Happy April! I hope you have had a wonderful first quarter of 2018.
If you have been in your home for a number of years and have significant equity in that home, you may have received advertisements from a new wave of companies offering to purchase your home with cash. I have received many questions from homeowners about these companies’ offers to buy their homes.
Q: I have received ads from online companies offering to buy my home at competitive price and no hassles. Is it for real? Is it worth it? How does it work?
A: These companies are “flippers”. They are not looking to buy homes to hold in their rental property portfolio like investment companies in the 2010-2013 era. They are buying homes directly from homeowners at a discount, then putting the homes right back on the market to sell at a profit.
The typical offer sounds enticing, but they also charge full commission and other selling costs, plus significant additional fees to use their service. Their angle is an easy transaction, as-is, cash, and flexible closing date. But they are not in the business to lose money. They will inspect the home carefully, and you can be assured they will demand compensation if problems are found.
Make no mistake, they are not in the business to provide a public service. They are in the business to make a profit. Since they are simply “flipping” your home (put your home right back on the market with minimum additional investment), in order for them to make money, you CANNOT make money.
They have to acquire your home below market value. They also make up the profit margin by charging all customary selling costs, full commission, plus additional fees. Do not believe they are paying fair market value. That is not possible. They have to sell it again soon, and for a profit. Once you understand they are “flipping”, it is easy to understand how this works.
There is nothing wrong with this business model. We all know if we sell our cars to an auto dealer, they will resell it at a higher price for a profit. This is perfectly normal. We are trading top dollar for convenience.
However, unlike a car, our homes are likely our largest assets. It can take many years to build up equity. Is a quick, convenient sale really worth giving up a 5-figure value in your home? That is tens of thousands of dollars that should be in your bank account.
We are real estate professionals whose sole mission is to guide homeowners through the process of home-selling to achieve the highest price possible, with the maximum profit going to the homeowners. We always work closely with the sellers to prepare the home for sale for the most gain, then we take over the marketing and selling and make the process as smooth as possible for the sellers. Our track record speaks for itself.
If you are thinking about selling a home, let us walk you through the process and show you how you can get the most money for your home!
~Yien and the Yao Team