I'll buy your house for cash! [No, not me!]

[Jackanory]

If you're like me, you probably receive offers like this in the mail, on a fairly regular basis. If you're like me you treat these letters with a heaping helping of skepticism! My house though, has more than its fair share of deferred maintenance, and sales prices up my street will substantially exceed my personal profit allowance. So I was wondering:

Does anyone have any actual personal experience contacting these (I assume that they're) flippers? Did you proceed, and how did it turn out?

I'm weighing the pros and cons of doing a few 'touches' to make it more marketable, but since I'm fundamentally lazy, would appreciate experiences with this rather dire alternative.

 

[IMATERP]

If you're like me, you probably receive offers like this in the mail, on a fairly regular basis. If you're like me you treat these letters with a heaping helping of skepticism! My house though, has more than its fair share of deferred maintenance, and sales prices up my street will substantially exceed my personal profit allowance. So I was wondering:

Does anyone have any actual personal experience contacting these (I assume that they're) flippers? Did you proceed, and how did it turn out?

I'm weighing the pros and cons of doing a few 'touches' to make it more marketable, but since I'm fundamentally lazy, would appreciate experiences with this rather dire alternative.

We were solicited by a company that wanted to use the house as a rental. The company (Intl based) had bought 300 houses in the Raleigh area back in 2013-14. We negotiated an offer of approximately 10k less than what our house would have gone for. We actually asked for 3k higher than the rental syndicates offer.

In return, we only needed to pay 3% commission. We did not have to paint and the inspection process was quite minimal as the inspector only looked at the big picture. From a personal perspective, my wife and I had selected OUR new home and the price was high enough that we didn't lose anything. All in all it was a very easy process for us.

 

[Jackanory]

If I only had to sacrifice 10k + 3%, you wouldn't see my A4D! I'd happily sacrifice 10% for a lazy sale, but I suspect more chiseling might be involved!

 

[athena53]

DH's ex-wife sold her place as a tear-down. The area (NJ suburb, commuting distance to NYC) was up and coming, other large houses had gone up nearby and the builder just wanted the lot. She was very happy with the price and loved the fact that she could take what she wanted and leave the rest behind for the wrecking ball.

 

[IMATERP]

If I only had to sacrifice 10k + 3%, you wouldn't see my A4D! I'd happily sacrifice 10% for a lazy sale, but I suspect more chiseling might be involved!

Just to update you on our old home - it has been rented throughout the last 4 years. It also could sell for 50K higher today. On the downside (for the rental company,) they had to replace the carpeting and on a recent pass-through we noticed that they had to replace the A/C Unit. That would have been 8 - 10K as our place was two levels.

Anyway, they made money and we got our new home in a retirement community. By the way, our 270K home is now worth $350+ so the timing was right.

 

[Sunset]

OP if you can estimate what the house is worth, then you could simply phone them and see how close they are to the number.

Maybe calling a few real estate agents to come and give you a value and advice, which is what they do prior to listing would be helpful. I've seen plenty of "handy-man" homes for sale on normal real estate listing sites. I even bought one when I had nearly no cash, but lots of time.

 

[Jackanory]

My mettle when dealing with salespeople isn't the strongest -- this thread is partly my way of steeling myself for the encounter.


My neighbors identical house listed earlier this year in the high 700's and closed this week in the high 800's, so I have a fairly good comp!

 

[Sunset]

My mettle when dealing with salespeople isn't the strongest -- this thread is partly my way of steeling myself for the encounter.

,,,

Then have a friend with you, and tell the friend you don't want to sign anything today, just find out prices (so friend knows the plan and will feel allowed to remind you to "wait for the other estimate").

 

[CaliKid]

I deal with these type of real estate investors a lot at work. They generally are good people just looking for a bargain. It's a numbers game. If they send enough letters, put up enough signs, etc... they'll get some deals In my experience the amount they pay below fair market value is considerable. They will factor in the poor condition of your house and offer even cheaper. In much of the country the real estate market is so good that you can list any property on the MLS (other than high dollar stuff) and you'll get offers right away if it's priced fairly. I thus would not bother with the investors.

 

[mountainsoft]

I was hoping to find one of those "I buy houses" folks after my mom's stroke. Her house was in really bad condition and we didn't think we would get much for it as-is on the market. Unfortunately, her house is in a rural area and I wasn't able to find an "I buy houses" company that operated that far out.

So my wife decided to fix up as much of the little stuff as we could. Because of the 2 hour distance we could only work one or two days a week. It took us about 7 months to clean up the yard, paint inside and out, remove the popcorn ceilings, install new carpet and flooring, replace all electrical outlets and lights, repair or replace all faucets, new water heater, etc. Overall we spent about $8000 on repairs, plus whatever utilities we had to pay while we were working on the house.

We just listed the house at full market value and had a few different offers. The one we chose offered our full asking price, though we did have to drop the price about $10K after the inspector found some major issues we couldn't afford to tackle (siding, roof, etc.). We're still coming out better than if we had tried to sell the house as-is. I'm just hoping we don't run into any other issues before it closes.

 

[aaronc879]

My Aunt went as far as having someone come out and see her home and give her an offer. They offered less than 70% of what she felt it would go for on the open market. That was the end of that.

 

[Another Reader]

The flipper formula is 70 percent of after repair value less rehab costs. A wholesaler trying to squeeze out his profit will try for a lower price. In most active markets, you can list and sell to an owner occupant that wants to remodel at a much higher net to you price.

The Phoenix market is white hot with zero inventory at lower price points. I get between 10 and 30 solicitations in a week in the mail. A couple of the equity thieves have figured out how to find phone numbers and I get the canned speech via voicemail a couple of times a month.

 

[Palmtree]

It's basically what others have said. They will offer you around 50-70% of its true value. It appeals to the "get me out of this" nature of some folks who do not what to deal with a "burdensome" house. The promise is that they can go to closing fast and you will be "done" with the property with some fast cash in your pocket.

They will then resell it to a flipper for a fast profit or fix it up and sale or rent it out.

 

[brucethebroker]

I was hoping to find one of those "I buy houses" folks after my mom's stroke. Her house was in really bad condition and we didn't think we would get much for it as-is on the market. Unfortunately, her house is in a rural area and I wasn't able to find an "I buy houses" company that operated that far out.

So my wife decided to fix up as much of the little stuff as we could. Because of the 2 hour distance we could only work one or two days a week. It took us about 7 months to clean up the yard, paint inside and out, remove the popcorn ceilings, install new carpet and flooring, replace all electrical outlets and lights, repair or replace all faucets, new water heater, etc. Overall we spent about $8000 on repairs, plus whatever utilities we had to pay while we were working on the house.

We just listed the house at full market value and had a few different offers. The one we chose offered our full asking price, though we did have to drop the price about $10K after the inspector found some major issues we couldn't afford to tackle (siding, roof, etc.). We're still coming out better than if we had tried to sell the house as-is. I'm just hoping we don't run into any other issues before it closes.

Remember to figure in the value of your "free" labor and the lost interest-investment income over 7 months (plus property taxes). Often, it brings the additional income more in line to the "as-is" sold price.

 

[brucethebroker]

My Aunt went as far as having someone come out and see her home and give her an offer. They offered less than 70% of what she felt it would go for on the open market. That was the end of that.

So, did she sell, or sit tight?

 

[athena53]

Before DH and I married he talked to one of these people, knowing we were going to move. They couldn't come to an agreement; the house was in decent condition (good repair but not updated) and DH wasn't desperate. He went through a realtor and eventually cleared $100K although it took a year (it was built into the side of a mountain and had a steep set of steps leading up to the house- so people loved the price and then most of them didn't even want to look inside).

 

[PatrickA5]

We're in the process of selling my dads house to an investor. They're offering around 85% of what I figure I could sell it for "as is". Probably around 70% of what it would go for fixed up. We'll pay 2% commission to the realtor who found us the investor. Overall, we're pretty happy with it (if it goes through). No inspections. All cash. The other two flippers offered around 78% and 70%. The guys that are buying aren't looking to really flip it. They buy to rent out and have about 50 homes in the area.

In our case, we're talking small money ($82K), so there isn't much money to be made by anybody. Also, my DB and I have to split the money, so taking the time and $$$ to fix it up just wasn't worth it. We'll be glad to get rid of it (even though emotionally it's hard since it's the house we grew up in).

 

[calmloki]

We lend to a couple flippers. I normally have no problem making them the loans because they buy the places at a good enough price that if they can't make the payments I can afford to spend the time and aggravation and cash to go through a foreclosure process. Think 6 months minimum unless they declare bankruptcy in which case it takes a bunch more time and the judge can decide we don't get the interest in our contract but some paltry amount instead. Oh - and the lawyers and costs have to be paid by us as the foreclosure wends it's way through the courts. That's why we charge 10-12% for the loans we make that allow the flippers to make those fast all cash purchases. We take on a bunch of risk. The flippers we deal with pay for the renovations to make the places sale-worthy - lots of work and cash out of pocket and then waiting to sell while our high interest loan has to be serviced. I admire the flippers we deal with - the best one buys at a good price, renovates at rocket speed, and puts a great looking redone house on the market at a price point that beats any of the competition.

By comparison, some years ago I decided to sell a rental house we had. Marketed it sans realtor for a year, paying utilities and holding it vacant - no income. My price was too high and I was too stingy to put the cash into major improvements. A flipper wants to make money, but has a very current idea of what a house is worth and what it will take to make it attractive to a new buyer.

 

[Nightcap]

If you're like me, you probably receive offers like this in the mail, on a fairly regular basis. If you're like me you treat these letters with a heaping helping of skepticism! My house though, has more than its fair share of deferred maintenance, and sales prices up my street will substantially exceed my personal profit allowance. So I was wondering:

Does anyone have any actual personal experience contacting these (I assume that they're) flippers? Did you proceed, and how did it turn out?

I'm weighing the pros and cons of doing a few 'touches' to make it more marketable, but since I'm fundamentally lazy, would appreciate experiences with this rather dire alternative.

Yes, though not through those "We Buy Ugly Houses" solicitations.

Our former house was a big old place. We calculated that fixing it up for resale would be ruinously expensive, since we did not have the skills, time, experience, or connections to assemble and oversee the various tradespeople required. When we decided to live full-time in our Cape Cod condo, we spoke to the realtor we'd bought the place through 20 year earlier. He looked at the property and calculated its worth, which was about 50K more than we thought. We explained our desire to sell to a flipper. It just so happened that his son was doing exactly that, and if we thoroughly understood his conflict of interest, he'd put us in touch. As it happened, we got two bids: the son's flipping company would pay the full value as-is, without contingencies. And a very nice man offered $25K more, figuring he would renovate the place himself for his elderly parents. We couldn't in good conscience sell to him; we knew the flaws (the lead paint and asbestos and flooding problems) and its unsuitability for older people. We wanted the no-contingencies cash sale and sold to the flipper.

Six months later, the house, which never went back on the market so we never saw what they did to the interior, sold for $200K more. I'm quite certain it cost at least $150K to renovate and carry, and don't begrudge a dime of the profit he made. We got more than we thought it was worth, and we got to be good neighbors for once and improve the value of the neighborhood.