It’s normal to go through a home transaction using real estate agents, a buyer agent and a seller agent. In a normal use case, a buyer is looking for a new home to live in, and a seller is looking to either relocate or flip the house for some profit. But there are other scenarios where homes may be bought and sold in more unusual cases, and that’s generally when a real estate investor is involved. You may have heard of investors but aren’t entirely sure what they do. Let’s see if we can help clear that up.
The Traditional Process
A normal real estate transaction looks like this:
- A homeowner wants to sell their home, so they begin making any repairs or cosmetic improvements they feel will raise the resale value
- Homeowner contacts a listing agent who will then begin the process of staging and taking photographs of a property in order to list it on the local MLS
- A buyer enlists the aid of an agent to locate a home for them that matches certain criteria based on location and specs
- The home has multiple showings where buyers are scheduled to come check out the house. Sometimes there are multiple interested buyers, and that leads to a bidding war.
- After the bidding, negotiations begin to take place where the buyer tries to lower the cost of the house by leveraging inspection details
- The buyer also goes through a mortgage approval process so they can secure financing for the home
- After the negotiation and approval, the seller and buyer must agree to some terms like closing costs or deductions for certain things, and meet at a Title company to make the transaction legitimate
- Then they pay the real estate agents their dues (usually at closing) of about 3% each.
This process alone can take anywhere from 4-12 weeks in a normal scenario, but it can last over a year when the home does not match criteria that’s high in demand.
Where Investors Fit In
For most homeowners, the agent’s process is typical and will work just fine. But for some others that are in financial or similar stress, that process will take far too long. Homeowners that are in financial stress due to income reduction or medical bills begin falling behind on their mortgage payments. Once they receive a notice of foreclosure, they have to come up with the entire sum of money before their home gets auctioned off, leaving them with nothing. A traditional sales process in most cases will not allow them to sell the house in time, and if they’re already behind on the mortgage then they won’t be able to make the necessary repairs.
Other homeowners deal with things like water or fire damage, vacancy, inheritance, or Simply need to relocate very quickly. Similar to foreclosure issues, they’re under a tight timeline and can’t go through the normal MLS process. In either of these scenarios, a real estate investor can step in and assist in the sale of the home.
While there are multiple types of investors, they’ll all generally perform the same thing as far as the existing homeowner is concerned. Rather than looking for financing, they usually have their own investment funds or they have a private lender who’s willing to lend cash. The investor will assess the property and offer a cash value, generally below market price, but it’s in cash and it’s quick. The investor pays closing costs, doesn’t require the homeowner to make any repairs (they can purchase it as-is), and they can generally close within 7 days, which is usually within a timeline that the homeowner desperately needs.
Do You Need To Sell Quickly?
If you’re one of the homeowners who is in a tight situation and need to sell the home quickly, check out what a Houston home buyer can do for you. We’ve written about investors before, and we know the importance of getting out from under the bridge when it comes to a home mortgage. Don’t wait! Letting it sit until the last moment can do a lot more harm than good, and there’s still a way out.
For more information on investment or home care tips, check out some of our other blog content (http://www.dallascarpetcleaningblog.com).