Companies that buy houses for cash have been popularized by their marketing strategies of stickering signs and unsolicited calls and texts to buy your house. While these companies have been around for decades, the seller’s market of the past few years has created even more demand for their services.
Though their marketing strategies may be familiar, the companies themselves — who they are, the services they offer, and the pros and cons of working with them — are less widely known. There are two classes of these companies that buy houses for cash: the traditional kind and iBuyers. Both are legitimate companies that buy homes in any condition, but utilize different tools to do so.
In the age of digital marketing, cold calling and posting signs might seem like a red flag to some would-be customers suspicious of getting scammed. However, many of these companies are legitimate businesses relying on old-school sales tactics.
Companies that buy houses for cash offer homeowners a quick and simple way to sell their home without the hassle of traditional real estate transactions (hiring an agent, listing the home on the market). They make instant, or near-instant, cash offers on houses in almost any condition and will help you close quickly. However, these companies offer well below market value for homes.
We buy houses companies offer homeowners looking to sell their house fast an easy solution: sell your house as-is for a cash offer. They buy homes in good to poor condition, and in return, they “flip” the house and sell it for a profit. Their services aren’t available everywhere, but they operate in over 100 markets nationwide.
The process is generally the same: Homeowners fill out a form, after which a representative will contact them with an offer — usually within 24 to 48 hours. Homeowners aren’t obligated to accept the offer, but if they do, they can expect to close fast.
However, these companies’ cash offers can be as low as 50% of the fair market value of a home — a lot to lose for the convenience of the sale.
When you sell your house to We Buy Houses, they’ll schedule an on site visit to view your home. Within a day or two of the visit, you’ll receive a cash offer for your home. There’s no obligation to accept the offer, and if you do, We Buy Houses will accept your house as-is, eliminating the need for any repairs or renovations. The deal will typically close in one to two weeks, which means you’ll have your money within that time frame.
An added benefit is that We Buy Houses works with a variety of homes — they’ll buy foreclosures, tenant-occupied homes, and they’ll even buy your home if you’re underwater. This can be a game changing solution for homeowners in a tight spot and need cash quickly, but they may end up sacrificing some profit for this convenience. As with all companies that buy houses for cash, We Buy Houses typically offer under market value in order to turn a profit once they fix up and sell the property.
HomeVestors, founded in 1996, has a similar process: They’ll schedule an in-person visit to your home, examine your property, and get you a cash offer. If you accept the offer, you can expect to close within three weeks (or longer if you need the extra time). You will need to pay some closing costs but you’ll save money on a Realtor commission — which makes up a large part of the seller’s closing costs.
HomeVestors buys multi-tenant, commercial properties, and single-family homes in any condition. Again, this can be a great solution for homeowners who need cash fast but homeowners can’t expect to get the most money for their home from HomeVestors. As real estate investors, they will only pay between 50% to 70% of market value for your home.
Unlike the other companies that buy houses for cash, iBuyHouses.com simply connects investors with homeowners who want to sell their home fast — the company isn’t involved in the transaction.
iBuyHouses.com claims to get sellers offers within hours in some instances and helps facilitate a closing date of your choice. They will even help connect you with investors who will purchase multi-family, mobile and manufactured, or foreclosed homes, and they’ll work with homeowners who are underwater on their mortgages, too.
Investors aren’t vetted by iBuyHouses.com, so it’s important to carefully research any offers you receive before moving forward with them. Additionally, investors are likely to offer well below market value to guarantee a profit for themself.
Many companies that buy houses for cash operate nationally. However, there are also more local options that operate in select states and cities like the following:
iBuyers, or “instant buyers,” are a class of real estate tech companies that use technology to streamline the process of buying homes for cash and make an offer on a home instantly. The services of iBuyers vary from company to company but many will offer sellers flexibility for the move-out date and the ability to sell their home as-is.
iBuyers generally offer closer to fair market value of a home, as compared to We Buy Houses companies. However, it’s unlikely that an iBuyer offer will net a home seller as much as they would have made by listing their home on the market.
Opendoor is a fee-based iBuyer founded in 2014. They offer a variety of services like buying and selling your home directly to Opendoor, as well as home financing. Opendoor operates in 48 metro areas across the country.
Sellers who work with Opendoor start with a free virtual assessment of the home, after which time Opendoor makes an offer on the house. Sellers have the choice of selling instantly for cash, or choosing to list on the open market. In exchange, Opendoor collects a service charge, averaging around 5% to 6% (but it can sometimes be as high as 14%, according to the company) of the purchase price of the home.
Offerpad buys homes to renovate and sell for a profit. The company buys houses for cash in two ways: the first service is Offerpad Express which gives sellers the standard cash offer, the second is Offerpad Flex, which allows sellers to list their home on the market while giving them the security of a back-up cash offer if the house doesn’t sell on market.
Offerpad is a great solution for sellers who need to sell fast. After requesting an offer, homeowners can expect to receive an initial cash offer within 24 hours. However, Offerpad requires sellers to sign a contract before knowing their final offer amount. This can put sellers at risk of accepting a cash offer for thousands of dollars less than their initial offer.
Offerpad has been around since 2015 and operates in metro areas in Alabama, Arizona, Colorado, Florida, Georgia, Indiana, Nevada, North Carolina, Texas, Tennessee.
Redfin is a discount real estate brokerage serving over 100 markets in the U.S. and Canada. Their iBuyer offshoot, RedfinNow, offers homeowners a convenient way to sell their home fast for cash. Their service fee ranges from 5% to 13% of the sale price of the home and they have a closing date window of 10 to 30 days.
HomeLight is another real estate technology company based in Scottsdale, Arizona. They match real estate agents with homebuyers and sellers and have an iBuyer service called Simple Sale.
Simple Sale matches sellers with cash buyers or home flipper investors. The unique benefit of this service is that it helps sellers looking to sell fast get multiple offers on their home, as opposed to other companies that buy houses for cash which only give one offer. Many of these investors will buy homes as-is; however, sellers risk accepting a lowball offer if they don’t understand how much their home is worth.
Sellers who use Simple Sale will also have to wait longer than other iBuyer offers — typically a full week, as compared to an instant offer of some of their competitors. They will also work with a shortened closing window of 10 to 30 days, which can be less flexible than many sellers need.
A new class of real estate tech companies have risen to prominence in recent years classified as power buyers. Their main difference from iBuyers and companies that buy homes for cash is that they focus their services on helping home sellers get the most money for their home (as opposed to slightly under market value) and help homebuyers get an edge in a competitive market.
Homebuyers who need to buy a house while selling their current one have few solutions. Flyhomes is a real estate brokerage and mortgage broker trying to change that.
When you work with Flyhomes, Flyhomes will buy your new house for you, allowing you to move out of your old home and into your new one immediately. While you live there and wait for your old home to sell, Flyhomes charges a daily rental fee. They will then help prep and list your home to sell on the market, or Flyhomes will buy your home if it doesn’t sell within 90 days. Once your home sells, you can use those proceeds to buy your home from Flyhomes and settle up any additional expenses.
Flyhomes was founded in 2016 and is based in Seattle.
The mortgage lender Knock offers yet another option for homeowners who need to buy and sell at the same time. They offer a program called Home Swap where homeowners can get approval for a new home loan before their old one sells — something that has traditionally been challenging for homebuyers with an existing home loan because the remaining mortgage balance has counted against them as debt — as well as bridge financing.
They operate in 15 states across the U.S. and have been in business since 2015.
Here at Orchard, we’re focused on radically simplifying the homebuying and selling process. We do this in a few ways:
Orchard was founded in 2017 and currently operates in 13 metro areas across the country.
Selling your house for cash can be a quick and convenient way to sell your house. The buyer paying cash for your house doesn’t have to deal with a mortgage lender, which means no financing, inspection, or appraisals required — and that can speed up a deal and get money in your pocket sooner.
However, when you sell to companies that buy homes for cash, you probably won’t get as much as if you’d sold on the open market. These companies offer below market value in order to ensure that they make a profit when they eventually list the home themselves. Additionally, you don’t get the opportunity of bidding wars, as you would on the open market, which can also drive up purchase prices.
Still, if you’re in a pinch and need to sell your house fast, or as-is, selling your house for cash can be a good solution.
Want to sell your house fast and still make top dollar? At Orchard, we’ll guarantee your home sale but list your home on market to ensure you get the most value out of your home. Learn more about how Orchard works.
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