Are All Home Cash Buyers the Same?

Home cash buyers entered the real estate residential markets with real traction back in 2009. It was when the financial crisis threw millions of homes into foreclosure, short sales, and semi-distress. Opportunists jumped into the volatile property environment in pursuit of profit angles never imagined in more quiet times. Since then, home cash buying has progressed substantially from telephone pole signs that promoted, “SELL YOUR HOUSE TO US FOR CASH TODAY.” There’s little doubt it’s a mainstream option for homeowners. It’s even embraced savvy tech operators known as iBuyers that deploy the internet and social media to make fast cash offers. According to The National Association of Realtors (NAR), home cash buyers in the US were responsible for 15% of home transactions in July 2020. More impressively, it grew by 11% year on year.

So, let’s dig down to see who these home cash buyers are

As a neat definition,  house buying entities can be individuals or companies active in the single-family or multi-family residential segments ready to buy units for cash on the nail with no lender assistance. Why is their proposition attractive? Well, it boils down to five principal benefits where they:

  • Erase the need to spend money on curb appeal, disrepair, decluttering, staging, and renovating to create buyer appeal.
  • Remove all the MLS hassle involving images and 360-degree video representations
  • Discount the lifestyle disruption of showing the house to strangers every other day.
  • Cut out realtor’s commissions, lender costs, and appraiser valuations below offer just when the deal looks ready to close.
  • Can get an offer into homebuyers’ hands within twenty-four hours and complete the transaction within a week.

However, not all home cash buyers fit into this formula the same way. Their conditions and strategies cover differences that can impact the price they offer you. Let’s look at them more closely:

1.   Buy-and-hold home cash buyers

This subcategory buys with the single-minded goal to rent the properties out as landlords, thus tapping into passive income for an attractive ROI (return on investment) over time. In some cases, a strategy along these lines requires minor fixing up or simply leasing out as-is. Institutional investors are into this model, purchasing at least ten rental properties annually. A primary example is Invitation Homes, owned by the juggernaut real estate company Blackstone active in 16 regional markets. Indeed, reliable articles indicate that buy-and-hold investors are significantly more flexible on closing dates. They also tend to offer better prices than the average home cash buyer.

2. Home flippers and wholesalers

Here you’re dealing with a different mindset if you’re a seller. This group searches for homes in poor condition where remodeling can pay huge dividends in a short time. Reliable data shows that in 2019 fix-and-flips swallowed close to 6% of national residential sales, with a whopping 245,000 single-family homes moved in this way. 

Wholesalers are swift operators, frequently flipping houses and condos without the “fix-up” in as little as twenty-four hours. They know their way around the real estate market, locating and targeting the “remodel-to-flip” and buy-and-hold parties for a fast-as-you-can-blink profit and then move on.

Compared to other participants, the price squeeze is far more of a compelling factor in this subcategory. Frequently the deciding  forces converge on the players’ knowledge of market rhythms and the opportunities sitting out there waiting for someone to take advantage of them.

3. iBuyers

Tech-savvy investors are entering the fray with innovative technologies like automated valuation models (AVMs) – generally after homes in better condition. iBuyers fit best into that benefit called “seller convenience.” Typically, they transact expecting narrower margins, relying on the sleekness of their digital models to yield the required profits, whether for a flip or buy-and-hold. Professional investors committing to the iBuying system tend to offer prices between 90 and 98 percent of fair market value. The downside is that it frequently comes with a fee of between seven and ten percent (higher than a realtor’s commission rate).

iBuyers only accounted for around 1% of the market in 2019, but that’s approximately 100% up on the previous year. Although the numbers fell off substantially during the COVID-19 lockdown, they have since made a comeback that looks sustainable for the rest of the decade.

4. The professional niche home cash buyer

Here’s the thing. Homeowners intent on selling their homes with speed, for cash, come from all walks of life. The most common are:

  • Couples entering divorce
  • Inheritors
  • Families transferring out-of-state
  • Investors with bad tenants
  • Cash-strapped individuals facing pre-foreclosure and unaffordable renovations

Essentially, needs are different, and the connection to market conditions differ considerably. The average seller has no idea where the offeror with ready cash comes from (i.e., his or her intentions). This opens the door for scammers on the one end of the spectrum to legitimate and sincere home cash buyers permanently in the game (as opposed to “for one deal and gone.”)

Due diligence is critical if you want to sell your house for cash but still want a reasonable price. Get comfort from the fact that competition is alive and well within this enticing transactional system. Wherever you live, you can be sure there are home cash buyers with long-standing reputations for dealing with sellers fairly. Client reviews tell it better than a thousand words. Scan their websites and customer support channels. Read about their processes, the articles featured under the blog section, and look at ABOUT US. It’s not rocket science separating the home cash buying leaders from the wannabes and chancers.

Home cash buyers for Birmingham, Al specifically.

Home Buyers Birmingham are the best-of-the-best in this city and surrounding areas – period. Look no further than this company to give you the fairest deal versus the competition, no matter what the latter’s agenda is. Home Buyers Birmingham have been doing this for years and check all the right boxes. You get all the home cash buying benefits without second-guessing your buyer’s motive. Also, they won’t rush you to close because they know you need to deflect stress. There are no hidden or extra fees anywhere in the small print. With Home Buyers Birmingham, you can rely on a straightforward proposal that, bottom line, is the best there is anywhere in the country.

Home Buyers Birmingham
1821 11th Avenue South Suite #55331
Birmingham, Alabama 35205

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Are All Home Cash Buyers the Same?
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