Pros And Cons To Sell Your House To A House Flipper
When it’s time to sell your house, you have many options available to see the process through. Many people choose to contract a Realtor or a real estate agent to help with the entire process, and it’s the most common procedure around.
While it has its merits, using such agents’ services could also have downsides, mainly because their payment is usually given as a commission. Their fee could range anywhere from 5% to 10% of the house’s selling price.
So, are there any options?
House Flipper Hiring Pros
One way to avoid paying a commission is by selling your home to people who do house flipping. This latest style is more like a buy-and-sell scheme executed by house flippers who plan to renovate the property themselves and sell it for a higher price than the purchase amount. The point is obviously to make a profit, as it’s seen as a new kind of real estate investment these days.
As with other ways of selling, house flipping has its set of pros and cons. Here are some of the pros:
Selling Is A Quick Process
The main issue house sellers encounter is that they never truly know how long it will take for a house to sell. Once they have the house listed, there would still be many factors that will determine how fast your home will sell, especially if local home buyers would make reservations or offers. If you’re in luck, the process could only take three months. However, it could also take an entire year to move.
Selling your home to a house flipper changes the way this is done. Most house flippers won’t care about many things that would preoccupy direct home buyers. They also aren’t looking for the perfect home, so they’re willing to buy almost anything at face value. If you pick a good home investor, your property could be sold within days.
They Offer To Pay Cash
The financial aspects connected to selling your home are long and stretched out processes since you have to go through a bank or lender for various reasons. Some might even need to secure a loan before purchasing.
This process is also eliminated when selling to home-to-home investors. House flippers are dedicated to buying and selling houses to make a profit. One benefit of selling to them is that they’ll merely inspect your property, assess and estimate its value, and make a cash offer on the spot. You no longer have to wait for long clearance processes to get your money when dealing with a house flipper. If you need to sell fast and need fast cash, this is the way.
Will Buy Your Home As Is
Home sellers often put off listing their home on the market because they feel the need to invest money into their home beforehand to get the most profit out of the sale. This process involves beautifying the place and fixing defective parts, which both cost money. Home sellers understand that most buyers are in the market for a beautiful home that’s ready for occupancy. Thus, the fewer issues the house has, the faster it will be sold.
This isn’t a problem when it comes to house flippers. As mentioned, they’re looking into properties for the sake of investment, meaning they’ll buy your home as is. No need to revamp it since they’ll take care of that aspect.
House Flipper Hiring Cons
You may have seen many lifestyle TV programs focusing on house flipping. While it indeed looks lucrative and attractive an option, it has its cons, too. Here are some of them:
Selling Under Market Value
House flippers are known to move fast and make deals happen faster. But a consequence of this speed is that they’ll offer fast cash amounting to a bit less than your home’s worth. To flip a house properly, the buyer has to have some form of a contingency fund. Thus, they would purchase your home under the current market value.
You Won’t Know The Buyer
When house-selling, buyers and sellers often have the pleasure of meeting each other. The meetup somehow allows both to feel more comfortable about the sale.
When you sell to a house flipper, you should acknowledge that they’re only buying your property for investment and to make a profit. They’ll also have no idea who ends up living in your old home.
When selling to a house flipper, the money will be taxed as ordinary income. This means your tax rates might be way higher than when you sell by a more traditional method. Since you’re receiving the cash up-front, you might get taxed anywhere from 10% to 37% of the total. It’s a huge increase compared to a capital gains tax, which can start at 0% but only go up to 20%.
Many advantages and disadvantages come with selling to a house flipper. Many people choose this option for its speedy process. It’s a good choice for those in a hurry to sell, though they’ll have to accept certain consequences like getting less money than expected, on top of paying higher taxes. Thus, if you’re deciding, try to survey various house flippers first before finalizing your choice.