4 Facts On We Buy Houses Companies That You Need To Know [Definitive List In 2020]

As uncertainty continues to grow in the real estate market, speed can be of the essence in order to sell your house. When you are in need of a quick home sale, you simply do not have time to wait for a traditional sale as those take on average 90 days to sell.

You need to sell your house fast, your best option is one of the “We Buy Houses Company”, but what should you know when choosing a company like that?

Here are 4 facts for 2020 to help you decide and sell your house quickly:

Make Sure The Company Is Legitimate

With the rise of “Cash For Houses”, there are many companies out there looking to take advantage of homeowners. One easy way to avoid these bad apples is to make sure the company you contact is BBB Accredited. Many “we buy houses for cash” companies are safe and completely legal, the below accreditation will help you identify those.

The Better Business Bureau has a set list of standards it ensures an accredited company follows:

Build Trust

Advertise Honestly

Tell The Truth

Be Transparent

Honor Promises

Be Responsive

Safeguard Privacy

Embody Integrity

These are quite the reputable standards to be held to and characteristics you want of a company you are doing business with.

You don’t want to come to a deal with a company just to have them try to pull the wool over your eyes. Selling a home is stressful enough without “fake buyers”. That’s what led us to put the #1 characteristic you should you look for in We Buy Houses companies as their legitimacy.

To make things easy for you, we are an accredited business!

Check The Reviews

Selling your home fast and for cash is a bit of a newer experience. You want to see how a company has treated its past homeowners. Did they feel they received a good deal, did they enjoy the process, would they recommend to other homeowners? The best way to find this out, is through the reviews.

You can find reviews through a simple Google search of the company. These are going to be real people that have worked with this company in the best. There’s the concern that this company may not do what they say they will, i.e. get you cash for your house. You don’t want to go through the process of selling just for them to not be able to come up with the money. Look at the reviews! There is a wealth of information there, and people are generally more than happy to share bad experiences.

Reviews are critical for you to learn about the company and whether you feel they’d be a good fit for you. Over 60% of people state they look at Google Reviews before deciding to do business with a company. This is huge! It is highly recommended to look at a company’s Google review page to see what past homeowners have to say.

You can also, check out a company’s review page. A red flag, would be if a company does not have any reviews to show you. Here’s ours as an example of what to look for: Reviews

You Want To Work With Real/Local People

You’ve most likely seen the signs, “Cash For Houses”. This is part of a nation wide company, also known as an “iBuyer” (Internet Buyer). Yes, these companies do buy houses for cash; but you end up getting less money in your pocket than when you work with a local company. This is because the iBuyers make their profit by charging you fees.

We looked at Four of the big iBuyers companies to compare against our local offers. Here’s how Opendoor, Offerpad, Zillow Offers, and RedFinNow compared against local company 401HomeBuyers:

BuyerAvg. Service FeeMin. Time To CloseAverage Rating
Opendoor7.5%14 Days3.8/5
Offerpad8%10 Days1.4/5
Zillow Offers7.5%7 DaysN/A
RedFinNow9%10 Days3.6/5
401HomeBuyers0%7 Days5/5

The local companies know your market and the real opportunity that your home offers. In addition, they can use local resources to make the repairs. These are two traits that the iBuyers cannot offer, and are a reason why you will get more cash for your house with a local We Buy Houses company than an iBuyer.

Their Cash Offer Process Should Be Transparent

You probably haven’t sold a cash for house before, it can be a little different than selling with a realtor. Due to this, make sure you understand how the cash for houses company determined their offer for your house. If you randomly receive some “magic” number, truth is you probably didn’t get the best cash offer that you could have. Most companies should have nothing to hide, so don’t be afraid to ask them how it works.

The company has to make some sort of profit, and you want to get the best offer you can. These can both still happen! Though one does not have to sacrifice for the other. This is why it’s important that you understand how your cash offer was calculated. Here is a great example of a walkthrough of an offer.

Let’s run through a scenario: you have a house you want to sell but it definitely needs some work done to it. Not a problem, but I’m sure you can agree you won’t be able to get market value with all those required repairs. Though, we know the Jones’ house down the road sold for $250K. Their house was similar to yours but had a few upgrades: new roof, new floors, granite counter tops, removed wallpaper and added fresh paint throughout. Now we know the market value (After Repair Value) once your house is fixed up is worth $250K, but how do we get to your cash offer?

Here’s how a company should break down your offer for you:

[Your Offer] = [After Repair Value] – [Cost Of Repairs] – [Selling Costs] – [Minimum Profit]

So, how do we get there?

We bring our contractor in and we’re told that in order to add in the granite, the floors, the roof, etc… Our Cost Of Repairs will be $50K.

From having done this a number of times, we know that our selling costs will be 10% of the After Repair Value –> 10% x $250K –> $25K.

Let’s say our minimum profit for this house would be $30K. Now we’re ready to go through the numbers:

After Repair Value = $250K

Cost Of Repairs = $50K

Selling Costs = $25K

Minimum Profit = $30K

Now you’re ready to start getting cash offers for your house. Here at 401HomeBuyers we believe we can provide the best offers around, at the very least we try to. We’ve included a simple form to get you started on receiving a cash offer today!

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