How to sell your house…
If you are a property owner, then you probably have had multiple real estate professionals reach out to you in regards to selling your house. Generally, there are two main types that would approach you regarding the sale of your home, a local real estate investor or a real estate agent. When you decide to sell, it is important to understand the differences between an investor vs a real estate agent. Each professional can help you reach your end goal, so before moving forward it is important to consider who can add the most value.
What do investors and real estate agents have in common?
Oftentimes, investors are mistaken as real estate agents. This usually happens because the intent of both professionals is to put their clients first. In the real estate industry, multiple service providers are required to facilitate a real estate transaction from start to end. This can be a very frustrating process with a lot of moving parts and a very limited time frame. Both professionals have large inner professional networks and are fully equipped to really simplify and streamline the home selling process for the owner.
Now, there is a stigma that is usually associated with investors where all they care about is the profits. Truthfully, the same can be said about realtors and their commissions as well as any professional working in real estate. The fact of the matter is, no one gets paid until the closing goes through. This includes clearing all title requirements, loan requirements, and home repair requirements in order to resolve any and all issues.
You see, it is in the best interest of both professionals to assist in any way possible throughout the home selling process. This is where things start to really differ between the professionals. Depending on the homeowner’s unique situation would determine which party is best to work with.
Agents List Your Home – Investors Buy It
A Real Estate Agent is someone that is licensed by the state and works as your representative to assist in selling or buying a home. The agent answers to the requirements of their profession, as administered by the government. Agents work on a commission basis and are paid a percentage of the home value in a transaction. Real estate statutes require agents to work under a broker that must supervise and be responsible for their real estate agent’s actions. However, the broker is legally not allowed to control certain aspects of their work which can result in inconsistency with the customer experience.
A Real Estate Investor is someone that is representing themselves and doesn’t need a real estate license to buy a home. They are wanting to buy the home from your directly. They are either managing, renting, or rehabbing properties with the intent to make a profit. Making repairs and improving the actual property is typically involved in their real estate investing strategy. They are running their own business and have a personal investment and interest to maintain consistent quality. Additionally, they have more freedom and flexibility to meet the individual needs of their clients.
Working with real estate agents
A real estate agent’s role is a fiduciary to help and protect your best interests in a real estate transaction. This includes working with homeowners to maximize the sales price for your home. Usually, they are working with larger brokerages with tons of resources to handle any situation that may arise during the sale of the home. This includes networks of furniture stagers, mortgage lenders, credit repair specialists, home inspectors, etc. They also have access to their state’s multiple listing service which can drive the most exposure for any homeowner needing to sell. Working with a real estate agent can net you 5%-10% more than your home’s appraisal value in some cases. It would probably be best to work with a real estate agent if your home is already in tip-top condition and in a desirable location. It is also more common to work with a real estate agent for higher-priced homes that are far above the median house price in your city.
PROS:
- Access to your local multiple listing service.
- Higher potential to maximize your home value
- You approach buyers with a level of authority
CONS:
- Paying realtor commissions
- Hiring a top brokerage does not mean you are getting their top realtor
- Top realtors are in high demand and you are at the mercy of their timeline
- Limited capabilities when dealing with costly and time-sensitive transactions
What does a real estate investor do?
Maximizing the sales price of a house really does depend on the condition of the house as well as the area it is located. Homeowners are really at the mercy of home inspectors and appraisers that work on behalf of home buyers to ensure they are getting a great product. But what if your home does not meet those requirements. In this case, it falls on the responsibility of the homeowner to update the home accordingly to meet those requirements and take care of them in a very limited time frame. Unless it is something minor like small cosmetic repairs, updating the home can become a serious hit financially and may not generate the return most homeowners are expecting.
Dealing with major or unexpected repairs is as bad as pulling out your own teeth. There are so many moving parts involved and something unexpected always comes up. Of course, you can hire a general contractor that subcontracts out the work and buys the materials for you but that in itself comes with its own set of headaches. You don’t really know what your timeline is or how much you are going to spend until you check what is behind the walls and in your attic. One small thing can lead to another and end up leading to time-consuming and costly repairs. Sadly, this gives contractors an opportunity to take advantage of homeowners leaving them vulnerable to extended repair times and unexpected costs. Investors have gone through ups and downs and are efficient at saving time and money on major repairs. Redoing electrical, roof, or plumbing usually takes 2 weeks and can cost up to $20,000.00. But to someone without the right contacts and relationships, those same repairs can cost upwards of $40,000 and take months to complete.
PROS:
- Working with an extremely active home buyer
- Not having to deal with the risk of costly and timely home repairs
- More dedication on your transaction and expedited cash closings
- Investors are sometimes willing to front a lot of capital upfront in order to deal with complicated transactions.
CONS:
- Investors will make an offer contingent on making roughly 15% of the sales price as profit
- Investors will always try to push to close as soon as possible
- Investors are in high demand and have to decide which project would be best for them
Realtor or investor, which is best for you?
As stated above, it is almost better to work with a real estate agent if the home you are selling is in a desirable location and the home is in inspection passing condition. Real estate agents are also much better equipped to sell higher-priced luxury homes as well. However, if you are dealing with a situation where you have a home that needs major renovation or you are dealing with an even more demanding issue regarding the title, a real estate investor may be better suited to be your direct buyer. This is because they simply have more incentive to work longer cases like divorce, probate, or foreclosures. In some cases, an investor would even pay off any liens on behalf of the homeowner to make sure there is enough time within a transaction. This is why they demand and justify asking for a 15% profit margin on each transaction. In fact, most investors were at one point a servicer in the real estate industry. They were either a real estate agent, mortgage lender, title agent, etc, and realized that they could be of better assistance to homeowners going through a challenging transaction and make a little more in the process.
Find a Houston Real Estate Investor | Ricky Pok | Wabi Sabi Realty Group
As always, it is important to do your due diligence when deciding to work with someone regarding selling your house. I started Wabi Sabi Realty Group as a way to help distressed clients that I couldn’t do otherwise while I was working as a mortgage lender. I was always troubled about how we had to decline or pawn off clients just because they were facing a situation that became way too complicated.
At Wabi Sabi Realty Group, we buy homes in any condition for all cash, without any fees or inspections, and have years of experience in the Houston, TX market. We are also dedicated to seeing all transactions through and are willing to invest upfront on transactions to make sure there are no complications during the home selling process.
If you or someone you know may be dealing with an issue that may require a real estate investor, please do not hesitate to reach out. Even if you believe that a real estate agent may be better suited, still feel free to reach out and I can definitely put you in contact with the top agents in your local market. For more information about how we can assist you, please give us a call at 281-306-5721 or fill out the form. We will be happy to talk to you about how we can buy your house for cash and close at a time that is convenient for you
Areas We Serve
Baytown, Conroe, Cypress, Deer Park, Galveston, Houston, Humble, League City, Missouri City, Pasadena, Spring and Sugarland, Texas.