What is with those “Cash For Houses” or “We Buy Houses” signs you see when driving around in the Chicago area. In most cases you will see them stapled to a utility pole or stuck in the ground on a busy street.
They are advertisements from local real estate investors looking to purchase property in the area. Selling directly to a local investor does provide sellers with many advantages over listing the property with a local real estate agent. In today’s post we’ll dive into what it means to sell your Chicago area house for cash.
Is Cash For Houses In Chicago Right for You?
The Cash for Houses in Your Target Market
The people posting the “cash for houses” signs are advertising to local home owners who would prefer to sell their house quickly and as-is. These companies typically specialize in working with sellers who need a fast/guaranteed closing, own a property that needs repair, or simply don’t want to deal with hassle of listing the property.
The point is that every home owner has their own situation so these signs serve home owners who are looking for a fast and convenient way to sell their house. The investor will offer the house seller speed, convenience, and ease of transaction in exchange for some equity in the property.
The Thoughts Process Behind the Offer
Because investors are seeking properties for quick turnaround and profit, they want motivated sellers and properties in distress that can be rehabbed quickly for resale. As the seller, this may or may not be your best play. The buyer is looking to ease your burden quickly. They know you have some emotionally binding stressor that requires a quick sale.
As a result, the offer might be for the remaining mortgage balance irrespective of the value of the home. At best, investors want properties at wholesale pricing, which is often below fair market value by at least 30 percent.
Consider Your Position Before Negotiating
Keep in mind there is a cost to keep a home. Everything from mortgage payments, insurance, and property taxes must continue to be paid while you own the home. The longer you delay a sale, the longer you must pay for utilities, maintenance, and upkeep.
Do the math then consider the average time it takes for homes to sell in your market. Based on average pricing, will you make up the difference in the cost of maintaining the home for the extended timeframe?
It may also be urgent to sell because of an impending foreclosure or estate tax cash requirement. Consider all of these factors as you begin to look at offers from buyers.
Maximizing the Sale Value
It doesn’t take a lot of research to get an idea of a property’s fair market value. If you really want to know, pay a couple hundred dollars for an appraisal or simply speak with a local realtor who will give you an idea of the value of your home in its current condition.
Once you know what the estimated value is based on current market conditions, look at what can be done quickly and inexpensively to improve the property thus increasing the value.
Do what the investors would do. These include cleaning the home inside and out; make sure windows and screens sparkle. Remove all weeds in the landscape and trim trees and bushes back. Replace carpet, tile the bathroom and kitchen and repaint the inside and out.
Investors often will redo a kitchen and put in a new appliance package, thus making their margin on the property obtained at 30% below market value. You don’t need to do this, but if you have the time and money to do so, it might be worth the investment.
The bottom line is if you can extend your timeline of a need to sell, you can wait for a more traditional buyer to come along and give you an offer that puts some money in your pocket.