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Choosing to sell your home is a big decision. This major financial investment holds within it a lot of the sweat equity that you’ve put into your career and your family. Understanding what a traditional home sale vs. we buy houses offers will help you make the best decision for your home sale in Charlotte.
Though there are more than just these two routes open to you, the two major options in home selling are to go with a real estate agent or to go with a real estate investor. Both are viable, but they have very different benefits and costs.
Options in the home sale process
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In today’s real estate market in North Carolina, there are more options than ever to get your home on the market and sold. It can be overwhelming, especially for homeowners without much experience.
Some of the options for North Carolina homeowners who are thinking about selling their home are:
- Listing with a real estate agent
- Selling to an individual investor
- Selling to an investment company
- Listing yourself – For Sale By Owner/FSBO
In the past, homeowners were really caught between listing the home themselves and working with a real estate agent. Over the last thirty years, the number of real estate investors in North Carolina has increased greatly. Now it’s commonplace for a homeowner to be solicited with offers from a real estate investor for their home.
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It’s not as simple as choosing the route you’ll go for a real estate sale in Charlotte. Within these four possibilities for selling your house in Charlotte, there are still more options. These have more to do with what you do before you put the house on the real estate market.
Most homeowners assume they’re going the traditional real estate sales route and inventory the things that have to happen before the selling process even starts. If you’re a homeowner in Charlotte, you’ve probably already looked around your house and thought about what needs to get done before you put it on the market.
- Live in the house and do repairs slowly
- Move out of the house and perform repairs quickly
- Sell the house as-is
Whether you decide to put money and effort into repairs and preparing the house for sale is a big part of the equation. In fact, the choice to go with an as-is sale or a traditional home sale will affect every part of the process.
When it comes down to it, the essential difference between a traditional home sales we buy houses for cash sale is doing repair work and engaging with a mortgage company. Everything else in the home selling process flows out from these two starting points.
Investment companies and we buy houses for cash companies
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An investment company can go by lots of names. You’ll see these listed as we buy houses, we buy ugly houses, etc. Those companies might be large local real estate investors who have jumped on the buy ugly houses name or the we buy houses for cash name because it’s so recognizable.
It’s important to note here that, though these smaller companies look similar in terms of their messaging and their marketing, they aren’t the same. We buy ugly houses. Companies are vastly different, offering different terms and rates. They’re all still buying houses for cash companies, but they’re run by different real estate investors who each do things in their own unique way.
Mega we buy houses companies
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Large companies that do most of their business online include names like iBuyer, Offerpad, and Opendoor. These mega real estate investment firms buy houses just like other real estate investors, the only difference is that they’re huge. They’re somewhere between a traditional real estate investor and a tech company.
Though these companies might have local branding, they’re spread out across the country. Large home buying companies have individual offices or representatives in every state and locality that they operate in.
You’ll find these companies in Charlotte, Greensboro, Raleigh-Durham, and all over North Carolina. Any time you search for something related to selling your house in Charlotte, they’ll come up immediately as a paid ad in the search results.
The sheer volume of home buying that they do is massive.
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Millions of dollars in home sales, both cash home sales and foreclosure home buys, are completed by these mega we buy houses companies every year. Corporate real estate investors sometimes put the squeeze on Charlotte homeowners rather than giving them a fair cash offer.
Nearly ten percent of homes are bought by corporate home buying companies. They make the process simple and straightforward for home sellers. Not only that, but these companies also do a lot of business in the realm of foreclosures.
There are lots of iterations of these company names, but they all do the same thing – they buy houses for cash. Whether it’s from individual homeowners or through foreclosure auctions, these companies are an undeniable part of the housing market.
Selling distressed properties
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Different kinds of buy houses companies have different strategies for making money off of real estate that doesn’t include distressed properties.
When a home buyer takes on a house without getting an inspection beforehand, they know that they might run into problems with the home. Even if a house looks good on the outside, that doesn’t mean it’s structurally sound on the inside. Pictures of a home only tell part of the story.
No real estate investor is going to buy ugly houses that they don’t think they can make a profit on. An ugly houses company will do background work like checking the title and reviewing the public records on a home that they are interested in purchasing, before they put money on the table.
Investors can carry more risk than individual buyers
The major difference between an ugly houses company and an individual buyer is that the ugly houses company has the ability to absorb some risk. Whereas the purchase of a home might be the biggest transaction that an individual will make in their lifetime, it’s one of innumerable transactions that a real estate investor will make each year.
A we buy houses company has the ability to take on the risk if a property should have even more problems than are visible on the outside. The worst case scenario for them is that they’d lose money on that single property. In the wider scheme of things, they’ll still be able to earn that money back on other home sales.
Investors purchase distressed properties all the time. Buying a house for cash that needs repairs gives the we buy ugly houses company the chance to either put work into the house to remedy repairs, or they can simply turn the house over fast to someone else who wants to do the repairs in a fixer upper scenario.
Buy and hold investors
There’s another kind of investor out there that doesn’t want to fix up the property and sell it. They can still buy ugly houses as is, but their goal isn’t to get rid of the property.
Buy and hold investors buy ugly houses or ready-to-go homes and use them as rental properties. This strategy involves a real estate company holding onto a house for years while they accumulate income from the rent.
Being a landlord isn’t the only strategy for making a profit off of the home selling process, but it is a long term way to make money. When an investor decides to buy rental properties, they aren’t looking to get out of a house fast, but they are often interested in getting into a house fast with an all cash offer.
Ongoing repair costs and holding costs are a legitimate concern for houses companies who buy rental property. Whether a buy houses company uses this strategy or another strategy in the long term doesn’t necessarily matter to you when you’re selling your home, but many homeowners want to know that their houses are going to legitimate companies.
The real estate industry today
Current market trends make the sales process so fast that ugly houses don’t stay on the market for long. Investors and families purchase homes sight unseen in the current housing market. It’s an extraordinary moment to be in real estate.
Working with local investors or with reputable realtors in Charlotte will both lead to offers for homeowners who want to sell homes.
The inventory of available houses in North Carolina in general and in Charlotte in particular is incredibly low. There simply aren’t enough houses available for everyone who wants to buy a house in Charlotte.
Some of this has to do with national trends in home inventory levels, and some of it has to do with the explosive population growth in the Charlotte region. Year over year, people have been moving to RDU and Charlotte in North Carolina for the climate, education, culture, and relatively inexpensive housing prices.
The constraints on home building in the last couple of years have left the housing market stretched thin, so seller’s definitely have a leg up. House flippers and investors are increasingly open to paying more for a home as is than they were in the past.
Pros and cons of a cash home buyer
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Deciding whether to go with a cash buyer or we buy houses in Charlotte, NC should involve looking at both the positive and negative aspects of the sale. These are such different ways of selling a house in Charlotte that homeowners should vet exactly what they stand to gain from each option.
It’s a good idea to lay out what the benefits and drawbacks of a cash home sale and a conventional real estate agent sale are.
PRO – Cash on hand for the sale
A cash buyer will have the money in hand for the sale of the home at closing. A home seller in Charlotte should ask for a proof of funds document to show that the cash buyer has the money they say they do for the sale prior to closing. This is provided by the buyer’s bank.
CON- Offer will be less than fair market value
A home seller in Charlotte who’s working with a cash buyer should expect to get an offer for less money than fair market value for the home. This selling price could range anywhere from sixty to ninety percent of the home’s market value. It’s also possible that repair costs will come out of that figure, depending on the negotiations with all cash buyers.
PRO – Quick turnaround on the sale
A cash home sale for an as is property will go through much faster than a traditional sale. It could take anywhere from a few weeks to just a few days, from the initial reach out to an investor to the final closing. This fast turnaround time makes it easier for individuals to move on to the next step in their lives, in addition to saving all the money.
PRO – Fewer sale requirements
A cash home sale has fewer costs associated with it than the traditional home sale process. There are less maintenance costs and fewer home ownership responsibilities for the seller with a cash home sale. This extends to requirements for home inspections and home appraisals that are required by many lenders. Since a cash buyer doesn’t have to appease a lender, they can waive these traditional home sale steps that often entail hidden fees.
PRO – Home sold in as-is condition
A major boost to using a cash buyer is that they commonly take the home in as-is condition. This allows the home owner in Charlotte to forego additional repairs and the investment and time that those repairs require. Most homeowners benefit from selling a house for cash in as-is condition.
Pros and cons of a traditional home sale
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There is a whole different set of pros and cons for a conventional home sale. Understanding what the regular route looks like, both the good and the bad, is a positive step for Charlotte homeowners looking for the best way to sell their home.
PRO – Potential fair market value
The biggest reason to go through the traditional home sale process is that it offers the potential to get a higher selling price than a cash home offer. For a Charlotte homeowner who’s been making mortgage payments for a decade or more, that can understandably be a motivator.
If a home is move-in ready and has high end finishes, plus if it’s in a great Charlotte neighborhood like NoDa or Matthews, then it’s reasonable to expect to get at or near the listing price for the final purchase price. It all depends on the strength of the local real estate market and finding a good real estate agent.
CON – Hoops with buyer financing
With a traditional buyer, there will be a lot to get through before the real estate transaction is complete, thanks to the need for involving a mortgage lender. There will be a credit check and work history evaluation. Bank statements will have to satisfy the lending requirements of the institution. To become eligible for a home loan, the bank will need to be confident that the buyer can make the mortgage payment, even if the house is being sold at a fair price.
The other issue here is the buyer’s existing home. In a traditional home sale, the buyer is juggling selling their own house, whether it’s local or they’re relocating to Charlotte, while they’re also trying to buy a new house. That juggling act can cause hangups for a home sale and slow down the process.
CON – Having to start over again
Allo those hoops that a buyer has to jump through before the final sale price is paid means that the whole process can possibly fall through. If the bank decides not to approve the loan, then everything with the transaction is dead and done. This can happen far into the process, especially if something unexpected comes up in a home inspection report. If that happens, then the home seller in Charlotte will have to start the whole process again, engaging with the open market to get a new buyer.
CON – Required home improvements
Though it does happen that a home inspection required by a traditional lender will find no existing issues, it’s more likely that something will be found that needs to be addressed. This could be anything from roof issues to yard problems to something with the HVAC. Often, a lender will require that the repairs be done before they’ll approve the loan, and that leaves the homeowner in Charlotte with the job of taking care of those issues.
It’s even possible that a home sale can totally fall through because of home issues found in an inspection, again leaving the homeowner in Charlotte to start all over again.
PRO/con – Working with a real estate agent
In a traditional home sale, a real estate agent is a central figure in the process. This can be a really good thing for a Charlotte home seller as the agent will do a lot of the heavy lifting. A good real estate agent will arrange open houses and do a good deal of the marketing. They’ll know the process and have a turnkey approach that will let the homeowner step back and do little.
The con to working with a real estate agent is that, though the homeowner can get a higher price for the home, they’ll pay more in real estate commission and closing costs. Great real estate agents do great work, but they also come at a premium.
Deciding on priorities
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Whatever your needs are as a home seller in Charlotte, you’ll have to make a decision that works within your timeline and your monetary requirements.
Full return on investment
If you have substantial equity in your home and want to get a full return on the investment you’ve put into the property, then going slow and doing a traditional real estate process will likely work for you.
There is something satisfying about going through the process of doing home repairs, getting an appraisal, staging a home, doing the marketing, and finding a great individual buyer to come take over a property that is meaningful to you. If that’s a priority for you in your Charlotte home selling journey, then it’s worthwhile to participate in the conventional process.
Moving quickly with a home sale
On the other hand, if your priorities veer towards getting through the real estate transaction fast and moving on with whatever the next step in your life is, then a cash home sale might be the best road for you.
Home buyers don’t always have to love the home the way you did or preserve it in some specific condition. Part of the process of selling a piece of property is letting go of the emotional attachment that you might have to it and moving on.
A quick home sale will mean sacrificing some of the potential profit from the house, but this is mitigated in part by dispensing with hidden fees.
It comes down to time and money
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The core of a Charlotte home sale comes down to time and money.
If a homeowner prioritizes putting the time and money into a house, then they can push their listing price up and get that bigger return. This involves working with a real estate agent, home stagers, contractors, inspectors, and appraisers to find the best home sale price.
On the other hand, a home seller in Charlotte who would rather not put all of that into the house has the option to work with a we buy houses for cash home investors. They’ll get less money by selling to these home buyers but the tradeoff is that they will get out from under their own home loan faster.
In both options, homeowners in Charlotte, NC need to evaluate home buyers thoroughly to make sure whatever deal they choose to pursue goes through in a way that works for them.