Most homeowners sell their houses to traditional buyers who plan to make the property their home. But investors also buy homes, and sometimes it may be advantageous to sell to one. What are the pros and cons of selling your home as investment property?
Advantages to selling to an investor
You may have purchased your home as a place to live, but investors buy residential investment property for a variety of other reasons. Some want to own a house they can rent out, while others may want to update a home and sell it for a premium. Or a buyer might purchase investment property they can get at a low price with plans to resell at a higher price to another investor.
One of the biggest advantages of selling to an investor is the speed at which the transaction can be completed. A buyer looking for a personal home likely needs a mortgage, which requires an appraisal, an inspection, mortgage underwriting and the like. All of that takes time. The buyer looking for investment property usually pays cash and is willing to buy a home “as is.” The investment buyer therefore can close more quickly, which is a benefit to sellers facing job relocation, divorce, illness or foreclosure. This speed and simplicity can also make selling to an investor appealing to those who’ve inherited a home or who live in a different state.
Additionally, if you market your home to investors, there’s no need for the hurried decluttering, last-minute repairs, staging, open houses and other aspects of selling to a traditional buyer. The investment buyer is interested only in the property’s value and whether it is a good deal for her.
Disadvantages of selling to an investor
The convenience and simplicity of selling your home as investment property comes at a cost: a lower sales price than you’d get in a traditional sale. Those shopping for their dream home may get emotionally attached to a property and pay a premium for your house. Good investors will make a reasoned decision based on what is best for them financially. They will study comparable neighborhood sales, factor in the cost of needed repairs and upgrades, and offer less than the home’s market value.
Another disadvantage to selling your home as an investment property is that you may not know for sure whom you are dealing with. The home could be purchased by a real estate investment firm or trust, not an individual. The investor isn’t obligated to disclose the reason they are buying the property. And “investment buyers” can turn out to be scammers.
Work with a professional
If you think you are interested in selling your home as investment property, work with a real estate agent. His strong marketing skills can help you present your home in its best light, and his negotiation know-how can help you get the highest possible price. And if you’re not selling under pressure, consider holding out for a higher offer from someone who wants to make your house their home.