Whether it be a larger home for growing a family or a vacation home for getting away, the reasons for selling a current home are plentiful. What most prospective home sellers usually do not consider until they finally close, is the cost of selling a house. There are two basic options when selling your home. The first option is selling to a conventional buyer, who will more than likely need financing. The second option is selling to an investor who can usually pay cash.
When selling to a conventional buyer two costs must be considered. The first cost is in repairing the property for a new buyer to successfully attain financing. A large majority of home purchases are made with FHA loans, which means that the mortgage company will send out an inspector and an appraiser to verify that the property is in good standing. For example, if a roof is damaged and does not have enough life left on it, they will require it be replaced. The other cost in selling to a regular home buyer is time. When signing a contract to sell to a regular home buyer, it is usually contingent upon the buyer securing financing. Assuming the buyer is pre-approved, we can project that closing time will take about 60 days as long as there are no bumps in the road with repairs, appraisals or the financing process itself. Usually bumps in the road will arise from buyer qualification, where the bank will ask your buyer for updated bank statements and W2′s depending on how long the closing is taking.
The other way to sell your home is to an investor. You can usually find investor buyers’ signs on the side of the road saying “We Buy Houses” or by receiving postcards with a similar message. The “true” buyers are those who can close on your house in 21 days or less. The cost incurred here can also include time if you decide to sell to the “wrong” investor. For example, if an “investor” contracts to purchase your home and he is trying to “assign” your property, there is a chance they will never close which costs you time and heartache. If you are dealing with a true investor group that is trying to purchase your property, the cost in doing this will be monetary. Whereas a regular buyer will obtain financing and pay up to the appraised value of the property, an investor will not be willing to pay that amount. The reason they cannot pay this amount is due to the type of investment they are doing. They may be looking to repair your property and hope to sell it at a higher appraised value, or rent it out and create an income. The benefit of selling your home to an investor is that they will usually pay all the closing costs and the sale amount will be net to you.
In conclusion, regardless of the reason you are selling your home, there are costs involved. Some monetary and some not . The exact cost of sale can be estimated by a Realtor and is based on your county’s millage rates and tax obligations. Selling to a regular home buyer can cost you time and in some instances money. A sale to an investor can and most likely cost you in equity, but will usually not cost you time.