The housing market experiences clear trends, particularly within a geographic region as dynamic as Middle Tennessee. You have, no doubt, been catching the news and social media buzz about the wave of investors who are snapping up properties. As a homeowner preparing for sale yourself, you may have wondered whether or not you should sell to an investor if one were to approach you. As you would expect, there are pros and cons to both sides.

While your personal agent is the ideal person to consult regarding the intricacies of your situation, the following guidelines will be a useful general primer on the main things you’ll want to consider. 


The Buyer’s Future Plans

The most obvious difference between selling to a buyer who plans to move into your property and an investor is that an independent investor, by definition, plans to acquire your property to benefit their financial portfolio. Such a buyer has taken care of their finances, purchased their own home, and has begun to add more properties as one aspect of their (likely) diverse wealth-building strategy. 

Whether an investor plans to rent out your home immediately or quickly flip it and sell it depends on several factors. If your home is in a great location and is in less-than-ideal condition, the investor plans to flip. If your home is small, but situated on a larger tract of land, an investor may plan to do a full tear-down, break up the land, and build several homes with the intent of selling them. 

If your home is conveniently located and in good to excellent shape, the investor is most likely to buy and hold while they wait for the housing market to rise. In the meantime, they will rent the property with a large enough margin to yield a profit after their mortgage, property taxes, and maintenance costs have been accounted for. 


Corporations as Real Estate Investors

Independent investors aren’t alone; corporations and Wall Street-funded companies are rapidly purchasing individual homes and, incredibly, have been purchasing entire neighborhoods. If you are selling to a corporation as an individual or in tandem with your surrounding neighbors, it is essential that you contract an experienced real estate attorney to represent your interests. Should you indeed be selling one of a larger number of homes in your area, it may be possible for you to partner with your neighbors to collectively hire an attorney who is willing to oversee the entire transaction. 


Potential Downsides

When you sell to an investor, you are unlikely to secure an offer that is comparable to what you could expect to garner through a sale on the open market. Remember, an investor will not see your home as an exciting chance to purchase a property that will support their dream of living within these specific four walls, but rather as an opportunity to snag profits at every turn. 

An investor will have zero emotional investment in the unique characteristics of your home and is instead searching for properties that fit predetermined market strata and mathematical parameters.  

You may decide that you want to earn every possible ounce of profit possible from your home, and/or that you cannot bear to sell to a buyer who is not personally invested in the property into which you’ve poured so much of yourself. In either case, selling to an investor is unlikely to suit your needs.


The Benefits

You may have little emotional attachment to your home, and you may also value expediency and a guaranteed sale over the chance to shoot for maximum profits. If so, there are absolutely advantages to choosing to sell to an investor.

We mentioned expediency above because investors are less likely to require time to secure personal loans. After you and an independent buyer have agreed upon terms, you can expect to wait an additional 45 days for your buyer to jump through hoops to finalize their mortgage agreement.

Investors, on the other hand, are much more likely to approach you with cash in hand. If you want to be finished with your sale as quickly as possible, you should know that an investor can be ready to close in less than a week!

Is your home somewhat worse for wear, and do you lack either the time, cash, or motivation required to do some last-minute upgrades before the sale? You may decide to sell to an investor who is looking to flip a home.

You can skip the hard work of staging, enduring open houses, and clearing out for multiple showings by selling to an investor. They won’t want to picture themselves living in your home. Instead, they will have performed extensive market research, and a clear inspection report may be all they require before feeling prepared to put in their offer.


The Takeaway

Answering the following questions can help you determine whether you should sell to an investor:

  • Are you on an accelerated timetable that makes a rapid sale your most important consideration? 
  • Does your home require repairs or upgrades you can’t afford?
  • Is your home in excellent condition?
  • Are you emotionally attached to the idea of a new family enjoying your home as a primary residence?
  • Have you already begun the process of closing on your next home?

Clearly, there is no definitive answer that is right for all homeowners. If you’re stuck deciding what you want to do, remember that your real estate agent is available and is on your side! They will help talk you through your own goals and then point you in the direction they believe will be best.

Ultimately, though, the only party who can choose what to do is you. Whatever you decide, you can be confident knowing that you are making the best call for your unique situation. 

Posted by Parks Real Estate on

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