Cash-for-Home Practices
The buying for cash home practice is existing in the real estate business and this is usually a procedure which small companies thrive on, a non-conventional method of buying real estate properties, because the selling and buying of a home is quick due to the fact that these companies bank on the types of situations which a distressed homeowner may fall in, such as: a homeowner who can’t sell his house or his listing has expired; a homeowner who is divorcing; bankrupt homeowners; homes in probate; foreclosed homes; homeowners who are transferring; homeowners who are evicting tenants; vacant homes; damaged homes.
A typical real estate agent receives a percentage commission from the selling price, once a house is sold, and which includes fees for listing the house and other expenses which a real estate agent would usually require from the homeowner; however, in the cash-for-home practice, these small companies do not charge commissions or fees because they process the sales, internally, instead of hiring for an outside service and they pay their own title policies.
Equity purchase companies are referred to as these companies that buy homes for cash because they buy homes for cash based on the equity situation of a homeowner and usually their business strategy works as they negotiate for the lowest price possible to the homeowner, knowing that the homeowner is strapped with an equity problem. On the part of the homeowner, here are ways to determine your net profit, if you plan to sell your home to this type of company: your selling price will likely be less than 80% of the market value and your equity value could be discounted more than 50%; the company may offer to pay your existing mortgage payments on your house; the company will use credit lines to cash you out so the negotiation can be closed as early as possible.
Whether a homeowner sells his home to a conventional buyer or a cash for home company, either way, he will receive cash, except that a conventional buyer will be paying more as he will most probably make a house loan to pay off the homeowner’s existing mortgage, while the cash for home company will immediately pay cash, work on the homeowner’s mortgage, and the pay amount is less than the conventional buyer, but immediate, and they most probably resell the home to a conventional buyer for a higher price. Homeowners must be extra cautious of taking offers from a cash for home company and that it is more advisable for the homeowner to consider other alternatives to selling his home and preserving his equity status because observing the conventional practice, such as listing his home at a reputable real estate broker, can assure him of a better sales profit even if it takes a longer time to close a home transaction.
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