Is it just me or do many people notice “bag” signs stuck into the ground at street crossings offering cash for homes? A quick google search with the inquiry “buy your home for cash in Oshawa” resulted in 25 companies on the first page. They are very easy to find. The ads typically offer solutions to bad credit, no commission, fast closings and offering to deal with foreclosures, divorces and inheritance properties you do not want. Sounds like a great solution huh? I mean really, fast closing, no repairs, no staging or banks involved.
What could possibly go wrong?
Let’s dig in and see how using a “cash for houses” company differs from selling with a Real Estate Broker.
Let’ begin with a couple of personal experiences; I was asked to work with the father of a client to help him sell his home. I am being kind when I say the home needed help. It was in an older part of town and needed bathrooms, kitchen, flooring, drywall repair and had knob and tube wiring. The seller reached out to a “cash for homes” company and had an idea of what they would offer. I gave him a market value assessment and he was in disbelief. I was more than a hundred thousand above the price he was given. We placed the home on the market at a price the Seller believed to be higher than what he thought the home was worth and after one week, and over 100 showings, the home sold for $90,000 more than asking. The selling price was several hundred thousand over the price he was given by the house flipping company.
The next example is a home I sold recently. I was asked to sell a home for an elderly woman who had been in the property for decades. The home had fallen into disrepair and the seller felt it was, in her words a “tear down.” I viewed the home from a different perspective. I worked out a price for the home and with the seller feeling I was about $100,000 higher than she felt it was truly worth. In the end, we sold the home for somewhere in the range of $300,000 over what the homeowner felt the property was worth.
In the event that the second seller had called a home flipper company, most likely the sale price would be closer to what she felt it was worth than what it ended up selling for. In fact, the selling price surprised me, as well as the 100 plus showings.
When a property is exposed to the open market, the market dictates what the true value should be. When you have a low inventory market as we have currently, homes that are placed for sale get an incredible amount of activity and they typically sell at high values.
In both of the above examples, the Sellers had more than 20 offers on both homes with the Buyers bidding the prices up. This situation does not happen when you have only one buyer negotiating to purchase a home. Dealing with a single buyer, the Buyer does what they can to purchase the property at the lowest price, which is the opposite of what happens when multiple Buyers attempt to secure the property.
Currently in Oshawa, Whitby and Clarington, we have a total of 300 homes of all types for sale. A year ago, at the time we had 526. With inventory at levels this low the pitches from the “cash for homes” companies make little sense. Sell immediately, no repairs, no banks, have your cash out quickly are the enticements. However, the elderly gal walked away with hundreds of thousands extra in her pocket with no staging, no banks, no repairs with the home sold in a week.
If you are planning on selling your home, it might be worth calling a “cash for home” company prior to having a Realtor in to see what your property would be worth after being exposed to the market. The results may be shocking.
If you have any questions about what your home is worth, I can be reached at or www.buyselllove.ca As for the flip companies, they are just a google search away.
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