Know what you’re doing before you sell to a house flipper

On Behalf of | Jan 21, 2022 | Residential Real Estate

Maybe you need to sell a house – your own or one you inherited. However, you don’t want to go through what can be a long, drawn-out process of getting it “market-ready,” then deal with strangers walking through it and sifting through multiple offers (if you’re lucky) to determine the best one. Just when you think it’s over, the whole deal can fall through and you may have to start over again – or at least go back a few steps.

That’s why more and more people are finding house flippers who are willing to buy their house as-is and are able to get to the closing in a couple of weeks or sooner. They will get less for the house than if they’d fixed it up and let a real estate agent market it. However, for people who need to deal with an inherited property thousands of miles away or don’t want to give up the chance at a great job in another state, it might be the most cost-efficient solution.

What should you watch out for?

There are all kinds of house flippers. Many people – often those who have been in the real estate business – make their living buying homes, getting them into “move-in” condition and selling them at a profit. You’ve also likely seen a slew of ads by businesses offering to give you cash for your home. Just be sure to do some due diligence and make sure you’re choosing a person or business with a good reputation.

It’s also important to learn a little about how legitimate house flippers earn their money and what a reasonable price is for your home. It involves the “flipper pricing model.” It starts with determining a home’s after-repair value (ARV). That’s how much the house can reasonably sell for in your market after necessary repairs have been made. To make their investment worthwhile, flippers will typically offer no more than 70% of the home’s ARV to the seller. If needed repairs and possible upgrades are extensive, they could offer less than 70%.

No matter how anxious you are to unload a home, you don’t want to give it away. If you’re not certain that a flipper is operating honestly or you believe you’ve already fallen prey to a less-than-legitimate buyer, it may be wise to seek legal advice.