If you’ve decided to put your house on the market, you’re likely facing a big pile of decisions (and paperwork) to figure out all at once. One option you may be considering is whether to go through a traditional sales process or sell to a house flipper. Like any big decision, it’s crucial to review the advantages and disadvantages so you can make the best choice for your specific situation. But first, let’s discuss why now is the perfect time to sell your home.
According to research conducted by the National Association of Realtors, 5.64 million homes were sold in 2020. This reveals it’s an excellent time for homeowners looking to sell. However, the data doesn’t tell the whole story.
Buyer demand for houses varies significantly depending on the condition of a home. For example, one survey by Coldwell Banker estimated that 80% of Americans prefer to buy a move-in-ready house versus one that needs some work done. Long story short: It’s a great time to sell, but the condition your home is in can be an obstacle to a fast and simple closing.
If your house is nowhere near move-in condition, you may be leaning towards selling to a flipper. Before you decide to take the plunge, here are some benefits and drawbacks to consider.
Most House Flippers Will Buy in As Is Condition
One advantage of selling your house to a flipper is that many flippers will buy property as is. This is a huge benefit if your home could use some work and you don’t want to deal with the repairs yourself. This option is also easier on your wallet since the flipper is the one footing the bill.
Selling your house as is can be challenging. Even in hot real estate markets like Massachusetts, homebuyers are still hesitant to commit to a property that’s not move-in ready. You will likely need to do some repair work before receiving offers. If you can’t afford repairs or don’t want to manage the logistics of hiring and overseeing contractors, then selling to a flipper is the right choice for you.
When deciding whether to sell your house as is or invest time and money in repairs, it’s important to consider the return on investment (ROI) of any potential renovations. If your house is in decent condition and could be ready for sale with some light cosmetic repairs, it might be worth it to do it yourself. On the other hand, if your house requires extensive repairs that will run far into the thousands, selling as is to a flipper might be more cost-effective.
Working With a House Flipper is Faster & Simpler
If your house needs a lot of work done before it’s ready for sale, one way to save time is by selling to a house flipper. Every flipper has a different timeline, but nine times out of ten, any flipper will be able to get you to closing day sooner than a traditional buyer. This is because flippers typically don’t require inspections, contingencies, or other common culprits of a drawn-out closing process.
You Might Have to Sell Your Home for Less
One of the first questions you might have about selling to a flipper is, “how much will a flipper pay for a house?” To answer this question, we first have to define “After Repair Market Value (ARV).”
What is ARV?
After Repair Market Value, or “ARV,” is the formula typically used by house flippers when deciding what to offer to pay for your home. ARV is the price a flipper expects to be able to sell a house for after repairs are completed. Put another way; it’s the estimated future value of a home after being fixed up.
How is ARV calculated?
To calculate the after repair value of your house, a flipper will look at what comparable properties in your area have sold for in the past few months. The average of those homes is your ARV.
Many flippers will make cash offers for the after repair value of your home, minus any additional selling costs. Selling your house to a flipper will typically result in a lower offer. However, when you factor in the money you would have needed to put into the home to sell on your own, selling to a flipper does make financial sense in many cases.
Be sure to check out a real life example of the ARV formula by exploring our section on how we buy houses in Massachusetts…
You Have to be on the Lookout for House Flipping Scams
Unfortunately, scams do exist in the house flipping space. That’s why it’s essential to make sure you are working with a reputable cash home buyer.
Here are a few red flags to watch out for when dealing with a house flipper:
- The flipper isn’t accredited by the Better Business Bureau (BBB): If a flipper has gone to the trouble to accredit their business with the BBB, it’s a promising sign that they are legitimate. To be BBB-accredited, companies must maintain a rating of B or higher. An A+ rating is the highest rating a business can achieve on the platform.
- The flipper doesn’t have the proper business licenses: It’s a good idea to verify that the flipper you’re considering working with has fulfilled the licensing requirements to do business in your state. If you’re in Massachusetts, you can look up professional licenses on the state’s Division of Occupational Licensure’s website. Most states will have similar dashboards where you can do a license check before working with a flipper.
Selling to a House Flipper Saves You Time and Stress
Another key advantage of selling to a flipper over a traditional sale is the time and stress it saves you. It’s not uncommon for house flippers to make you an instant cash home offer, especially in a hot real estate market. Selling to a flipper is particularly beneficial if your house needs expensive repairs before you’d be able to sell it to a traditional buyer. When you sell to a flipper, you shift the emotional and financial burden of repairs from you to the flipper.
So, should you sell to a house flipper? Of course, it depends on your specific circumstances. If your house only needs a fresh coat of paint, a traditional sale might make more financial sense. However, working with a reputable home flipper can save you a lot of time, money, and hassle if your home is in a severe state of disrepair.
Our team at Pavel Buys Houses has helped hundreds of homeowners in Massachusetts sell their homes fast for a fair cash price.
We are passionate about our work and would love to talk more about how we can help you. Please don’t hesitate to connect with us via our contact form or by calling a member of our team at 781-309-7085.