In today’s highly regulated lending market it’s not uncommon for house sales to take close to two months to close. This is due to the high level of due diligence performed by the buyer’s lender. The way to complete the sale much faster is to eliminate the lender. This is possible when a buyer such as Second Chance Offers has cash available to purchase the house without the assistance of bank financing.
With cash on hand a buyer can make decisions quickly and can also take care of other expenses such such closing costs, overdue payments or taxes, and can purchases houses in disrepair.
With a lender involved a buyer is going to have to complete inspections, appraisals, and surveys. And if the house needs repairs that the seller can’t afford or doesn’t want to complete, it’s possible the lender will deny the loan.
Is there a downside? The trade-off is generally speed for price. Generally cash buyers are not looking to lock their cash up in a property for 30 years. Most cash buyers are investors that are buying the house so that it can resold in the not too distant future. This means that a cash buyer is not able to pay top dollar for a house as he has overhead expenses to cover.
For example, the cash buyer will be paying closing costs on the purchase (2%), closing costs on the resale (3%), realtor commissions on the resale (6%), repairs and remodeling costs (anywhere from $10k to $100k), and carrying costs while repairing the home (4-5% – insurance, utilities, cost of funds, etc.).
These overhead expenses normally amount to roughly 15% or more of the resale value of the property after it has been repaired. This means that for the investor to make a modest profit, a cash offer will generally be around 65 to 75% of the house’s full market value, meaning, what it could be worth after being fully repaired.
So now you know, when you see one of those signs on the street saying “We Buy Houses,” what it means is that that investor can buy your house for about 70% of its full value, and do it fast. This can be a great option for some house owners, like those with lots of equity, for example. It’s generally not an option for those with little or no equity.
Second Chance Offers will buy your house for cash and offer you several other options if the cash offer is not suitable to your situation. Contact us if you would like to explore this further.
How fast can you close?
Normally as quickly as 7 to 10 days. For emergency situations, like to stop a foreclosure, it can be done in as little as a single day. The purchase may take longer if there are title/ownership issues. All owners on the deed have to agree to the sale. One exception to this would be if one party has a divorce decree or other document allowing him or her to sell the property unilaterally.
Do you ever pay more than 70%?
In real estate everything is negotiable. But, Second Chance Offers, just like any other cash buyer, can’t pay more for the house than what allows for a reasonable resell value that covers expense and risk exposure.
Why should I sell to Second Chance Offers?
Second Cash Offers is a true cash buyer, purchasing houses for our own business ventures. A lot of “investors” pose as cash buyers but are really wholesalers who hope to lock up your property with an offer and then flip the contract to companies like Second Chance Offers for a fee. That means they have to offer even less than a true cash buyer. We’ll offer the highest cash amount possible. Also, we always use standard contracts (TREC forms) just like any real estate agent would use and we hold ourselves to the highest ethical standard.