How To Find a Reputable Direct House Buyer

Cash offers are highly desirable for those who need to sell their house fast. On average, cash offers can close in as little as two weeks. It’s a simpler closing process with fewer contingencies, and cash buyers are less likely to request a home inspection, so if you’re experiencing foreclosure or bankruptcy and don’t have a budget to fix up your home for showings, cash offers provide a lucrative way to sell your home. Especially when the typical selling process can be stressful, slow and expensive, taking months to close a deal—two-week cash offers become a clear-cut and affordable option. 

When you sell your home, most typical buyers are young families needing more space, professionals or retirees in search of a relaxing community. However, sellers also encounter house-buying companies that connect them with investors. Direct house buyers allow you to skip showings and protect your privacy while releasing you from the responsibility of fixing up your house for sale. There are many different direct house buyers out there and we’ll cover the differences between them, as well as how to determine a reputable house buyer from scammers with a simple vetting process. 

What Are Direct Home Buyers?

Direct home buyers are either big corporate businesses, a group of investors or a single investor interested in purchasing your property directly from you—i.e. no middleman real estate agent necessary. Without costly agent commission fees that can range up to 6% of the sale price and cost you thousands of dollars, direct home buyers put more cash in your pocket. However, be mindful of larger home-buying companies that include “service charges” that can amount to a similar percentage as that of a real estate agent. 

On the flip side, some direct home buyers don’t charge any service charges and will even help pay for closing costs, saving you money on both fronts. As mentioned above, some direct home buyers make cash offers, allowing the closing process to be expedited and much faster than traditional mortgage-backed sales. The main benefits that direct home buyers can give you is a quick home offer and saving time and money; they’re typically less picky on the condition of your home so you don’t have to invest in any repairs as well.

Different Types of Direct Home Buyers

If a direct cash offer sounds appealing, there’s a plethora of home buyers to choose from, each with their specific niche, business goals and offered services. Below is a list of four different direct home buyers and the methods they use upon purchasing your house.

House Flippers

Like popular HGTV house-flipping shows like Flip or Flop, house flippers go into a home that’s worse for wear and transform it through renovations and repairs, increasing the property value. They aim to purchase properties at a discount, “flip” them through renovation and reap the profits in a quick resell. These renovations can range anywhere from mechanical fixes to layout changes—for example, knocking down entire walls to make a space larger and more inviting. 

Though typically house flippers aim for a fast 10% return on investment, the current hot real estate market has seen a lot of contractors booked full, so it’s taking longer for house flippers to complete projects and turn around houses. Despite this, house flipping is still a popular business found mostly everywhere. 

Buy-and-Hold Companies

As widely found as house flippers, buy-and-hold companies purchase a house for sale with the intent of renting it to a future tenant. They often look for properties that will offer enough profit for a good return on investment, justifying their purchase, and proceed to put in the necessary repairs to maximize the rent they can charge. 

While some smaller buy-and-hold companies handle their own property management to cut down on costs, larger companies often have specific repair-oriented teams that handle it for them. Due to their ultimate goal of renting to tenants, these direct house buyers are particularly interested in multi-family units and other rental-friendly properties. 

iBuyers

iBuyers like Redfin and Opendoor are largely focused in bigger metropolitan areas. Their businesses use online real estate market data to make instant offers—sight unseen—once a homeowner reaches out to them. Though their offers are market competitive, often matching and occasionally exceeding deals orchestrated by traditional realtors, they always charge a service fee typically ranging anywhere from 3-7%. 

iBuyers are mostly focused on suburban community homes with similar layouts and amenities that don’t need a lot of work put into them and are thus easier to resell. What’s more, iBuyers will assess your home for repairs that need to be made in order to make your home competitive with others on the market, charging you to cover these expenses. This type of company thus doesn’t provide sellers with the same cost-effective benefits as other direct home buyers.

Trade-In Companies

Trade-in companies purchase your new home which allows you the cash flow needed in order to secure your dream home. Oftentimes, they work with your real estate agent and come to an agreed upon price, at which point you’re able to control when you move out and can freely look for your next home—often sold by the same company or agency. This eliminates the pressure of having to sell your house and find a new place to live within a certain timeframe, as the trade-in company has already guaranteed to purchase your home at your convenience.

How To Distinguish Reputable From Fraudulent

You know how the saying goes: If something sounds too good to be true, it probably is. This message is true for direct home buyers as well, especially if a company’s buying process seems complicated and leads to doubt. Though there are plenty of reputable home buyers out there ready to make you a cash offer, there are also scammers ready to take advantage of a home owner that’s eager or desperate to sell. Below are a few basic steps to vet a direct home buyer.

Do Your Research

Verify that the company is accredited by the Better Business Bureau. You can also check their score and see what their BBB rating is (the company cannot pay for a good rating). Google is also your friend! Search the company’s Google Reviews and see what previous customers have to say. Check out the home-buying company’s website—does it look professional? What are they offering? How are their testimonials? 

Once you’ve read about what they offer online (cash deals, flexible move-out dates, any closing costs or service fees), call them! Make sure what they say over the phone matches up with the online information, and they can answer any questions you have about the buying process.

Proof of Funds

After you’ve vetted and selected a direct house buyer, feel free to reach out to them and request an offer. Nowadays, real estate agents work with home-buying companies due to their rising popularity. If you choose to work with a real estate agent to facilitate the deal, they can be the ones to contact the company and inquire about an offer. The house buyer will then typically request additional information on your house for sale—this might include photos or an in-person visit. They’ll then present you with a cash offer. 

Before you sign any contract, make sure you ask for Proof of Funds. This ensures the house buyer has the necessary cash to back up their offer. Otherwise, you risk the offer slowing or coming to a complete stop if the direct home buyer doesn’t end up having the equity needed for the deal to close. In other words, you can avoid wasting your time by asking for Proof of Funds.

Whichever direct home buyer you choose to make a deal with, hopefully now you feel well-equipped to examine your options and review their offers. When compared to traditional deals that are time-consuming and costly, direct house buyers offer sellers like you the opportunity to receive competitive cash offers for your house with deals that can close in as little as ten days—saving you time, money and stress.