Thinking of selling your house to an investor for cash? Here are the Top 7 mistakes to avoid | Long Island, NY
Selling your house for cash to an investor can be a really smart move for many. It can speed up the process, so that you get your house closed quickly, and it removes a LOT of headaches. It also saves you all the money for maintaining your house on the market for 6 to 12 months. And, of course you will get the money from the proceeds of the house super quick.
Nonetheless, there are some home owners that make some major mistakes in the process. I’ve been doing this for years, and I’ve seen it all. I’m here to advise you on the top 7 most common mistakes sellers make when selling (or thinking of selling) their house for cash, so you can avoid them.
Top mistakes to avoid when selling house for cash
Mistake 1: Overestimating the value of your house to an investor
First, many homeowners over estimate the value of their home. This is natural as the home has sentimental value to them and they’ve become accustomed to their home. Sellers need to think about the value of their home from a buyer’s perspective… and of course buyers always factor in all of the costs they will need to pay make the home more liveable (e.g. costs to paint, resand the floors/replace the carpet, upgrade the appliances and make many minor improvements), especially if the house hasn’t been updated for many years.
When it comes to investors, this is a business for them and they need to make a profit. When sellers estimate the value of the home to an investor, they often underestimate the costs the investor will need to pay to fix up the home and the carrying costs of owning the home while making those renovations. So, as a result, many potential sellers underestimate the discount needed to make their home attractive to a potential investor.
I’ve put together this video to help potential sellers understand what’s involved from an investor’s perspective.
Video: Evaluating the value of a property from an investor’s perspective
Mistake 2: Spending time or money on improving your house before you speak to an investor
First, you should know that as a general rule, you usually only get up to 75-80% return on investment for improvements you make to a house. You rarely recoup your full investment. So if you are doing this to make more money on the house, realize that you probably won’t. Yes, you will improve the value of your home to sell it for a higher price…BUT, you will spend MORE than what you put in to make the improvements for a net loss.
Second, you should realize that if you are selling to a cash investor, such as Long Island Cash House Buyer, you can sell your house “AS IS.” We will take care of all the repairs and improvements that need to be made. We can even clear out your left over furniture and/or mess. We can even clean the house for you. And, believe me, we are professionals and have been doing this for years, so we can do this much faster and more efficiently than you can.
Third, one of the huge benefits of selling to a cash investor is that you can sell fast. Not only will this help you avoid having to make big purchases or spend lots of time on the house, but it will also help you avoid paying all the ongoing maintenance and upkeep costs (such as real estate taxes, insurance, utilities and maintaining the property).
If you are going to sell your house to an investor, it’s a waste of time and money to start making improvements. Instead, let us take care of that for. You will come out ahead.
Here’s a video I just did on this topic.
Video: Do you need to do anything to your house if you’re selling to an investor?
Mistake 3: Not qualifying your investor buyer to make sure they are true investor who can actually buy the house for cash
It is critical that you qualify your potential buyer. You need to make sure that they are legit and have experience in buying houses for cash. You will need to see proof of funds and that they can in fact buy the house outright in cash.
You want an independent and trusted investor who typically purchase homes, repairs them, and then uses them to generate income; either as rental units or sell them for a profit.
The most important thing to watch out for here is that there are many glorified agents that will say they are cash investors, but in fact they are what are called “wholesalers”. This means that they are NOT the one actually buying your house, but rather they are acting as an agent who will try to find a cash investor for you. There are several downsides to this. The biggest one is your time to close; the “buyer” is actually going to be looking to re-sell the contract they enter into with you. This means that they will be looking for another buyer. You think your house is sold, when, in reality, it has just been put up for sale on the wholesale market. As you might guess, this would mean that it will take significantly longer to close. Additionally, you are likely to get a lower selling price as the investor they find will need to pay them a wholesaler fee/commission that is money that the investor probably would have paid you if you had dealt with them directly.
So, always ask for proof of funds, and make sure that investor will be the one actually buying the house, and that they are ready to close ASAP.
Also, watch out for kitchen table closings as well as someone who is pressuring you into a super fast closing. If an investor tries to pressure you into selling your house and says that you have to make the decision today, be cautious. Most reputable house buying services will make you an offer and that offer will be good for at least 2-7 days (minimum) for you to make a decision.
The reason reputable house buying services like ours at Long Island Cash Home Buyer LLC do place deadlines on our offers is because the market changes and values can change week to week depending on other sales in the area. Also, we buy multiple houses each month. When we make you an offer we’re assuring you that the cash to purchase your house is ready and we’ll reserve that cash for several days so if you do want to sell your house, we can close on your schedule. If you feel the offer isn’t a fit for you, then we’ll reassign those funds to help another seller with their home sale.
You can read more about how to find out if your potential investor is reliable and reputable here.
Mistake 4: Assuming that someone can close on your Long Island home in a few days (or within a week)
Here in New York, we are in an attorney state (and this is for your protection). This means that closings involve attorneys for both the buyer and the seller, and due to the nature of this closing on Long Island and New York state take longer than they do in other states.
Closing in a few days or within a week here on Long Island is just unrealistic. And if you do find someone who tells you they can close in less than a week, that is a red flag.
But, it is often possible to close within 2 to 4 weeks, if that is your preference. Here at Long Island Cash Home Buyer LLC, we do multiple transactions a month, so we have an attorney that is familiar with the process and helps us close quickly. (Also, just to put this in perspective, for sellers who work with a real estate agent, it often takes 6 to 12 months to reach the closing table). So, we help accelerate the process as much as is humanly possible.
Mistake 5: Hiring a general practitioner attorney rather than a real estate attorney
Related to above, you will want to hire a real estate attorney to represent your best interests. And, believe me, you want an attorney who specializes in real estate, not just any attorney. I’ve been in the real estate industry for 36 years and almost any time someone hires a general practitioner, it slows down the process dramatically. And, worse than that, they are less experienced in this specialized area, so you’re not getting the best representation.
Strangely, most lawyers that don’t specialize in real estate charge more than their specialist counterparts. This is probably because they have to spend more time familiarizing themselves with the particular real estate transaction than a specialist would.
So, conversely, you pay less for a real estate specialist than you would for an attorney that specializes in another area of legal practice (wills and estates, divorce etc.) that says “sure I can do real estate”. In addition, things can get slowed down because there is more back and forth between the two attorney’s . This can not only impact your bottom line, but in many instances, I’ve seen it kill a perfectly good deal completely.
Here’s a recent article I wrote about a client who did not heed this advice. Get proper legal representation when selling your Long Island house.
Mistake 6: Becoming emotionally attached to the property
Once you decide to sell your home, you need to treat it as a house. Treat it as commodity or product that you are trying to sell on the market, not as the home you grew up in. Think about it from a buyer’s perspective, not yours. A buyer won’t have memories or sentimental attachment. They will simply see your house for what it is – a structure to live in.
Mistake 7: Calling too many investors.
Yes, I know it’s tempting to do a rapid fire approach and get as many estimates from investors as you can. On the surface, it seems like this is the fastest way to get your house sold and that you’ll get more money from it. But, I’m here to tell you that this may be a recipe for disaster.
In my experience, those who get 4 to 7+ estimates and take a scatter shot approach, tend to take a much longer time to get to the closing table and often make less money than those who carefully choose and interview, at most, 3 reputable and legitimate cash investors.
Why? Well first, because they tend to get overwhelmed and confused during the process. They start to get conflicting information and they often can’t remember who told them what. It often leads to poor decision making, especially as their stress levels rise. Second, by calling in every Tom, Dick and Harry, they do run the risk of being scammed. If it sounds too good to be true, it usually is. You can read more about that here: Tips for finding a reliable and reputable cash house buyer here.
That is why I recommend that you zero in on the 3 most qualified investors at the most and focus your time and energy on them. Dig deep rather than wide and this will ultimately lead you to a better and faster decision.
So there you have it. The Top 7 Mistakes that I see Homeowners making when they are thinking of selling their house for cash to an investor. Thankfully, forewarned is forearmed, and these mistakes are all avoidable.
If your house is on Long Island, we can help you.
Here at Long Island Cash House Buyer, we make things easy and fast for you. First, we will buy your house “as is.” Yes, “as is!” We will fix whatever issues the house has (i.e. we will take care of all the repairs, any tax liens you may have and we can even clear out all the extra “stuff” and/or mess.
There are no costs for you…no real estate fees or closing costs.
And, best of all, we can usually close in 2-4 weeks!
If you are interested in learning more about the cash home buying process or are ready to talk to Mr. Witt today about selling your home for cash, please give Long Island Cash Home Buyer a call today at (516) 330-6940 or fill out the quick property evaluation form below. We look forward to working with you to sell your Long Island Home quicker than any other alternative!
Other useful resources:
- Selling a house to settle an estate on Long Island – The Ultimate Guide
- How much does it REALLY cost to have your house sit on the market for 6 months?
- Can you sell a house “as is?”
- Compare: Listing a house with an agent vs selling for cash
Do you need to sell your Long Island house quickly?
Since 1998, we have been a trusted source for the latest information in regards to selling your home fast for cash on Long Island. We will have an honest conversation with you about the benefits and disadvantages of a quick cash sale of your property. If it is not right for you then it will not be right for us. It must be a win-win situation.
- We have purchased hundreds of homes with cash since 1998
- We have over $5,000,000.00 in funding available to purchase Long Island homes.
- You will always get cash at the closing.
- We always keep our word and will always tell you the truth.
- We will purchase your home as-is, in its present condition, no matter how much work is required.
- You can avoid all the costs and frustrations of fixing your property for sale.
We are the buyers. We are interested in buying your home- not in listing it as a Real Estate Broker.
Our process is substantially faster and much less stressful than listing with a real estate broker. When you list the home with a broker you can count on 6-12 months and possibly longer before you get to the closing table. While it is likely you will end up with more money with a traditional real estate listing, our process is completely hassle free and fast!
Benefits of Selling Your Long Island Home For Cash
We are not moving into the house. Therefore there is no need to coordinate closings or lease expirations. There are no buyer showings or Open Houses ever. There is no renegotiating after a Home Inspector goes through your property. There is no waiting for a mortgage approval that may or may not materialize. You can even leave the contents of the house if that suits you best.
If you want a fast, trouble-free sale, contact us and we will make every effort to make it a win-win situation for both parties.
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7 mistakes to avoid when you’re thinking of selling your Long Island house for cash