6 Things “Cash for Houses” Victims Wish They Knew
If you need to sell your house quickly, selling for cash often looks like the most attractive option. Companies that buy houses for cash like to tout the process as hassle-free and, above all, very fast.
However, it’s important to remember that if something sounds too good to be true, it probably is. While there are certainly some benefits to selling your home to a “Cash for Houses” company, there are also some negatives they are glossing over.
Many Pittsburgh residents sell to a “We Buy Houses” company for cash only to later learn some very unpleasant truths they wish they knew ahead of time. If you’re considering working with a cash home buyer, make sure you know all the facts before taking the plunge:
You Won’t Get a Good Price for Your Home
Cash home buyers are companies looking to turn a profit, which is why their cash offers are often only 60-65% of a home’s true value. It’s all too common for people to sell their homes for $60,000 only to see them listed for $110,000 a week later.
Of course, no two cash home buyers are the same. Some might look to resell your home for an immediate profit, while others prefer to rent it out or renovate it and flip it for an even larger profit.
But regardless of the “Cash for Houses” company’s plans for your home, you can be sure that they are lowballing you when it comes to their offer. If they didn’t think they could make a profit on your home, they wouldn’t be buying it from you, so that’s an immediate guarantee that their cash offer isn’t anywhere close to your home’s true value.
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They Aren’t Truthful When It Comes to Fees
“Cash for Houses” companies love to remind you about all the fees and commissions you have to pay when selling your house with an agent. They’ll tell you selling for cash is a much better decision because they take no commissions, pay for all repairs, and charge you no additional fees. While they are not technically lying here, they’re conveniently forgetting one detail: Their lowball cash offer for your home is the biggest fee of all.
Think about it. When selling with a real estate agent, you’re much more likely to sell your house for what it’s worth–or maybe even more, depending on the market. When you sell your house for cash, you often only net 60-65% of your home’s true value.
That missing 35-40% is the fee these cash home buyers are charging you when you work with them, and that’s a much bigger piece of the pie than any real estate company is going to take from you.
You’ll Make More Money Selling with a Real Estate Agent
Maybe this point is obvious, but it’s worth stating. When you work with cash home buyers, they know what your house is worth and choose to pay you significantly less because they’re looking out for themselves. When you work with a licensed and insured real estate company, their goal is to help you maximize your profit by pairing you with a buyer who is willing to pay top dollar for your home.
Selling through a real estate agent ensures more people see your house listed for sale, putting it in greater demand. They’ll list your home on the West Penn Multi List, Zillow, Realtor.com, Facebook, and other websites to help you sell your home at a higher price.
Even if you account for fees and commissions, you will make more money selling with a real estate agent than you would by picking a cash home buyer.
They Can Profit Without Updating Your Home
While it’s true that some cash home buyers remodel and flip houses to turn a larger profit, others do much less. Some “Cash for Houses” companies will list your home immediately without lifting a finger, or merely upping the curb appeal by tidying up. These cash home buyers know they can turn a profit immediately, so they don’t waste their time by making any updates.
There are also companies, often referred to as iBuyers, that purchase high volumes of homes and attempt to sell them very quickly. Even if they do not make a significant profit on each sale, the sheer volume of sales with minimal effort makes these companies very successful.
Don’t let these companies profit off of your home without doing any work. You can do that on your own!
Quick, Inexpensive Updates Can Skyrocket Your Home Value
When you need to sell your house quickly, you might not have time to make renovations that garner impressive ROIs. However, there are plenty of small things you can do that can add value to your home without breaking the bank and without slowing you down.
Here are a few of our favorites:
- Landscaping: Mowing, weeding, and trimming bushes can all be accomplished in a few short hours. Nobody pays more for a house specifically because the lawn is mowed, but landscaping makes your house look nicer, which can lead to higher offers.
- Power Washing: Using a power washer can help remove years of dirt and grime from your sidewalk, driveway, and the surface of the house itself, completely transforming the appearance! If you don’t own one, see if you can borrow or rent a power washer for an afternoon. It will be worth it.
- Painting: Walls or surfaces that are faded or marked up won’t be very attractive to potential buyers, but this is an easy fix. A fresh coat of paint can be a difference-maker when selling your home. Check your basement or storage space for old paint cans; you may not even have to spend money on new paint.
- Decluttering: If you’re planning on selling the house to begin with, why not begin the decluttering process? Clutter makes rooms look smaller and is likely to attract dust. You’ll be surprised how much of a difference decluttering will make.
With the exception of potentially renting a power washer or buying paint, all of these things are free and can be accomplished with a little elbow grease.
Scams Happen with Cash Home Sales
The concept of selling real estate for quick cash is appealing to scammers that want to take advantage of people in tough situations. It’s unfortunate, but it happens all too often to people looking to sell their houses for cash.
While plenty of “Cash for Houses” companies are legitimate, it can be easy to get taken for a ride by one of the scammers. This is especially true when most of the advertisements you see are just flyers or signs with a phone number and the message, “We buy houses.”
There are two common “Cash for Houses” scams to be aware of:
- Bait and Switches: This scam begins with a verbal agreement between you and the buyer. Instead of creating a written contract based on your verbal agreement, they drastically alter your agreement when they put it in writing. Since you want to sell quickly, and you previously agreed verbally, they hope you sign the contract without reading it carefully. With this scam, you could end up signing a contract where the sale price, mortgage terms, or home ownership has been altered to take advantage of you.
- Equity Skimming: This scam is more commonly seen with people facing foreclosure. Scammers will offer to buy from you, but will require you give them the title of your home as security for a new loan. However, they instead use the title to refinance your property, steal all the equity, and leave you on the hook.
These scams can be very clever. Everything might appear legitimate until it’s too late. The best way to avoid being scammed by a cash home buyer is to instead work with a licensed and insured real estate company you know you can trust.
FIND THE REAL VALUE OF YOUR HOME