What’s Up With the "We Buy Houses" Signs?

Have you noticed those signs all over the city? The ones that say “We Buy Houses,” “Cash For Houses,” “Sell Your House Fast” or some variation of that along with a phone number? They are everywhere. What’s the deal with those signs? Why do people want to pay cash for houses?

Well, most of those signs are put out by real estate investors. We pay cash for houses as investments. We buy houses below the market value, fix them up, and either sell them or rent them out for a profit.

You may be wondering why anyone in their right mind would sell their house for below market value, and that’s a good question. There are actually many reasons people may want to sell a house quickly. Perhaps they inherited a house far away from where they live. Many people in that situation don’t know where to begin to sell their property, and the prospect of selling it in a matter of weeks for cash is very attractive to them. Some other people that might want to sell quickly for cash include: those facing foreclosure, couples divorcing, tired landlords, and people that don’t have the time, or cash to do the repairs themselves.

In a traditional real estate transaction, you would list your home with a real estate agent, make needed repairs, get the house ready for showings, and put it on the market. Depending on the market, your house could sell anywhere from one month to well over a year. You would have to deal with potential buyers walking through your house constantly, and when you finally got an offer, buyers will use property inspections and appraisals to try to reduce the price further or have you make repairs prior to closing. After all is said and done, you are paying for closing costs (such as escrow fees, title insurance policy, and home warranty), Realtor commissions (generally 6% of the purchase price), holding costs for the time your house was on the market (mortgage payment, home insurance, property taxes, utilities, and maintenance). Often times you will also have to pay for professional pictures or staging up front as well.

Once you add up the costs, the time commitment, and the hassle, it’s no wonder many people are looking for other options to sell their home. To many people, those “We Buy Houses” signs are the breath of fresh air they’ve been looking for. While it’s not necessarily the best option for everyone, if you run the numbers and consider the value of your time and sanity, it often makes a lot of sense to see if a cash offer from an investor might work for you.