Jeremiah Dalton, owner of Suffolk County House Buyers goes over the pros and cons of selling your house to a real estate investor.
(Full Transcript Below Video)
Jeremiah Dalton: 00:00
Hey, what’s going on everyone? I had a little time this afternoon which is a rarity these days, and I just wanted to make this quick clip about the benefits of working with an investor and selling your home off-market to a cash buyer. I’m hoping this video gives you some insight to help you decide if this particular route is the right option for you to take, because it’s really not for everyone.
Jeremiah Dalton: 00:20
In an effort to debunk some of the propaganda out there from those that say selling to an investor is always the best option, let me be clear. If you want the absolute most money for your home, then listing it is your best bet. It’s just that simple. Don’t sell to someone like myself. If you list your property, you’re gonna have more traffic through your home. The more traffic you drive to your home, the better chance that you’ll get a higher selling price. Yet, for some people, getting the most money is not the most important thing for them. I always say working with us is great for homeowners and landlords, but only if it makes sense. I want to explain to you a lot of the reasons because there are frankly a multitude of them.
Jeremiah Dalton: 01:04
For starters, let me explain some of the drawbacks of listing the home versus selling it off-market directly to a buyer. As I mentioned before, you want as much traffic through your house to get the highest price, however, having boatloads of people come through your house may not be what you want. You might be embarrassed of the condition. You may value privacy above all else, and having a sign on your front lawn is gonna lead to many nosy neighbors peeking their head inside, which is not something you want. There could be a divorce going on and you don’t want people to be aware of your business. It makes sense. These are all valid reasons as to why you’d prefer an off-market transaction. By working with us, you would accomplish keeping your personal business a secret.
Jeremiah Dalton: 01:50
Now, when you list your home, you’re gonna use a realtor, and undoubtedly you’re gonna have to pay a commission, which is something you avoid with selling directly to a cash buyer. That’s a given. Beyond that however, there are some issues with working with a realtor. There’s great realtors out there, but in my experience, there were only a handful of great ones, and the rest give the industry a bad name. You may get someone who doesn’t have your best interest, and again, you’re paying them to take care of this burden for you. I’ve seen many realtors keep their clients in the dark about other offers, they never answer calls, and quite frankly, they compound what is already a difficult process. The nice thing about working with investors such as myself is that you can get the information first-hand without having someone in the middle. If you’ve ever played the game of telephone in grade school, you know how a story can get twisted, so you avoid that.
Jeremiah Dalton: 02:44
Another benefit is the speed as to which we close. I’ve seen even in this market with houses that are priced very fairly, take months upon months to close with buyers stringing sellers along, only to get cold feet before signing contracts, or they lose their commitment and now you have to start the process all over again. Now, how do I know this? It happens to me all the time as a seller. The amount of people out there, flaky ones out there, is astonishing and quite disappointing. Bear in mind, I’m selling turnkey homes that have a flurry of buyers interested, because brand new homes are much more desirable, naturally. Even I incur this. This leads you to situations where you might actually reject another offer, and then that original buyer bails on you, and when you go back to that second offer, they’re already gone.
Jeremiah Dalton: 03:35
Another unfortunate consequence of living here in Long Island are two things: One, property taxes and two, oil heat. For each month that you can’t sell your home, that could easily be between two to three thousand in taxes and utilities, and I’m not even counting the fact that you have a mortgage. With a cash offer, you’re guaranteed to close in as little as 30 days. Homes that take months and months to sell in the winter time especially, you could be paying an extra 10 to 15 to 20 thousand in simple holding fees. Going back to what I said about realtors, many are gonna promise you the moon as far as the sale price, and after completely striking out on the list price, they’ve now stigmatized the home which leads to even more days on market. Again, not always the case, but certainly happens quite a bit. All of this is avoided with working with an investor. Now again, I’m not trying to knock Long Island. I live on Long Island. I love it, but there’s a high cost of living.
Jeremiah Dalton: 04:28
One of the things that you really need to consider when selling your home off-market is the condition of it. Aside from being embarrassed by the condition, which you shouldn’t feel embarrassed because that could be outside of your control, and it’s not indicative of who you are, but if the condition is bad, 98% of the buyers out there are gonna need to get a loan to purchase their home, and unfortunately, that is based almost exclusively off the condition outside of the value of the home itself.
Jeremiah Dalton: 04:59
There’s not many people out there who have lines of credit or cash to use on their next home purchase, so they’re gonna need financing. Even if the home is functional, but many of the key components, roof, siding, boiler, electric, even windows, they’re at the end of the life cycle, the home is not going to qualify for any government sponsored loans such as FHA, SONYMA, or VA, and quite possibly a standard conventional mortgage could be out of the question. Even if the condition is great but there are illegal additions to a home, that could preclude a buyer from getting financing. You could certainly legalize them, but that takes time and money. It’s not a guarantee.
Jeremiah Dalton: 05:38
If you plan to sell as is, and there are these kinds of complications, then you’ve now removed almost all the buyers who could purchase your home. The only ones left, like I said, are those with rich parents or relatives who could float them the cash, or those willing to do a 203K rehab loan, and that comes with restrictions. For the most part, you’re gonna be left with your pool of investors who will only buy the home if it makes sense for them from a financial perspective. A lot of times I explain to sellers that there is a decent gap between the standard retail offer and the investor offer because the retail buyer doesn’t care about the profit, whereas the investor does and there’s a lot of cost an investor has to consider.
Jeremiah Dalton: 06:20
Another thing to ask yourself is are there tenants? Whether it’s good tenants or bad tenants, having a cash offer and selling off-market could be very beneficial. If you have bad tenants, and you’re ready to move on from being a landlord, selling to an investor is the smart choice. Even if they’re good tenants on a long-term lease, you may not want to disrupt your cash flow by scaring them off after you list it, so selling it privately off-market would help you to continue to get those checks up until the day you close.
Jeremiah Dalton: 06:49
Lastly, and this is important, is how willing are you to cooperate with the demands of a buyer once both parties agree on a price? Many times buyers will make a competitive offer, and I know use the inspection as an opportunity to take as much off the purchase price as they can. Are you willing to make the repairs they want in order to allow the deal to go forward? I don’t know, but that could be an issue for you. When working with an investor, no repairs are expected to be made by the seller, traditionally. We certainly don’t require it, and overall it’s a very smooth process for the seller.
Jeremiah Dalton: 07:25
When I typically am talking to a seller, I want to find out the following: One) Is the house finance-able? If not, then the investor route could be their best option and probably is. Two) Is a smooth transaction something that’s particularly important to them? Are you at stage in your life where your BS tolerance threshold has hit its limit? If so, working with us is great because there’s no bullshit whatsoever, pardon my French. Three) Do you need to sell really, really quickly or do you need a guaranteed closing on certain day or month way into the future? I’ve gone under contract on houses where the home wasn’t purchased until 10 months later because the seller wanted to close on that particular day or that month, and they wanted the peace of mind knowing that a deal was gonna locked in. That’s not something a regular buyer would do, and a regular buyer isn’t going to close in 30 days or less.
Jeremiah Dalton: 08:19
Are you okay with getting full retail for your home? This is the last point, and again, I pay a fair price for a home considering what we can provide to you in terms of no fees, a quick and painless closing on your timeline, buying in an as-is condition, but it’s not full retail. If getting full retail is your priority, and rightfully so, because many people purchase real estate specifically for that reason, then I’m happy to tell them that the investor offer doesn’t make sense, and we could certainly discuss our options in regards to listing it. As long as you can withstand the nonsense that comes with selling on the open market, then an investor offer is definitely off the table if the value is the most important thing.
Jeremiah Dalton: 09:00
If any of these reasons I mentioned above apply, then an off-market cash offer could be beneficial or could warrant discussion. If your home is in great shape, and you could put up with the BS, then you should list it. I hope this clears some misconceptions out there. If you’re interested in getting a quote from us, you could set up an appointment by calling my office at 631-204-3829 or you could fill out the form on my website, www.suffolkcountyhousebuyers.com. Thanks for watching.