Welcome to your “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.
Today’s question is about selling your home without any hassle by dealing with one of the many companies that will pay quick cash and require no fixing up.
If you’ve ever dealt with a real estate agent and waited months for your house to sell, it’s an appealing offer. But is it worth it? Watch the following video for my take. Or, if you prefer, scroll down to read the full transcript to find out what I said.
You also can learn how to send in a question of your own below.
For more information on this topic, check out “How to Price Your Home So It Sells for Top Dollar” and “12 Ways to Blow Your Home Sale.” You can also go to the search at the top of this page, put in the words “real estate” or “home selling” and find plenty of information on this topic.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, everyone, and welcome to your “2-Minute Money Manager.” I’m your host, Stacy Johnson. Here’s the deal: You ask a money question, and if I can’t answer it in less than two minutes, you probably didn’t need to know it anyway.
Here’s today’s question. It comes to us from Mary:
“We received a postcard stating that a person wanted to buy our property as is, all cash. We hope to move out of state. Should I use this person, or should I talk to a traditional Realtor?”
What Mary has encountered we’ve all seen before. You pull off the freeway — or, maybe see a billboard on the freeway — and there it is: “We buy ugly houses.” “We pay cash for your house. Turnkey, walk away, we’ll take over.”
What we’re encountering here is called an EP company, or “equity purchase” firm. These are people or companies who come in and try to snap up your house for a very low price, allowing you to do nothing to fix it up, but also probably getting less than you could in a traditional sale.
Think of it this way: You go to a car dealership and buy a new car, and you want to trade in your old one. Do they give you a good deal on your trade-in? No. You get to walk away and not do anything to fix it up or expend any effort to sell it, but the dealer is low-balling you. They’ll make money on the new car and they’ll make money flipping your trade-in as well.
That’s exactly what an EP firm is doing with your house, but the numbers are potentially a lot bigger.
What will the EP company offer? Probably around 80 percent of the value of your house, or perhaps 50 percent of the value of your equity. You’re going to leave a lot of money on the table. Sure, you’re not going to have to fix it up. It will be way less effort than a traditional sale, it’s going to be quick and it’s going to be cash. But you’re getting a lot less money.
So, what should you do instead? You should hire a traditional Realtor. I know it’s a pain, I know they charge commissions, I know it’s going to take more time, but you’ll likely end up with a lot more money in your pocket.
Another idea: If you really can’t be bothered with selling, try renting out your house. If it works as a vacation rental, you can use services like Flipkey, VRBO, Homestay.com or Airbnb. If not, look for long-term tenants. Even better, try renting to somebody on a lease purchase agreement, so that they may end up buying your house.
Any of those alternatives are probably better than selling to one of these “as-is” cash buyers.
Want more info? Go to MoneyTalksNews.com. Just do a search for “real estate.”
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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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