Should I Sell to an Investor or List with a Realtor?

We have been in real estate since 2007 and have seen a lot of changes come to the real estate industry. Seems like today there is more information and more options than ever but yet with the ever increasing options, some home sellers are still unsure of which option is the best for them so before we proceed any further, we want to make sure you know all of your options when it comes to selling your property. While there are a lot of terms like ibuyer, hedgefunds, bridge buyers, wholesaler, Realtor, conventional & FHA Buyers being thrown around, at the end of the day, a buyer is a buyer, is a buyer.

However, which a seller might/should choose depends on their specific goals and timeline. We believe a seller should know all of their options before deciding but regardless of which you decide, we can show how to maximize your profits when dealing with any of the three. Aside from the traditional listing service we also offer unique programs to help you sell for as much as possible such as our:

  • Buy it now: NO CONTIGENCIES, NO INSPECTION PERIODS, $2500 DEPOSIT, Pick your move out date!
  • Fix and List: FIX UP YOUR PROPERTY BEFORE YOU LIST IT, PAY NOTHING UNTIL IT SELLS!
  • Tenants Without Toilets: BE A LIENLORD NOT A LANDLORD AND BECOME THE BANK!

Ready to explore your selling options?

Are you ready to sell your house in this hot market call 214-743-4143 or fill out this simple form.
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There are only 3 types of Buyers for your property

With all the hype and the noise of Investor vs Realtor, Cash vs. Financing, at the end of the day, its just marketing meant to get sellers to think one is better than the other. In reality, both have their advantages and disadvantages. So who should you sell to? We believe it’s the one that can help you achieve your goals on your timeline. Are you looking to maximize your profit or the most convenient process and to eliminate headache and uncertainty. Usually you trade one for the other. Understanding the three types of buyers for your property will probably help you determine which is the best for you.

1 – The Investor

The Investor, regardless if they are a local mom and pop, huge ibuyer or a wholesaler(middleman/headhunter), is just that. They look at your property as an investment and therefore will consider all of the risk as well as the rewards before making an offer on your property.

  • Pros: Fast closing(7-14 days),no repairs, no inspections, closing costs or commissions.               
  • Cons: You will sell for less than if selling to a retail buyer with a bank loan. 
2 – The Retail Buyer

This is someone who wants the property to live in it and is therefore not typically looking for a discount but is limited to which properties they can purchase based on condition, bank approval and lending guidelines. To get your property in front of these buyers you will need to list your property on the open market with a Realtor or similar service and your property will need to be close to move in ready condition.

  • Pros:  Maximize your equity and sell for Top Dollar.
  • Cons: Can take Months, Need to Renovate & Repair, Keep show ready, deal with Buyers, Realtors, Showings Inspectors, Appraisers, Banks, Title Companies, Repair Request, pay commissions, title policies, escrow fees and holding costs.
 3-The Terms Buyer

This buyer is able to usually unable to qualify for a bank loan in the near future due to work status or recent life events such as divorce, job transfer or bankruptcy but usually has a little money to put down and willing to pay more than a retail buyer due to limited lending options. They will however need you to finance the property to them. We usually consider this one step above being a landlord.

  • Pros:  Can sell for a higher price than property may be worth as is, no repairs needed no longer responsible for maintenance, taxes or insurance. Can earn interest. 
  • Cons: Do not get all your money at once. May need to finance from 10-30 years. May be limited to what you can charge in interest due to dropping interest rates. Will need a professional to keep you in compliance and set up mortgage note servicing to help avoid buyer defaulting on payments. 

The Wholesaler

While technically not a buyer for your house they are definitely doing their fair share of real estate transactions and while I am neither for or against wholesaling, (I actually buy from and work with wholesalers who offer a valuable service) I am of the belief that sellers are often misled by many as to what type of transaction they are entering into. Wholesaling has always been around but relatively unpopular until the last few years but with the rise of online education, more and more people are turning to wholesaling to earn a living especially since it requires little to no money out of pocket outside of their marketing costs. They will usually identify themselves as a cash buyer or as an investor rather than as a wholesaler. It is a strategy in which a wholesaler signs a contract on a property with its seller, will market that contract to and end buyer then sells that same contract(not the property, legally they can not claim to be the owner of a property they don not own) for a fee, usually 5-10% of the property but can be much higher. The end investor steps in and assumes responsibility and closes on the property according to the terms of the contract using their funds to close and the wholesaler collects the difference of what they got it under contract with you to what they sold it to the investor for. For example, a wholesaler contracts with you for $100k and they sell it to an end buyer for $130k, they collect $30k as their assignment fee, weather you should work with them or not is completely a matter of choice and if they can help you close accomplish your end goals or not. However most sellers are not aware they are working with a wholesaler until something goes wrong or until the end of the transaction.

How To Spot Offers From Wholesale Home Buyers

Offers from wholesale home buyers are usually easy to spot, here are a few telltale signs of a wholesale offer.

Escrow Period: Even though a wholesale deal is almost always an all-cash transaction, which normally closes escrow in about 15 days, the wholesaler will ask for a typical 30 day escrow period that allows them time to circulate the property among their investors and negotiate a sale.

Contingency Period: In most sales with a 30 day escrow period, the buyer has a specified period (commonly 15 days) during which to conduct inspections and review documents. If they cancel the sale after the 15 day contingency period, they lose all or part of their initial deposit. A wholesaler’s offer will allow them to keep their deposit even if they cancel on the 30th day.

Assignable. The buyer identified in a wholesale purchase offer will be the wholesaler or anyone designated by the wholesale during the escrow process, appearing as “John Smith and/or assigns.” This means the buyer can substitute a different buyer’s name (assign) during escrow. However, an assignable offer does not guarantee the buyer is a wholesaler. It’s a very common practice with investors to form a legal entity for liability or management purposes during escrow and want the property owned by that entity when escrow closes.

Expiration: Most purchase offers are valid for three days and expire at a time specified on the third day. Wholesale offers frequently require quick acceptance from the seller and usually expire in twenty four hours.

Always Ask. If you receive an offer with features similar to those I described above, ask the buyer if they are a wholesaler. Try these questions:

“Are you a real estate wholesaler?”

“Do you intend to assign this sale to another buyer during escrow?”

Don’t want the sale assigned? Counter the wholesaler’s offer with a “you can’t assign this” clause (consult with an attorney or licensed agent for help).

https://cordonrealestate.com/beware-of-wholesale-home-buyers/

Pros and Cons of working with a real estate wholesaler:

Here is what TREC said what it was like for sellers working with a wholesaler after an they conducted an extensive survey:

Sellers’ Comments on selling to a wholesaler:

Respondents who identified as consumers who sold their property to a wholesaler had mixed open-ended responses.

Those who reported a positive experience tended to say they appreciated options outside of a typical home sale experience. In addition, they expressed the general ease of offloading property when being faced with stressors like foreclosure, or a perceived sense the property was in too much disrepair to do well in the traditional market.

Those who reported having a negative experience tended to express feeling they were misled about the nature of the transaction or confused about whether the wholesaler was the end buyer or a real estate agent. A few mentioned that the sale was never completed since the wholesaler did not find a third party to purchase the interest in the property.

https://www.trec.texas.gov/article/results-trec%E2%80%99s-wholesaling-texas-survey

    Selling Your Dallas Home Should Be Easy, Fast, and Put The Most Money In Your Pocket.

    Selling a house or property is a big decision. Right now you’re probably thinking…

    “When is the right time to sell?”  “What is my property actually worth?” (HINT: not what Zillow say’s it’s worth) “Who should I work with?”  “I’m busy… how can I sell it with as little of my time as possible but put the most money in our pockets?”

    We’ve helped many many local Dallas area families sell their house fast, with less hassle, for higher prices.. and we’d love to help you too.

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    Fill out the short form below to get a FREE 100% Accurate Home Value Report for your Dallas area house with up-to-date nearby “sold” data and our recommendation on the trend of home values in your neighborhood.

    Ready to explore your selling options?

    Are you ready to sell your house in this hot market call 214-743-4143 or fill out this simple form.
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