So How Do Those All Cash Offers from Investors Work?

Hello Hampton Roads,

So how do those all cash offers from investors work?

If you are selling a home or thinking of selling a home, you may have received one of those "yellow letters" from an investor offering to pay all cash,  for your home  "as is" including paying for your closing costs and giving you a fast closing on your time frame.  It's an appealing offer, no doubt and it can be a benefit to both buyer and seller depending on the situation but as with all things, "the devil is in the details."

These offers are generally at a price significant less than  market value.   The types of offers are best suited for distressed properties and for sellers in situations where they need move their property quickly.  Any type of sale has to work out for both parties and each side needs to receive a benefit. In exchange for a fast, "as is" cash closing, there has to be profit potential for the investor and therefore the sales price has to make busineess sense. In order to calculate an offering price, typically what an investor will do is offer between 65% to 70% of the after repaired market value minus the cost of repairs.  What they offer will depend on their exit strategy which is either to "flip the home" for a profit or "buy and hold" and create rental income.

There's nothing wrong with an all cash, "as is"  below market offer, as it can make sense for both parties but it does come at the cost of what a buyer may be able to get if he puts it on the open market and sells it through an agent.

When it makes sense to listhe home for sale and go the traditional sales route is if the home has plenty of equity and needs only minor repairs. Equity is the difference between what you owe and how much the home could sell for on the local market.  So your next question might be, how do I know if my home has equity?  The best thing to do is to consult with your real estate agent and get a market analysis.

If you are considing selling, please contact me for free market analysis of your home as well as free neighborhood report so you get an overall pictures of the health of home sales in your area.   There is no obligation for either of these reports and it will give you a good idea of market value.

Before you decide whether to accept an investor offer or sell your home on the open market, find out what both options would give you and make the best decision for you. As a local Realtor, I work with both investors and regular home sellers and can provide you an estimate for either route.

Thanks for Reading,


Serving your Hampton Roads and Virginia Beach Real Estate needs. Liz Schuyler on Google+


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