- Key Takeaways:
- The Main Difference between Property Investors and Homebuyers
- Home-selling to an Investor vs. Listing with a Real Estate Agent: Key Factors To Consider
- Final Words
Selling Your Home to an Investor vs. Listing with an Agent
The real estate market is complicated. From fluctuations in the local real estate market to variations on how to sell your home, the average homeowner can feel overwhelmed. Ultimately, when selling your home, you have the option to focus on selling to a real estate investor or using a listing agent to have a traditional home sale. Both have benefits and drawbacks. Your goals, timeline, and comfort level can help you determine whether you should sell your home to an investor or use a listing agent.
Selling to an investor has several key benefits. Each real estate transaction is different; however, real estate investors are often cash buyers, have quick closing timelines for a quick sale, and have limited concession requests. However, this can also come with an offer that is below market value. In addition, a seller may feel emotionally tied to their home and not want to see it as a rental property or sold to house flippers.
Using a listing agent for a traditional home sale also has benefits. A realtor that knows the local market can accurately price the home at a fair market value. In addition, putting the house on the open market, may result in multiple offers, resulting in a higher sale price. Moreover, the listing agent can handle all of the complex paperwork, marketing, and negotiations for your benefit. Yet, selling on the open market can be a lengthy process that includes substantial repairs and complicated negotiations.
Fret not. We’ll help you weigh the two options. Read on to learn what critical factors to consider to make informed home-selling decisions.
The Main Difference between Property Investors and Homebuyers
The real estate market shows no signs of stopping. As such, it’s best to capitalize on its market growth. One way to take advantage of this is to sell your property.
According to NAR’s most recent research, moving closer to family and friends is the top reason for selling homes. While over 20% of home-sellers said so, 11% sold their properties to move to a new place due to retirement and less desirable neighborhoods.
When it comes to home-selling, you can sell your house directly to an investor or list your property with a real estate agent.
Now, let’s draw the line between investors and homebuyers. One of the significant differences between the two is their intent. Why are they looking to buy a house in the first place? Find out the answer below:
- Property investors: They invest in houses for business purposes or as part of their investment plans. For example, they seek to list their properties on Airbnb for short-term or long-term rental. Some think about turning the houses into income-generating properties. Others consider house flipping to gain a high ROI.
- Homebuyers: They buy houses to have a place to stay long-term, whether starting a family, building a career, or establishing their residence for good. Purchasing properties for future investments isn’t their primary intention. That’s why they apply for mortgage loans, seek the best savings account interest rates, and do everything to cut costs.
Given their motivations for home purchases, you can decide whether to sell your home to an investor or list your property with a real estate agent.
To help you make informed decisions, learn the factors to consider in the next section.
Home-selling to an Investor vs. Listing with a Real Estate Agent: Key Factors To Consider
When it comes to the real estate market, home-selling is thriving. As such, now is the right time to sell your property if you have a valid reason for this. Doing so lets you earn a high ROI!
But here’s the current problem: While the house prices go up, the sales go slow. According to Bankrate, the median home price has increased by 2.8%, while home sales decreased by about 2% from August to September 2023.
The statistics leave you with the decision of whether to sell your house to an investor or list it with a realtor. Weigh both options by looking at the table below:
|Key Factors To Consider
|Home-selling to an Investor
|Property Listing with a Real Estate Agent
|Real Estate Market
|Learn and understand the market for informed selling decisions
|Work with experts who know the ins and outs of the real estate market
|Sales and Marketing
|Negotiate directly with the investor
|Undergo the typical process of sales and marketing (property listings, viewing, inspection, negotiation, and closing)
|Sell the property as is
|Undergo property repair and upgrade before selling
|Networking and Negotiation
|Look for potential investors and negotiate with the prospect yourself
|Tap into the agent’s real estate network and entrust the negotiation to them
|Prepare legal documents yourself but handle less paperwork
|Consider complex paperwork but leave the preparation to the agent
|Deal with lower costs as long as you negotiate well with the investor
|Prepare for several expenses involved, including the agent’s service fee and commission
|Sell property faster but at a lower price
|Sell property at a higher price
Let’s expound on each of them.
1. Real estate market
The real estate market is a complex industry to navigate. Think of property listings, house inspections, real estate financing, and mortgage loans associated with it. However, selling your house directly to an investor is often less complicated. Still, learn and understand the market to make informed selling decisions.
Real estate agents are experts who know the ins and outs of the market. David Janovic, Founder & CEO of RJ Living, suggests hiring a realtor if you don’t have the knowledge and experience in the industry. “Your agent will assist you every step of the way, from listing your property to closing the deal. Ultimately, they will help find the right homebuyer and maximize your profit.”
2. Sales and marketing
It’s pretty straightforward and hassle-free when you sell your home to an investor. All it takes is to find a potential investor, negotiate, and get your bucks for selling your property. You don’t have to undergo the real estate processes, such as property listing, viewing, inspection, repair, and closing.
But you’ll go through the typical processes when you sell your house through a realtor. It starts with marketing, where you’ll get your property listed, set for viewing, and scheduled for inspection. Then, your agent will negotiate with a potential homebuyer, prepare all the pertinent documents, and close the deal.
3. Property condition
For home-sellers, the property condition is a topmost consideration. But when you choose to sell your house to an investor, you need not worry about this. Most investors will purchase properties as they are but at a lower price. Then, they usually renovate and sell them at a higher price for profit.
Stephan Baldwin, Founder of Assisted Living, underscores the importance of property inspection. “This is a part of the overall real estate equation, particularly when you list your house with an agent. As such, you must have a property upgrade or undergo repair to increase your home value and sell it at a higher price.”
4. Networking and negotiation
Real estate involves networking with potential investors or homebuyers and requires skillful negotiation to make the most of the market. If you’re seasoned in the industry, having worked with various stakeholders, sell your home to an investor. Doing so is a good idea as long as you negotiate for flexible terms.
However, working with a realtor is better if you’re selling your house for the first time. Your real estate agent can give you access to a vast network of potential homebuyers. They can negotiate with a few worthy prospects on your behalf. Ultimately, your agent will help you find the right homebuyer to purchase your property at a higher price.
5. Legal paperwork
Real estate requires a lot of paperwork for legal and regulatory compliance. Think of property deeds, sales contracts, closing statements, title insurance, and tax records. You’ll handle less paperwork if you sell your house to an investor. However, you’ll have to prepare the legal documents yourself.
Andrew Pierce, CEO at LLC Attorney, recommends working with a real estate agent for home-selling. “That way, you need not worry about the complex paperwork to prepare. Your realtor will help you obtain and secure all the legal documents. More importantly, your hired agent will help you guarantee legal adherence.”
6. Costs involved
Anthony Martin, Founder and CEO of Choice Mutual, suggests preparing financially for home-selling, especially if you hire a real estate agent. “While it ultimately gives you profits, several costs are involved, like closing costs, staging fees, home repair costs, property inspection fees, and agent commissions. If possible, get insurance for financial protection.”
Meanwhile, you’ll save a lot of money if you sell your home to an investor directly. For one, you don’t need to deal with the costs involved in property staging, inspection, and repair. Likewise, you don’t need to prepare money for the real estate agent’s commission. Ultimately, the total cost will be much less when you close the deal with an investor.
7. Sales profits
Jim Pendergast, Senior Vice President at altLINE Sobanco, highlights the value of the real estate market. “It’s a profitable and lucrative market where you can make money through home-selling. However, you must distinguish between selling it directly to an investor and listing it with a real estate agent.”
According to Pendergast, the former is best if you want to sell your property and earn money as soon as possible. Meanwhile, a real estate agent can help you sell your house at a higher price with proper marketing and effective negotiation. But in the end, you call the shots!
The real estate market is a complex industry to navigate. For one, home-selling requires careful planning and critical decision-making. The question is: Would you rather sell your home to an investor or list your property with a real estate agent?
To wrap up, close the deal with an investor if you want uncomplicated, more convenient transactions and sell your property as soon as possible. However, work with a realtor if you are a real estate newbie needing guidance and assistance selling your house at a higher price.
Consider the seven factors discussed above, and you’ll ultimately make informed home-selling decisions!