As a home seller you want be educated on all of your options when selling a home, and how the process works when you do this. We have all seen and heard the numerous ads on TV, Radio and Social Media about selling your home directly to companies like OpenDoor, OfferPad, Zillow, and hundreds of others in your local market. Is this a scam where an investor is trying to buy your home for pennies on the dollar or an option to seriously consider when selling your home? How does selling your home to an investor compare to selling your home the traditional way through a Real Estate Agent?

Well let’s break it down.

Let’s say you have finally decided to sell your home, the first thing most home sellers do is contact a local Real Estate agent. You recently saw the nicest house in your neighborhood sell for $350,000 and you are hoping for the same price. Your home is similar in square footage but doesn’t have a pool, needs updating and has normal wear and tear of a home occupied by a family. After consulting with a Real Estate agent it’s determined your home will not be able to sell for $350,000, as the one that recently sold in your neighborhood. That home is remodeled, has a pebble tech pool and all the latest touches a buyer is looking for.

A LISTING Price of $320,000 is agreed upon after comparing your home to the most recent sales in your area. A typical real estate brokerage charges a 6% commission to offer a full-service listing this includes MLS access, Lock Box, Open Houses, and your home is listed on all the top online Real Estate sites like Zillow, Redfin and Trulia. A 6% commission on a price of $320,000 is $19,200 that’s assuming you get a full price offer. After your home is listed for a couple weeks you receive an offer of $310,000. You have already found a new home you want to buy so you accept the $310,000 price with a closing date in 30 days. The buyer on your home is Pre-Approved for a mortgage, but the loan still needs to go through the underwriting process. This includes getting the home appraised, title and lien search, and verifying the buyer’s Credit, Income and Assets to close. The buyer also requested a professional home inspection to be done within 10 days of contract acceptance. There are many items that can delay or hold up a sale during this time. In most cases things work out, but there are issues that can come up that can cancel the deal or just simple delays that can affect the closing date. These items can include but not limited to, home inspection issues, repair requests being negotiated, cost of repairs, time frame or additional inspections required like a Roof, Electrical or Plumbing. Delays in the buyer’s loan may affect a closing as well. When a buyer is getting a mortgage loan your home will need to appraise for the price you are selling the home in this example it is $310,000. If your home does not appraise then the price may need to be renegotiated. Your home sale closing will occur at a title company or in some states an attorneys office. There are fees associated with conducting a title search, requesting loan payoffs, and making sure the buyer, seller and property does not have any liens or judgments associated with the transaction. None of these are deal breakers, but can cause delays, additional paperwork and more fees. Most real estate closings will take place within the time frame agreed upon in the purchase contract. A majority of home sellers will sell their home this traditional way, but is this always the best way, the easiest way or most importantly the way that will net you the most money from your home sale.

Let’s breakdown the example above

Original Listed Price $320,000

Agreed Sales Price $310,000

Real Estate Agent Commission 6% $18,600

Seller Closing Cost (Title Insurance, Escrow Fees) 1.5% of sales price $4,650

Home Inspection Requested Repairs $2500

30 days of mortgage interest $1500

Total Cost To Seller $27,250

$310,000 Sales Price – $27,250 in Costs

Final NET To Seller Is Sales Price Minus Selling Costs.

$282,750

How does this compare if you sell your home to an investor? An investor will purchase your home directly from you and pay all the costs associated with it. They will buy the home as-is, no repairs, no appraisal. A Real Estate Investor is looking to buy your home for a discounted price in relation to the most recent sales in the area. An investor is going to buy the home and put in the updates or completely remodel the home so it will sell for top dollar in the neighborhood. The example we have been using is the most recent updated, remodeled sale was $350,000. An investor would like to come in and buy your home for as low as possible then fix the home to the market standards to then sell the home for maximum profit.

As a home Seller would you consider selling your home for $282,750? This is the NET amount you would of received selling your home with a Real Estate Agent. Or what about $275,000 or even less to avoid, delays, repairs, and extra costs, and uncertainty? Even though you may be able to sell your home for a HIGHER GROSS PRICE with a Real Estate Agent, in some cases considering an offer from an investor that will basically net you the same amount from the home sale is something to definitely consider. Selling your Real Estate Assets shouldn’t be hard, consider selling your home the New Way, not the old way.