Why it’s a non-issue with a home-buying company: Home-buying companies don’t need a loan to purchase a home. They have the funds to make all-cash offers and close in as little as 10 business days. They’ve probably seen every complication during the closing process, and they have the experience and expertise to handle each one.
Sellers can also have their own financial troubles, too.
If they had to take out a second mortgage on the house and owe more than the house is worth, home-buying companies can offer a short sale to avoid foreclosure.
Low appraisals
Part of the process of buying a home is having an appraiser inspect the house to determine the value of the property. This can take a few hours, and the appraiser will look at the condition of the house and the neighborhood. The fee is typically paid for by the buyer.
However, when the appraiser values the house at a lower amount than the selling price the buyer and seller have agreed upon, it’s a problem. Afterall, the bank will only loan money based on the value of the house. In this case, the seller needs to either lower the purchase agreement price, or the buyer will have to put down a larger down payment.
Why it’s a non-issue with a home-buying company: Appraisals are irrelevant because home-buying companies do not need a bank loan to close the deal. They have the money to close on an all-cash deal and can do it quickly. Inspections are only done to ensure that the property is in the condition that the home seller described. When sellers are transparent about the house’s condition, home-buying companies are usually able to provide an accurate estimate of how much they can offer.
Houses don’t need to be in pristine condition, either. Dated kitchens or properties trashed by a tenant are common problems for home-buying companies. In fact, they are even willing to assume properties that are boarded up by the city or have a squatter in it, thanks to help from locksmiths and legal teams to help move the closing process along.
Title and home inspection surprises
Just like there can be surprises when an appraiser comes back with a low value for the house, there can also be unwelcome findings after a home inspection or after checking the title.
During the title search, any liens on the property will surface. For example, if a homeowner owes money to the city for not caring for their lawn, the sale can’t go through until it’s rectified. The house can even be taken from the homeowner if the issue has not been resolved.
Probate, or the transfer of real estate when the owner has died without a will, adds an extra layer of difficulty when selling a house, especially if not all the heirs can be located or if they don’t agree on how to manage the sale of the house. And if there is no will, processes are in place to ensure that the house sale is fairly executed.
For someone who is not experienced in these areas, it may be too time-consuming and stressful to be worth it.
Why it’s a non-issue with a home-buying company: Going through probate, closing out liens, and dealing with costly repairs in an inspection can be overwhelming. But for home-buying companies, these are common issues that they’re experienced in handling. For example, they can use the services of an heir search company to find each heir listed on a will. This is especially helpful with homestead properties, which require every single heir to be involved.
When dealing with liens, the home-buying company has access to bankruptcy attorneys to mitigate and update any payments that have been made. Again, these cumbersome processes are much easier when you have experience and access to resources to handle them.
Buyer’s remorse
Buying a house is a stressful process. Buyers have to save money to make a down payment, and it is perhaps the most expensive investment they’ll ever make. They can get sticker shock when they see how much money they need to hand over, leading to swirling questions in their heads: Are we paying too much? Is the house too small? Too big? Is the neighborhood as good as we think it is?
Unfortunately for sellers, the stress of the situation can lead to buyers getting cold feet, house closing problems, and ultimately backing out. In fact, more than half of homebuyers experience buyer’s remorse, according to American Family Insurance.
Why it’s a non-issue with a home-buying company: There’s no need to worry about buyer’s remorse here. When purchasing properties in all sorts of conditions, home-buying companies are not looking to move into a house and turn it into a home. Rather, it is an investment to rehabilitate, resell, and rent properties.
Contract contingencies
To protect both buyer and seller, contingencies can be added to contracts. For example, a seller may request that they have their new home purchased before selling their first one. Or a buyer may add that if the home inspection and appraisal reports are less than ideal, they can back out of the transaction.
In the scenarios we discussed earlier — the house’s value being less than the sale price or the inspection showing that the structure is unsafe — the buyer may lose interest and decide not to continue. Contingencies in the contract may enable them to back out.
Although there are reasonable contingencies to put into a contract, sellers can become overwhelmed with buyers who make frequent requests to update the contract or who don’t return signed paperwork in a timely manner.
This drags out the closing process, and sellers are understandably concerned that it’s a sign of bad things to come. And if you are unable to move into your new house before selling the current one, it can be a pricy ordeal.
Why it’s a non-issue with a home-buying company: Remember, when you work with a home-buying company, you don’t have to do an appraisal. Most will simply do an in-person visit to confirm the condition of the house aligns with the information they were provided. Home-buying companies are accustomed to purchasing homes in a variety of conditions, even with extensive damage like foundational issues. With thousands of properties purchased a year, it takes a lot to deter home-buying companies.
What about selling your house to a home-buying company?
Many things can go wrong during the home selling process, but it doesn’t have to be a stressful experience. Meridian Trust has more than 15 years of experience purchasing all kinds of properties in a range of conditions. This includes houses, townhomes, condos, apartments, and multi-family units. No matter what issues arise, Meridian Trust handles it with their team of transaction coordinators, attorneys, and even an in-house title company. Our team of experts can help resolve issues with permits, liens, or violations — and we’ll even cover the closing costs for you.
Call Meridian Trust for a free, no-obligation property value analysis. If we’re able to make a cash offer, you can decide if you’d like to move forward — no pressure.
To get started or learn more, call us at (954) 807-9087.
Note: This guide is for informational purposes only. Meridian Trust does not make any guarantees about the sufficiency of the content in or linked to from this blog post or that it is compliant with current law. The content within this blog post is not a substitute for legal advice or legal services. You should not rely on this information for any purpose without consulting a licensed lawyer in your area.
