The story that emerges from these two questions goes to the heart of real estate markets, specifically residential single-family homes and condos. Starting with the financial crisis in 2008, homeowners have had the option of selling to a buyer category that includes wholesalers, fix-and-flippers, and fix-and-renters. Its general heading is home cash buyers who, indeed, are jumping into the fray against traditional realtors who represent homes to third-party buyers through the MLS. Questions have a way of leading to more questions, so here are some that you as a homeowner should wrap their mind around:
Who or what created the opportunity for the home cash buyer to have a chance of acquiring your real estate assets? And how do home sellers navigate this space to get the best results? Finally – to reiterate – how can an appraised value help your decision?
The answers to the above are vital considerations.
In the beginning, a home cash buyer option appealed to hard-pressed people. That’s to say, it connected closely with victims of the mortgage collapse caught in the flood of foreclosures that followed.
These folk didn’t align well with the essential ingredients for traditional marketing to work favorably, namely:
- Top-class curb appeal
- Uncluttered and possibly staged internal presentation
- No or minimal disrepair
- No severe time pressures
Things have changed in the home cash buyer framework in modern times. Old problems still linger but others have also appeared as significant homeowner handicaps:
The old ones:
- Creditors hounding them to settle up.
- Mortgage payments falling in arrears.
- Disrepair with no money to fix
The more recent ones
- Divorce proceedings and spousal disagreement.
- Inheritance and ongoing family squabbles.
- Defaulting tenants, especially during the CARES Act in 2020/21.
- Illness in the family
- Urgent transfer out of the neighborhood.
In short, it’s a picture of a seller pushed into a corner by cash flow issues, excessive emotional distress, and often daunting time challenges. These realities detract from marketing a home traditionally, finding it difficult to compete on a level playing field in a competitive market. But, of course, a seller’s market is one massive exception to this. The latter can help substantially deflect some of these shortfalls. However, when it’s a buyer’s market (or a neutral one), all the described constructs are generally heavily in play.
Home cash buyers stepped in to fill the gap.
Yes, that’s how it works in a capitalist economy. Entrepreneurship invents new systems that zone in on emerging needs. It’s precisely what happened here, and on the surface, home cash buyer benefits looked worthy of attention. Front and center of the latter were, as a home seller, you can:
- Bypass realtors’ commissions and other closing costs that generally eat ten percent of the eventual agreed-to home price.
- Erase mortgage lender involvement, and therefore low appraisal values from disrupting the home buyer’s offer.
- Expect a firm cash offer in your hands within forty-eight hours of contact and money in your bank account (i.e., a deal closing) within a week.
- Dismiss poor curb appeal, unsightly decor, and cluttering as deterrents to home cash buyers.
- The latter probably visualize a do-over anyway once they take ownership.
- Similarly, they view fix-ups and renovations professionally, promising not to weigh these things unfairly against the offer price.
On the surface, the home cash buying option looks great! Doesn’t it?
No question – as long as it works as presented. If so, it has the power to solve cash flow issues, end all kinds of psychological pain, and avoid lifestyle disruption like prospective buyer tour-inconvenience. Also, it seamlessly kicks home inspections to the curb – a post-offer contingency that inevitably uncovers defects and erodes offer pricing. So finally, the answer to disadvantaged home sellers’ prayers is here. Or is it?
Not so fast; it’s not that simple.
Home cash buyers all share one goal that should be obvious to every homeowner entertaining this alternative: to profit from the transaction. That said, not all home cash buyers are the same. Their path to profit is critical and where things come together or conversely fall apart. As we see it:
- There’s no substitute for integrity when it comes to choosing the home cash buyer in the end. Sure, there has to be a monetary reward on the other side of the table, but things go awry when this starts looking excessive. Home cash buyers who lack integrity zone in on seller desperation, thus paving the way to earn abnormal profits from the transaction. It emerges in an approach that’s short on perspective.
- Remember, the home cash buyer you’re dealing with has a kick start of around six percent of the offer price from the commission saving. That should figure into their bottom line. With this in the bag, the conversation turns to the home’s value through an accurate appraisal. There should be a connection to that number, cash offer or not. Here’s the thing:
- Unscrupulous home cash buyers, by default, frequently ignore this vital metric in the hope that their lowball offer will resonate with you. It works more times than you think, success generally directly connecting to the sellers’ pre-existing anxiety.
- On the other end of the spectrum, operators in the arena like Home Buyers Birmingham function around real appraisal value. In their case:
- Birmingham’s principal was a registered appraiser before initiating his home cash buying entity in Alabama.
- So, when you contact them, you can assure yourself that he personally goes through the appraisal process.
- Although his license to appraise has officially expired, the experience and knowledge attached to it have not. He knows, and so should you, it’s crucial to a fair offer in the end.
There has to be a middle road – a balance, if you will – where the appraisal fits into the formula for a win-win. In short, it should converge on solving the seller’s most pressing issues but not take unfair advantage.
We suggest that one of your first questions when dealing with a home cash buyer, is “So how does my home’s appraisal value figure into your offer?” We predict the responses will tell you much about the expertise and sincerity of the party you’re talking to. Professionals stay connected to appraisal values, whereas those with a less systematic approach will likely expose their “iffy” evaluation methods when confronted with a question like this. No matter where you live in the USA, the Home Buyers Birmingham model is the one that should work in your favor when evaluating this option.
Home Buyers Birmingham
1821 11th Avenue South Suite #55331
Birmingham, Alabama 35205