpayers and these assessments were done months or even years ago, so the value is outdated no matter what. Therefore, the tax value is artificially low and likely outdated, which is great for the investor and not great for the seller who would like to receive the best price.
If the investor is offering to purchase using cash that means that they can likely close quickly and they will not need to get approval from a lender. This means no bank appraisal to worry about and oftentimes a much smoother transaction. Because cash is so quick and much easier to close, they will often offer slightly below value. If you’re looking to close quickly without a lot of fuss, this can be well-worth the decrease in price.
Oftentimes, investors want to purchase a home ‘as is’ because they don’t really care what the condition of the home is. They have a team of people who will fix anything that comes up and quite honestly, they don’t want a homeowner making repairs that they could do cheaper and to their own specifications. This means a little more risk to the investor because they aren’t 100% sure what they’re buying, but it means no repairs to do and that the seller preserves their sale price by not having to compensate a traditional buyer in lieu of needed repairs.
At the end of the day, an investor offer is an offer and it’s important to weigh the pros and cons of the decision, and also to compare to other offers that may come through on the market if you were to list a home traditionally. Just because an offer knocked on your door (in this case, quite literally) doesn’t mean it’s the right one for you and your family. So remember to be as objective as you can in your evaluation, and do what’s best for you, your family and your particular circumstances when evaluating a market offer or an investor offer.