Is Cash For Houses In Jozi Right for You?

You’ve seen the signs at almost every street corner or painted on someone’s wall, “Cash for houses” or “We buy houses.” Some of these are cartoonish signs and others might even be nailed to a light pole or street sign. Some cash for houses signs makes claims they buy houses in any condition and for competitive rates and all cash. If you need or want to sell your home, this looks like the perfect opportunity to sell quickly without the headaches of preparing a property for showing……

You’ve seen the signs at almost every street corner or painted on someones wall, “Cash for houses” or “We buy houses.” Some of these are cartoonish signs and others might even be nailed to a light pole or street sign. Some cash for houses signs makes claims they buy houses in any condition and for competitive rates and all cash. If you need or want to sell your home, this looks like the perfect opportunity to sell quickly without the headaches of preparing a property for showing.

Their Target Market 

The individuals and companies putting up these signs are investors seeking quick, undervalued properties to capitalise on. By putting signs out, it takes a lot of the legwork out of researching distressed properties and homes in wanting to sell quickly. 

The key target market includes homeowners in some negative financial situation. This includes people facing bankruptcy or foreclosure, medical issues, divorce or damaged properties in complete disrepair. They also hope to find properties transferring ownership from auctions, vacancies and even existing listing that are about to expire.

The Thought Process Behind the Offer

Because investors are seeking properties for quick turnaround and profit, they want motivated sellers and properties in distress that can be rehabbed quickly for resale. As the seller, this may or may not be your best play. The buyer is looking to ease your burden quickly. They know you have some emotionally binding stressor that requires a quick sale.

As a result, the offer might be for the remaining bond balance irrespective of the value of the home. At best, investors want properties at a wholesale price, which is often below fair market value by at least 30 percent. 

So why such a big bargain? Well like all investments, property has its fair share of risk. Just like the stock market investing cash in properties that require substantial renovation and to hold on to that property, which may take 3 to 8 months on average comes at a cost. To protect the investment these investors, use strategies that come at a cost to them. So, to make sense of a deal they need to work in those cost.

Consider Your Position Before Negotiating

Keep in mind there is a cost to keep a home. Everything from monthly bind payments, insurance, and property taxes must continue to be paid while you own the home. The longer you delay a sale, the longer you must pay for utilities, maintenance, and upkeep.

Also a fact that is not well known to sellers are the cost needed for professional inspection on electricity, plumbing and gas. These will need to come out of your pocket for a buyers bank to agree upon the purchase of the property.

Do the math then consider the average time it takes for homes to sell in your market. Based on average pricing, will you make up the difference in the cost of maintaining the home for the extended time frame? 

It may also be urgent to sell because of an impending foreclosure or estate tax. Consider all these factors as you begin to look at offers from buyers. 

What’s Their Intentions?

Some might argue that these investors are predators, and there are a few who give other investors a bad name, the experienced investor often seeks to provide a service. How you may ask? They do this by providing opportunities to sellers who need to get out of tricky situations. While banks offer the most bang-for-buck there are times when the process to sell a home or wait for a buyer might be more of a hindrance financially. Lets take a look at a case-study of Sarah.

Sarah, a full-time college student, had been living in her dads house with her mom for most of her life. Unexpectedly and sadly, Sarah had lost her dad a few months earlier. Unfortunately, Sarah was unable to keep up with the cost to maintain the house as a student with no income. To make matters worst the property was in arrears with the municipality. Due to her inability to pay off the fees associated with looking after a property as well as looking after her ageing mom, the municipality cut off their electricity.

Sarah’s only option was to sell the house. Having researched the market and having spoken to some real estate agents she realised that she would need to put money into the house to make it attractable to buyers. The agent also told Sarah that the average time it took to sell a home in her area was 3 to 6 months. With college coming to end and her final school fees needed in order to receive her qualification, Sarah knew this was not the best option.

Fortunately, Sarah had found a reputable investor who was willing to pay cash for her house. Having met the investor, the investor provided Sarah with options, a a result the investor was able to buy the house cash for reasonable discount. The investor allowed Sarah to rent back property while she completed her studies. Sarah was able to pay off her debts and with a significant portion of cash leftover, she was able to conservatively sustain her living standard until she found a good job. 

Maximising the Sale Value

It doesn’t take a lot of research to get an idea of a property’s fair market value. If you really want to know, pay a couple thousand rand for an appraisal or simply speak with a local real estate agent who will give you an idea of the value of your home in its current condition. 

Once you know what the estimated value is based on current market conditions, look at what can be done quickly and inexpensively to improve the property thus increasing the value. 

Do what the investors would do. These include cleaning the home inside and out, remove all weeds in the landscape and trim trees and bushes back. Replace carpet, tile the bathroom and kitchen and repaint the inside and out. They can provide the most attraction in some cases. Investors often will redo a kitchen and put in a new appliance package, thus making their margin on the property obtained at 30% below market value. You don’t need to do this, but if you have the time and money to do so, it might be worth the investment. 

The bottom line is if you can extend your timeline of a need to sell, you can wait for a more traditional buyer to come along and give you an offer that puts some money in your pocket.

IF YOU NEED HELP SELLING YOUR PROPERTY FAST, CLICK HERE.