Are There Drawbacks to Selling your Home to an Investor?

Lives change and with them, lifestyles. If you’re thinking it’s time to sell your home, you might be wondering if there are there drawbacks to selling to an investor. Dynamic market conditions make the decision to sell an easy one. Even if you haven’t thought much about selling your property before reading this article, and depending on your plans for the future, it might be a good idea.

Before you call your brother-in-law, the Realtor®, stop to consider the best direction. Different goals call for different paths and today you have choices. In these modern times sellers have many options.

Working with a Realtor®
Years ago, when it was time to put a house on the market, owners would have listed it with a Realtor® or real estate brokerage. Unless they chose to post a “For Sale by Owner” sign in their front yards that was pretty much the first thing people thought of.

The old school method of working with a Realtor® isn’t always quick but it is simple: just sign a listing agreement and agree to pay a percentage to your Realtor® when the house sells. Keep the house clean for open houses and within a few months to a year an appropriately priced property should sell. If it doesn’t sell, you adjust the price or add to the value.

Even though today’s seller has options, some still go the traditional route because it’s the only way they know. Does that mean it’s a bad idea to have someone petition buyers on your behalf? Not really. It can and does work for some—especially for those not in a hurry to sell.

A Realtor® acts as your outside sales agent. He or she can be a big help, but depending on the sale price of your property, it might end up costing thousands of dollars in commissions.

Who Pay’s the Realtor®?
Realtors® earn their keep by marketing your property to potential buyers with hopes of selling at full price. Their commission comes out of your pocket when the house sells. Marketing efforts include listing your property in the MLS; the Multiple Listing Service.

MLS enables real estate brokers to establish contractual offers of compensation among brokers. It also circulates information about all the properties listed. This brings together Realtor® representing sellers and Realtor® representing buyers.

A Realtor® is also responsible for holding open houses for potential buyers. They conduct private showings for those who want a closer look. Advertising tools, both online and in print are methods Realtors® use to get the word out about your property.

Some Realtors® blog about the properties they represent. The expectation is they’ll do whatever they need to do in as short a time as possible to sell your property at or above the asking price. Unfortunately, that doesn’t always happen. You can’t take hope to the bank.

Selling to an Investor
The hassle and expense of listing a property for sale with an agent doesn’t necessarily make financial sense. Some sellers want to close on their properties quickly. For these sellers another option is becoming increasingly popular: selling to an investor. You might see it as a compromise of sorts in a majority of circumstances.

Are there are drawbacks when selling to an independent investor?

For those unfamiliar with the process, the idea of selling a property to an independent real estate investor is stigmatized at best. However, once a seller fully understands the process of selling to a reputable investor, they often discover it can be the solution to a number of potential issues.

Seller’s First Steps
Your first and most important step as a seller is to learn how to distinguish investors. Not all are created equal! Just as you would interview a real estate agent or a banker, interview potential investors to make sure you are comfortable doing business with them.