“Mom’s going into senior care and I need to sell the house fast to pay for it!”
What if staying in the home is no longer an option and you need a fast sell to pay for managed care?
You have two options when it comes to selling the house and cashing out.
If the house is in great condition, shows well, needs no maintenance or renovations, and can command full market value, your best option is to find a realtor in your area who will tell you the truth about what the property is worth. Then, you list it and sell it through the normal real estate channels.
I emphasize finding a realtor who will tell you the truth because many will tell you what you want to hear to get the listing and then the house will linger on the market while you suffer through a series of markdowns until it gets to market value. No one needs that frustration! Any house (and I mean any house) in great condition and priced right should sell within 30 days.
On the other hand, if your house has years of deferred maintenance, needs a new roof, or still has pink appliances and pink bathroom tile, it needs an investment of cash to make it marketable. Unless you’re prepared to invest the time, money, and effort yourself to bring the home up to top dollar standards, your best option is to sell to a “fast-cash offer” real estate investor.
Real estate investors make a living by finding houses in distressed condition, buying them for cash at a discount, investing the cash to renovate them, and then putting them back on the market to sell at a higher value.
If you choose to sell to a real estate investor, it’s important to be realistic in your expectation of value. By that what I mean you need to understand that both sides need to get something out of the deal. You need to get as much money you can, while the investor needs to make a profit.
Thinking you’re going to discount your home by 10 percent compared to the other homes in the area is not realistic. You trade a discount for the convenience of simply collecting your check at the closing table and walking away. This saves you the pain of dealing with cleaning the house out and preparing if for sale, choosing a realtor and listing it on the MLS, making the house available to a parade of showings, facing the anguish of meeting contingencies demanded from a potential buyer, and most importantly, having the selling process simply consume your life for the next 120 days.
How much of a discount is that worth? I’m going to tell you.
Anatomy of a Fast Cash Deal:
Let’s assume that homes similar to yours in perfect condition are selling for $350,000. When I say “perfect” condition, I mean they’ve been updated with a new kitchens including new granite counter tops, new bathrooms with modern fixtures, new flooring with the latest in hardwood, new heating and air-conditioning units, new double-pane windows throughout, and new paint both inside and out.
Let’s also assume that your home needs all of that renovation to match the same value. Lastly, let’s assume that all of that renovation could be done for $50,000. Your “as-is” value is $350,000, (less $50,000). However, that’s not the purchase value for an investor. Remember, he has to by the house (and in most cases, pay all of the closing costs including title, transfer tax, and other costs usually assigned to you the seller.)
Additionally he will invest money to renovate the property, pay the costs of holding it during that process, place it back on the market, pay a realtor fee when it sells, as well as all the normal sellers closing costs. And after all of that, he hopes to make a profit. How much is all of that worth? That’s the discount. Typically you can expect that discount to be about 25 percent.
Below is what the offer will look like:
Maximum selling price after renovation: $350,000
Less discount of 25%: <$87,500>
Less cost of renovation: <$50,000>
Cash in your hand at closing: $212,000
Now before you make the judgment that number is not acceptable let me show you a side-by-side comparison of what you can expect if you do it all yourself. Would you be surprised to see that the difference between selling the house yourself versus simply selling to an investor with no further obligation is about $20,000?
As you can see the difference in net proceeds between doing everything yourself ($231,935) or simply selling to an investor and walking away ($212,000) in this example is about $20,000. Now the question to ask your self is, would you pay someone $20,000 to do the job for you?
If the answer is yes, I can put you in touch with the best investor in your area. Click here to set up a consultation call with me to discuss your options.
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