There are also unscrupulous players who may apply pressure tactics to take advantage of your urgent situation. Tigranyan says it’s vital to vet companies carefully and find one with a trustworthy reputation.
His company, part of HomeLight’s Simple Sale network, takes a high-integrity approach:
“Number one: treat every client as you want to be treated. No one gets taken advantage of,” Tigranyan explains. “I’ve seen both sides of the industry. When I go home to my kids and my wife, I want to sleep with peace of mind that, ‘You know what? I really did take care of this person. I did the right thing.’ I’m a firm believer that you do unto others what you want to do unto yourself.”
If you shop around, you may find company owners like Tigranyan, who prioritize helping others over profits and maintain hands-on involvement in property progress. HomeLight’s Simple Sale platform connects you to the largest network of trusted cash buyers in the U.S.
What kind of companies buy houses?
For homeowners considering a cash sale, understanding the different types of house-buying companies is vital. Each has its unique modus operandi, strengths, and purposes. Here’s a closer look at the variety of companies you might encounter in your journey:
- Franchisors: Operating under recognizable brand names, these companies purchase homes in their current state, renovate them, and then either sell or lease them out. Examples include We Buy Ugly Houses, HomeVestors, and We Buy Houses.
- House Flippers: These savvy investors search for homes that need repairs, invest in renovating them, and then resell them as fully upgraded properties. Examples include FortuneBuilders, The Property Flip, and FlippingJunkie.
- Buy-and-hold Investors: Focusing on the long game, these companies or individuals buy houses and convert them into rental properties, seeing them as long-term assets. Examples include Invitation Homes, Tricon Residential, American Homes 4 Rent, and Progress Residential.
- Trade-in or buy before you sell: Catering to homeowners looking for a seamless transition, these companies purchase your current home, often providing options that unlock your home’s equity, enabling you to buy a new property without the usual financial constraints. Examples include HomeLight Buy Before You Sell, Flyhomes, Orchard Move First, and Knock Home Swap.
- iBuyers: Revolutionizing the market with tech-driven solutions, iBuyers utilize automated valuation models (AVM) to present all-cash offers. They often present more competitive offers than franchisors or house flippers and make profits through volume. Additionally, they typically charge a service fee ranging from 5%-6%. Examples: Opendoor and Offerpad.
As you navigate the selling process, it’s crucial to recognize which type of company aligns best with your priorities, goals, and the unique circumstances of your property. Each category has its advantages and potential drawbacks, so always do thorough research before making a decision.
How much do We Buy Houses companies pay?
Understanding how much a We Buy Houses company will offer for your home is a nuanced process. The final figure can vary significantly based on several factors — including the specific company you’re working with, your property’s location and condition, and broader market dynamics.
The core distinction between house-buying companies and traditional buyers is motivation. While a regular homebuyer might see value in subjective aspects like a home’s proximity to amenities or its aesthetic appeal, house-buying firms primarily aim for profit. Consequently, it’s realistic to expect a lesser amount than what the open market might bring.
The 70% rule is often cited
Many We Buy Houses companies apply the 70% rule, meaning they’ll offer you about 70% of your home’s after-repair value (AVR), minus their estimated repair costs.
Here’s an example of what a simplified formula might look like:
(Your home’s ARV x .70) – repair costs
To see how the 70% rule might work in a real-world scenario, let’s take a look at an example offer equation. Let’s say your home could sell for $450,000 after repairs, but it’s going to need $30,000 of work to get there.
($450,000 x .70) – $30,000 = $285,000
In this example, a We Buy Houses company might offer you around $285,000 for your home.
The 70% rule does not always apply
While the 70% rule is regularly used as a benchmark for estimating what sellers might receive, it’s not a consistent standard. The actual figures can deviate significantly. Some house flippers might offer as little as 50% of ARV, while certain national iBuyers are known to pay up to 85% or even more.
Tigranyan highlights the complexities in this calculation. He notes the vast range of influencing variables makes it challenging to set a consistent percentage expectation. “Homes could sell for X amount of dollars on one street, and the next street over could sell at a different price,” he explains.
Predatory companies can exaggerate costs
While some homeowners might find a decent deal with house-buying firms, particularly if they prioritize speed and convenience over maximizing profit, caution is essential. Not all players in the industry operate ethically. Some predatory firms might attempt to exploit sellers by inflating repair cost estimates or making unjustifiably low offers.
Seek out more than one value source
Tigranyan cautions sellers: “Sometimes sellers look at websites like Zillow or Redfin, and they might think that’s what the property is worth, but that’s not always the case. That’s just the starting point. Zillow doesn’t know the condition of your house. It’s just a big driven data piece. They don’t know you might have a roof that needs to be replaced. You might need to replace the plumbing. Zillow doesn’t know the condition of the house, interior, or exterior.”
For sellers aiming to make an informed decision, conducting independent research is crucial. You can check one source now by using HomeLight’s Home Value Estimator. Additionally, reaching out to a seasoned real estate agent for a comparative market analysis (CMA) can provide valuable expert insights. CMAs, which many agents offer for free, offer estimated property valuations based on recent sales of similar homes (called comps) in the vicinity.
»Learn more: How to Find Comps for My House: An Illustrated Guide
How fast can I sell my home to a house-buying company?
The speed at which you can sell your home to a We Buy Houses company can vary widely based on the company and your specific circumstances. However, one of the major selling points of these firms is their ability to close deals much more swiftly than traditional sales. In general, you can expect to sell your home in a matter of days or weeks compared to the months it can take to sell on the open market.
Tigranyan, with his extensive experience, sheds light on this topic, emphasizing the flexibility his company offers.
“First, we like to understand what timeframe the seller needs,” he explains. “Every seller is different. For instance, I had one in Baldwin Hills (in Los Angeles County) who wanted their escrow to close in 60 days. On top of that, they requested an additional 30 days post-closing to move out.”
A reputable company will strive to align with the seller’s needs and expectations, including more urgent needs.
“With all the paperwork in order, we’ve managed to close deals in as short as five days,” Tigranyan says.” However, the specific timeline often varies, sometimes stretching to 30 days or more, depending on the seller’s preferences.”
In essence, while a rapid five-day closing is possible with companies like Tigranyan’s, the timeline will typically be tailored to suit the homeowner’s requirements. Whether you’re seeking speed or a more measured approach, these companies offer flexibility to accommodate a wide range of needs.
Pros and cons of using a We Buy Houses company
Navigating the decision to use a We Buy Houses company comes down to weighing the pros and cons. On one hand, the benefits of speed and no need for repairs can be enticing. On the other, the likelihood of getting a lower offer is a reality.