You’ve seen the signs at almost every street corner or off-ramp, “Cash for houses in Detroit.” Some of these are cartoonish signs and others might even be handwritten, nailed to a light pole. Some cash for houses signs makes claims they buy houses in any condition and for competitive rates and all cash.
If you need or want to sell your home, this looks like the perfect opportunity to sell quickly without the headaches of preparing a property for showing.
Is Cash For Houses In Detroit Right for You?
The Cash for Houses in Your Target Market
The individuals and companies putting up these signs are investors seeking quick, undervalued properties to capitalize on. By putting signs out, it takes a lot of the legwork out of researching distressed properties and hones in on homeowners wanting to sell quickly.
The key target market includes homeowners in some negative financial situation. This includes people facing bankruptcy or foreclosure, medical issues, divorce or damaged properties in complete disrepair. They also hope to find properties transferring ownership from probate sales, vacancies and even existing listing that are about to expire.
The Thoughts Process Behind the Offer
Because investors are seeking properties for quick turnaround and profit, they want motivated sellers and properties in distress that can be rehabbed quickly for resale. As the seller, this may or may not be your best play. The buyer is looking to ease your burden quickly. They know you have some emotionally binding stressor that requires a quick sale.
As a result, the offer might be for the remaining mortgage balance irrespective of the value of the home. At best, investors want properties at wholesale pricing, which is often below fair market value by at least 30 percent.
Consider Your Position Before Negotiating
Keep in mind there is a cost to keep a home. Everything from mortgage payments, insurance, and property taxes must continue to be paid while you own the home. The longer you delay a sale, the longer you must pay for utilities, maintenance, and upkeep.
Do the math then consider the average time it takes for homes to sell in your market. Based on average pricing, will you make up the difference in the cost of maintaining the home for the extended timeframe?
It may also be urgent to sell because of an impending foreclosure or estate tax cash requirement. Consider all of these factors as you begin to look at offers from buyers.
Maximizing the Sale Value
It doesn’t take a lot of research to get an idea of a property’s fair market value. If you really want to know, pay a couple hundred dollars for an appraisal or simply speak with a local realtor who will give you an idea of the value of your home in its current condition.
Once you know what the estimated value is based on current market conditions, look at what can be done quickly and inexpensively to improve the property thus increasing the value.
Do what the investors would do. These include cleaning the home inside and out; make sure windows and screens sparkle. Remove all weeds in the landscape and trim trees and bushes back. Replace carpet, tile the bathroom and kitchen and repaint the inside and out.
Investors often will redo a kitchen and put in a new appliance package, thus making their margin on the property obtained at 30% below market value. You don’t need to do this, but if you have the time and money to do so, it might be worth the investment.
The bottom line is if you can extend your timeline of a need to sell, you can wait for a more traditional buyer to come along and give you an offer that puts some money in your pocket.