I was doing some research on companies that buy homes fast for cash. I was trying to help a client of mine with the best way to move forward and I believe in helping them regardless of my compensation.
Fast home cash offers typically result in net proceeds 10% to 30% below market value, often paying 70%–85% of the home's value, as companies deduct repair costs, closing fees (1%–3%), and a service fee (5%–10% or more). While saving on repairs and agent commissions, sellers trade convenience for a lower, "as-is" price. [1, 2, 3, 4]
Key Costs and Considerations
- Lower Sale Price: Cash offers are generally 10–30% lower than market value.
- Service/Convenience Fees: iBuyers often charge a 5%–10% service fee, and some firms may deduct additional fees for holding costs, taxes, and repairs.
- Repairs: Buyers typically deduct the cost of all necessary repairs from their offer, as they buy the home "as-is".
- Closing Costs: Sellers usually pay closing costs, similar to traditional sales, though no agent commission might be needed.
- No Commission: Many cash investors work directly with sellers, eliminating the 5%–6% agent commission, which partially offsets the lower offer price. [1, 2, 3, 4, 5, 6]
Investor Types
- iBuyers: Offer closer to market value (sometimes 85%+), but charge higher convenience fees. ( Marc Spain is and example of an iBuyer)
- Wholesalers/Local Investors: Generally offer lower prices (70%–80% of market value) in exchange for quick, as-is, all-cash closing. [1, 2, 3]
For the best deal, it is recommended to get 3-4 different cash offers and compare them against a traditional sale. [2]
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