If it seems too good to be true...
If you have spent any time on the internet in the past year, you have undoubtedly seen ads for various companies touting Well buy your home! Save the hassle of going on the market! Well give you fair market value! WOW! Seems awesome, huh?!
Well, remember the adage If it seems too good to be true, it probably is.
Now, I am going to preface this post with the fact we have only had the opportunity to review ONE sales contract from one of these companies buying a house (this will be detailed below). We have not done any testing ourselves because frankly, we don't have the time to do it. Therefore, we are not going to sit here and tell you not to explore these avenues if you feel it may be the best for you. We are just going to encourage you to also meet with a Realtor® to really see what is better for your bottom line.
My guess is that you did a tremendous amount of research and homework before you bought your house, right? Why would you not do the same when selling it? Afterall, at the end of the day you did buy your house as an investment, right? You want to squeeze as many dollars out of it as you possibly can.
So, what IS your bottom line when you're selling your house? The money that you take away from the sale of your home after all commissions, concessions, fees and mortgage balances are paid is what we call Net to Seller. This is the amount of money that you are taking to the bank after closing. Pretty important, huh? Again for the cheap seats in the back: this is the amount of money you are taking to the bank after closing. Selling your home is more than just the sales price! You must consider your NET to get the full picture of the return on your investment.
Quite simply, your net looks like this:
$$ Sales Price $$
(Seller paid closing costs)
(Any other concessions)
(Real Estate Commission)
(Tax prorations and fees owed at closing)
(Mortgage/HELOC Payoff(s))
$$ NET TO SELLER $$
First lets talk about what one of these "we buy your home" companies are going to give you for a sales price of your home. Read any comment thread from their social media ads and the companies themselves will fully admit that you're actually NOT getting fair market value but a lower amount presumably to offset the fact that you don't have to be inconvenienced to put your house on the market. So, you're already starting with a lower number than any Realtor would recommend.
Now for the example that we have seen from one of these companies. We had a client who used one of them to sell his home and used us to buy a home. We were able to look at the contract between him and this company (please note, we were not representing him in that transaction so we did not, nor were we lawfully allowed to, advise this person in any way on this sale). After closing costs paid by the seller, commissions (yes, a lower rate than a traditional Realtor), and fees built into the special stipulations, this seller made $35,000 in concessions to the buyer (ie the "we buy your home" company).
Had this client contacted a Realtor® to sell his home, he would have paid $16,000 in real estate commission and probably a few thousand in closing costs. For arguments sake, lets just say $4000 to make his total commissions and concessions $20,000.
Do you see the difference?! $35,000 to the "we buy your home" company and $20,000 by using a Realtor?! This is a difference of $15,000 THAT YOU GET TO TAKE TO THE BANK!! Let that sink in for a minute.
This is what can happen when you don't do your homework. I do want reiterate that every "we buy your home" transaction may not be this ridiculous (because frankly, I think this is robbery) but because we care about our past clients, our current clients and our community as a whole we want to make sure you know what questions to ask so that you are taking the MOST money to the bank after that sale. DO. YOUR. HOMEWORK.
It's simple. If you're going to explore this route of selling your home, ask the company what your NET will be. Then, meet with a Realtor® and ask them what your net would be at the same sales price. Then you will at least have the information you need to make the decision that is best for you (and your wallet) at that time.
*All of our web content is based strictly and solely on our Real Estate experience and Real Estate laws in the State of Georgia. Its important to remember that Real Estate laws and customs vary by state.
