List with a Realtor or Sell Directly to an Investor?

As a multi-family investor for the past 20 years, I’ve learned that it makes sense to sometimes sell an apartment building without listing it on the market. However, for many years, I could not understand why people would accept an unsolicited offer to sell a home directly to a buyer. I thought it was always best to sell a home on the Multiple Listing Service (MLS).

So in 2018, when my brother, Brandon approached me with an opportunity to start a new real estate investment company — Brothers Buying Houses — buying off-market properties, I was initially skeptical.

For one, I’ve never been a fan of “We Buy Houses” or “Sell For Fast Cash” signs. These signs and other tactics gave me a negative view of “We Buy Houses Fast” businesses. Also, since I’d been a real estate agent for over six years, (at one point owning a real estate brokerage and management company) I had the mindset that listing with an agent is always the best option when selling real estate. However, the more research I did, I began to realize that there are times when it makes sense to sell a home directly (and sometimes very quickly) to an investor.

To be clear, in my experience, a vast majority of the time, listing with a Realtor will net you the highest proceeds from the sale of your property. A good example of this is a For Sale By Owner (FSBO) home that my brother and I were recently interested in buying. During the course of my initial conversation with the homeowner, he disclosed that he had over 100 separate investors inquire about buying his house. Almost all offers he received were less than what he was willing to sell for. However, he had been under contract twice, but both buyers later tried to renegotiate the purchase price to a lower amount. (See my blog, Beware of “We Buy Houses” Scams).

Needless to say, by the time I spoke to him, he was exhausted with the process. He expressed his desire to sell soon and was clear on his “rock bottom” price. He also said if he didn’t sell it within a couple weeks, he was going to list the home with a local real estate agent.

We decided not to make an offer and in the end, he listed the property and in less than two weeks had accepted an offer for more than he expected. This just highlights the power of using a real estate agent and having your property listed on the MLS.

So Why Sell to an Investor?

Well… It is Fast

Once you’ve accepted the offer, a legitimate and experienced investor should be able to close the transaction within a few weeks, if not sooner. For my brother and I, as long as there are no title or escrow issues, we have the ability to close a transaction within days.

Often No Contingencies

When listing your home with a real estate agent, it is likely any offer you receive will have contingencies. The most common are financing and/or an inspection. A big benefit of selling to an investor is often there are no contingencies in the contract.

Buying Your Property “As-Is”

This is another big benefit if you need to sell quickly or do not want to deal with any negotiations to repair the property. Most investors will buy your property “as-is,’ regardless of the condition. Also, when selling to an investor, often you will not be required to clean or remove any trash or unwanted personal items.

Often No Closing Costs

When selling your property to an investor, it is common for them to pay your portion of title and escrow fees as well as your excise or reconveyance tax.

When is it Best to Sell to an Investor?

Don’t want to clean? Most investors buy “as-is” like my brother and I did with this home.

The answer to that question is subjective and completely up to you and your life situation. Since starting Brothers Buying Houses, Brandon and I have met people from all walks of life who for a variety of reasons, would like to sell their home fast and hassle-free. However, the last home we bought was a new situation for us. The reason — the property owner was a successful investor. His motive for selling was he had found a new investment property that he wanted to buy and was in a rush to raise funds in order to complete the 1031 exchange transaction. Although negotiations took several weeks, we eventually bought the home for approximately 25% below his asking price

If you are considering selling your home to an investor, I urge you to exercise caution and also read my article, Beware of “We Buy Houses” Scams. Due to the “hot” real estate market in many areas, there are literally hundreds of “investors” vying to buy property directly from the owner. Unfortunately, some of these “investors” are unethical, and others are outright scam artists. Most likely, the property you want to sell is your largest financial asset. Take care to protect your interest. If you are unfamiliar with the process of selling real estate, please talk to a reputable real estate agent, and/or an attorney or accountant before signing any documents.

Lastly, regardless of where you live, if you have questions about selling your property to an investor, or have questions about listing with a real estate agent, I am happy to answer your questions. I live in O’ahu but have real estate partners on all the major islands as well as on the mainland. If you are looking to buy or sell in Washington State, I recommend you contact my brother, Brandon. He is a highly rated broker.

Curious to know the value of the property you own in Hawai’i? Simply call me directly at 808 354-5772 or click here and I can quickly provide you with a CMA. I look forward to helping you achieve your real estate goals. I’m here to serve you.  

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