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◊Home ◊7 Ways to Sell Your House in 7 days
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Do we buy ugly houses? Here's everything you'll want to know
Who's "we" and why do you want to buy them ugly? We have investors within our network who specialize in buying ugly houses. These investors buy houses to rehab and then sell, or lease. While buying ugly houses has the potential to bring a good return on investment, there are also risks involved and these are usually assessed at the time of purchase. Ugly houses may often sit for a long time on the retail market, waiting for a qualified buyer who can buy and get a conventional loan to buy the house. We are a National network of independent investors who buy houses for cash all around America. All of the investors within our network work independently from one another. Our network merely supplies leads to individual investors in different States so that they can contact sellers directly to make offers on their house. HousesFast and its network House Buyers National Network, do not work directly with the investors within our network during any stage of the offer, or purchase of the houses. Our network exists for the purpose of providing sellers access to many investors around the country who can make offers to buy houses fast.
What to do with an ugly house? Sell to investors who buy ugly houses.
In the ideal real estate transaction, everyone gets what they need. The seller gets his house sold, in the time he needs it sold, for the dollar amount he is expecting to sell it for. The investor gets what he needs, an ugly house he can start rehabbing, for a price he can still make a profit with and with terms that will facilitate the business. Here are some of the con's to rehabbing your own house to sell, with the pro's being you may get a higher dollar amount in the end, if it's done right.
For the homeowner who wants to know more details about selling your house now, we can provide you with the means to get no obligation offers from investors who are interested. For the homeowner who would like to explore other possibilities, such as to fix and rehab your house yourself, we provide numerous articles and tips to help you go about this process.
Fix and rehab/ remodel your ugly house yourself.
If you also plan to sell your house at the end of the rehab/remodel then you'll need to consider costs of selling your home retail as well. Many of these costs are outlined below. Some of the Rehab and selling costs you'll want to consider.
Sell ugly house "as is" on the retail market. Selling an ugly house "as-is" on the retail market is not easy to do, unless you're prepared to take a considerable discount. [The term "retail" market is generally used to refer to selling your house through a traditional Realty company, with the Realty company usually using the MLS (Multiple Listing Service) to find end buyers through their buyer's Realtor.] A discount selling your house does not mean regular value, minus cost of repairs. It may even mean regular value, minus cost of repairs, minus at least 30%. See an investors formula for offer price. The up side of the retail market approach, is you may get plenty of offers from investors, but be prepared for plenty of "low ball offers". The down side is you will now also have to pay Realtor commissions, these can be from a few to 6% and rarely higher. Add that 6% to a few percent for seller closing costs, a few months of holding costs and possible buyer concessions your buyer may be asking for and you may find it's costing you close to 10%. If your selling an ugly house in it's "as-is" condition, your end buyer is almost certainly an investor. Ask any investor whether they would rather work with you the seller directly, or through a Realtor. Now sometimes that extra 10% or so, can be the difference between finding an investor who can buy your house, or not. Remember investors are in this business for a profit and cannot purchase a property where their purchase price, closing costs and repairs, equal the final sales price to their end buyer. Too often a seller uses the formula to estimate the price they hope to receive from an investor as: ARV (After Repair Value) of the property - Repairs = cost I can sell my house for. In reality it may be closer to 30% off of that, but we'll talk about an investors formula for offer price later.
How much money can I sell my ugly house for? Obviously the condition of the house will seriously affect the price you will be able to sell it for. You might consider getting estimates from a few contractors for all of the repairs and that might give you a better idea of what the house will be worth to you, not what it's worth to your buyers. When estimating the repairs that will be needed to remodel the home, too often homeowners underestimate the amount of repairs needed, because they do not realize how much upgrading it will need to bring it up to "market value". The best way to find out how much upgrading is needed, is to look at the comps (market comparables). Your house really only needs to be rehabbed up to the level of the comps you are using in your estimation formula. For example, if you are using 3 comps (at least 3 comps are most commonly used by any appraiser, or Realtor) to estimate the After Repair Value that look like this:
...well then, you have a pretty tall order for your repair estimate. Don't think you can get away without estimating for any of the above if all of your comps have the same, because these details are what an appraiser, or an investor, will also look at.
The market comparables. Are they ugly houses, or not? The market comparables, also known as comps, recent sales, are what every appraiser uses to determine the value of a property. Realtors use them when the create a CMA (Comparable Market Analysis, contrary to misunderstanding Realtors do not "appraise", nor make "appraisals" of properties), investors will definitely use them before they make you an offer and even your tax appraisal district uses them when they value your property for taxes. Though the tax appraisal district usually uses quite outdated information and conservative numbers, for this reason appraisers and knowledgeable investors will not use the appraisal district's valuation. Here is a summary of what is "most commonly used" for comps by all of the above:
If you're wondering where these comps come from, it would be the MLS (a database that exists in almost every city and is used exclusively by Realtors™ and some other paying entities). These MLS current sales data are available throughout the Internet and exist as plug ins on many local real estate sites, though the more detailed records of previous and recent sales are not available to the public. For that you'll need to have a Realtor, or a site related to them, pull comps for you. Recently some sites like Zillow.com have started to use more of this recent sales information for the public and are getting better at producing reasonable comps, at least some of the time.
What an investor buyer will want to know. Before an investor makes an offer on your property, he/she will want to know the following, but does not always have to have all of this information. Some of these details are already publicly available on the tax district's website:
Most investors would rather work out another option to paying all cash for your property. If you MUST have all cash say so early on, this will limit your pool of buyers, but remember you will probably not get the same price as if you were taking back financing on some, or all of the property, letting an investor take over payments, taking back a note for 6 months till repairs are made, or many other options you may be offered. For most sellers, cash is their first choice and if they need too much and there's not enough equity in the house, then investors will probably pass. If the seller is prepared to accept a price that will work for investors, then there may be plenty of cash buyers available. See an investors formula for offer price.
An investors formula for offer price on an "ugly house". Although every offer will be different and one investor can afford to offer more and another less, there are some fairly common criteria that are used by many investors, especially if making cash offers. The formula is also most commonly used on houses that do need repairs, not necessarily houses already in retail condition. One investor teacher used a now popular acronym MAO (Maximum Allowable Offer) to describe what an investor should offer when buying a house. It is calculated as follows: ARV X 70% - Repairs = MAO Where ARV is the After Repair Value of the property and that means repaired to "tip-top" shape, the condition the house would need to be in to sell on the retail market for best possible price. In other words, how much repair does the house need to look as nice as the nicest houses (similar SF, similar age) on the street, or subdivision which have recently sold. To calculate the ARV the investor will use the market comparables for the houses recently sold in their After Repaired condition. Not necessarily the most expensive, but the average price range of houses sold. Repairs are any work needed to be done to the property to get it into excellent retail condition. Paint, carpet, cleaning and hardware replacement are minimums. See Fix and Rehab for a more complete list. MAO does not guarantee the investor will make a profit, it has previously been described as the following:
In conclusion the typical investor formula for offer price may be the After Repair Value of the house - 30% - any repairs needed to get the property into tip-top shape. If that already sounds like to low an offer, don't panic. Consider we're talking about what would usually be a cash offer. If you're not prepared to sell your house that cheap, or if you don't have that much equity in the house, there is still a good chance an investor will be able to work with you in buying your house. There are other options besides all cash offers and investors will usually give you a number of choices. If you do receive multiple offers to buy your house, knowing which investor to work with can be one of the most difficult decisions to make. Although many investors will work with you to create a mutually beneficial transaction, there are those who may tell you anything you want to hear, so they can do anything they want to do. Knowing this from the beginning can save you a lot of time and trouble in the long run, so you can plan ahead better and don't run out of time to do what you need to.
Protecting yourself through disclosure. Most states have disclosure laws, you may need to study up on, but an easy short cut is to get a "seller's disclosure" form from a local Realtor, or realty company. The investor you decide to sell your house to may also have one of these forms and you can ask for it if he doesn't give one to you. The idea of the form is not to find out everything that's wrong with the house, because the investors inspector will do that already. The disclosure form is to make sure you have disclosed everything required by law to disclose in order to protect yourself. In some states for example, a buyer can cancel their contract with you at any time if they have not received this disclosure, that would effectively give them an unlimited option period while they are under contract to buy your house. Disclosing every problem you are aware of with the property on a document signed by your buyer, also protects you should someone come back later and claim you were "deceptive" for not disclosing what you knew. Deceptive Trade Practice laws may be threatened in this scenario, but you won't have to worry about that at all, if you did your homework by having the form.
Where do the ugly houses come from? As investors buying ugly houses, we see ugly houses come from many places. Primarily these houses get into bad condition from a long period of not being maintained. Houses need a lot of regular physical care which often enough the occupants are unable to manage. A house needs for example would be: Painting (sometimes annually), cleaning, power washing mildew off masonry, caulking. The caulking of seams on the exterior off the house, siding gaps, trim, around windows, flashing, etc, has to do with sealing against leakage and is one of the most important and often overlooked regular maintenance needed. Composite roof replaced every 10-20 years, depending on the type of shingles formerly used. Low hanging branches should always be cleared away from the house and little if any trees left overshadowing it. Overhanging tree branches create continuous moisture on the roof of the house from dripping condensation and promote various growths. These constantly wet and shaded areas of the roof are the first to need replacing. Correct landscaping is not just to beautify the exterior of a home, but provides proper soil conditions which preserve the structural integrity of the foundation. When a house's foundation has failed, this is more often than not a condition which could have been prevented through proper landscaping and watering. In areas with clay, or soils susceptible to frequent expansion and reduction, even watering of the soil can create a continuous condition for proper foundation preservation. Inherited houses are frequently offered for sale to investors, as the owners often do not have the finances, or desire to rehab the house to marketable condition, or would just like to get the house sold quickly. If you are selling a house like this and have not been through probate court, you should try to find out as early as possible whether this will be required for you and what if any documentation will be required for you to have on this. The buyers title company will want to make sure this was taken care of and this can be a long hold up if you have not done the proper follow up on it. You should also do your research on the tax implications and requirements of selling the inherited house. The IRS has published detailed information on this in a document Publication 559 (2006), Survivors, Executors and Administrators. Some of the ugly houses that get offered to our investors have been damaged by flooding. This flooding may be a result of houses being in a common flood plain, or else in a hurricane. Our investors purchase flood houses for cash that can't be bought or, sold any other way. Many of these kinds of homes have also developed serious mold or, toxic mold problems (like Stachybotrus). Investors can clean out, perform mold remediation and get the houses back into livable condition where no one else could. Along the Gulf States where hurricanes are common, we have investors who search for and are regularly purchasing wind damaged homes. In some cases the house may be little more than a remaining slab, or empty lot, in which case properties can still be purchased for lot value. Hurricanes are a major source of damage to whole neighborhoods and towns simultaneously. Many sellers do not want to go through the process of rehabbing their house after they have collected their insurance money and are more interested in selling the house in it's un-repaired condition to cash buyers. Cash buyers within our network may be able to make you an offer to buy your house with little or, no hassle. Fire damage to houses is usually quite severe and even when the fire has not burned in much of the house, the smoke damage can cause the house to be uninhabitable.
Damaged by foundation shifting: Foundation shifting, settling and movement is the most common serious problem with houses in some areas. This kind of damage is typically expensive and make continue to cause long term damage to the house until corrected. Cracked slabs and sinking foundations have a number of different causes, often related to the type of soil and or, landscaping. A type of clay soil found which is very frequent in some states, expands and condenses under wet, or dry conditions. When the soil is wet the clay will expand with the moisture. When the soil gets dry and stays that way, the lack of moisture causes the soil to shrink and pull away from the foundation of the house. This soil is often spread out unevenly in patches and will cause only certain areas of the house to sink more than others. This type of foundation damage is avoidable through even watering during dry seasons.
Grown mold, or toxic mold due to leakage. Mold can become a serious problem in many houses and if left untreated can render a property uninhabitable. Mold or toxic mold has become a kind of scare word amongst home owners, or would be house buyers, in the real estate industry . Once a house has had toxic mold problem it may be required to go through expensive mold remediation and repairs. Even after this it may still be necessary to disclose the fact that the house previously had toxic mold and this could be an issue to potential buyers in the future. For many of our investor house buyers toxic mold is not a scary issue, because they are familiar with mold remediation and repairs. This kind of repairs and mold remediation can be quite expensive, but our house buyers are familiar with the process and can create a good estimate on the cost of repairs, which they will use for their consideration when making an offer to buy a house. Selling because of Toxic Mold: The toxic mold can can create a serious stigma on a property making it almost impossible to resell, or to get a fair price for selling it. We don't believe that it has to be a serious issue and our investors look forward to buying these houses. Our investors perform mold remediation and rehabbing of these kind of properties, in order to bring them up to environmentally safe standards.
This site is N0T ASS0CIATED with the company and franchise HomeVestors ® of America, or their trademark WE BUY UGLY HOUSES ™
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Questions
our
investors are frequently asked:
"How much money can I get for my ugly house? How much money can I get for
my ugly house? Do you buy houses that aren't ugly? Can I
If you have the time, the patience, the knowledge and the money, then rehabbing
your ugly house yourself might be for you. After all selling your house to
investors is not going to be for everyone, but you might want to consider