Are “We Buy Houses” Companies Legit?
Your house may be one of your most valuable assets – and if you’re looking for someone to sell your house to, you want to make sure they’re legitimate. The home selling process is complex, and you’ve probably heard horror stories of deals falling through at the last minute because the buyer couldn’t secure financing.
It makes sense, then, that many people wonder whether or not “we buy houses” companies are legitimate. After all, they operate outside of what most people consider traditional real estate – there’s no listing, there’s no realtor, and deals are often made in cash.
“We buy houses” companies are legitimate – they simply serve a niche that falls outside of traditional real estate. In this article, we’re going to answer all your questions, from how “we buy houses” companies make a profit to the people they serve. That’s a lot to cover, so let’s get moving.
What is a “we buy houses” company?
“We buy houses” companies are a broad category of investors who deal in buying and selling homes as their primary business. You’ve probably seen the advertisements these companies make – most feature the phrase “We buy houses”!
Almost anyone can post an ad, which sometimes leads to credibility issues. That’s why we highly recommend you do your research before choosing a “we buy houses” company – you can read more about that in the “Can I trust “we buy houses” companies” section.
How do “we buy houses” companies make money?
“We buy houses” companies invest in the houses they buy to improve them, then sell those houses. This practice is often called “house flipping”. They generate revenue by selling those houses they buy for more than the price of purchase and the price of improvements. This means that “we buy houses” companies are incentivized to buy homes in any condition – as long as the cost of repairs is lower than the potential resale value, the “we buy houses” company will be interested in purchasing the house.
Because “we buy houses” companies usually pay in cash, they can avoid many of the costs associated with traditional real estate, including interest on mortgages. This lowers the overall price of purchasing a house, which improves profitability.
Who owns “we buy houses” companies?
“We buy houses” companies are often independent, family-owned businesses run by individuals who are skilled in trades – the more you know about repairing houses, the less you have to pay contractors.
How much will a “we buy houses” company pay me for my house?
There’s no simple answer to this question. The amount that the “we buy houses” company will pay you depends heavily on the market value of your house (including size, location, and other factors), the amount the “we buy houses” company will have to invest in order to turn a profit, the amount of equity you have in your house, and more.
“We buy houses” companies will typically pay less than your house would list for on the traditional real estate market. This is why some people question the legitimacy of these companies – why are they paying less than the house might go for on the market? There are many reasons for this – and none of them mean that the companies are illegitimate. To understand, you need to know about the market that “we buy houses” companies serve.
Who uses “we buy houses” companies?
The traditional real estate market is complex. Showing your house can be time-consuming; houses can stay on the market for months, and some homes need serious repairs and other improvements before they can reasonably be sold.
People who don’t have the time to list on a traditional market or the means to complete improvements to list their houses need a way to sell their homes. “We buy houses” companies fill this niche. A company like Solutions Home Buyers can pay well, pay in cash, pay quickly, and offer cash advances, variable closing dates, and other services that the traditional real estate market cannot.
“We buy houses” companies are used by:
- People whose houses need significant improvements before they can be sold
- People managing estates
- People who have recently been divorced or widowed
- People who want to move quickly
- People who have little to no equity in their house
- People who have fallen on difficult times and are looking to sell quickly
- People who are looking to sell unprofitable rental properties
Can I trust “we buy houses” companies?
“We buy houses” companies are like companies in any other industry – most are legitimate, but there are bad actors out there. Do your research on the company you’re interested in selling to. Read their reviews. Check their BBB profile. Talk with the people who are interested in buying your house, and ask them for testimonials.
While that means you can’t trust every “we buy houses” company, the industry as a whole serves an incredibly useful purpose. Not everyone should use a “we buy houses” company, and if you have the time and money to list in the traditional real estate market, you may be able to sell your house for more.
“We buy houses” companies are not, however, trying to rip people off. Legitimate companies offer competitive prices for the houses they buy and can help people get out of difficult situations with a win-win deal.
Why are “we buy houses” companies advertising to me?
Simple – they want to buy your house! “We buy houses” companies are interested in any house they believe they can sell for a profit. By advertising to everyone, they can find people who are in need of their services – people who may have been let down by traditional real estate.
That means that “we buy houses” companies are trying to reach as many prospective sellers as they can. You’ll see signs that say “We buy houses” in every location, from big cities to remote rural areas. You’re also likely to get ad mail to your home advising you that a “we buy houses” company is interested in buying it. These ads aren’t sent to specific houses – rather, they’re sent to a large number of homes in order to increase visibility.
What kind of houses do “we buy houses” companies purchase?
There’s a notion that “we buy houses” companies only purchase from people in dire straits or that they only purchase homes in poor condition. That’s not true – “we buy houses” companies will buy houses in any location and any condition.
Companies like Solutions Home Buyers care about offering a good deal, upholding their reputation, and turning a profit. As such, we’ll buy houses anywhere, and we’ll always provide a number of different deal structures so the owner of the home can pick the deal that works best for them.
Why do “we buy houses” companies pay cash?
Mortgages are complicated, and the fees associated with obtaining them can be pricey. Getting a mortgage is also time-consuming.
“We buy houses” companies pay in cash because it offers a tremendous amount of flexibility – by paying cash, we can offer variable closing dates, cash advances, and a speedy closing process.
A note on wholesalers
Some “we buy houses” companies are wholesalers. These companies purchase houses, then try to sell them as quickly as possible to other investors. Wholesalers are legitimate companies, but sellers should pay attention to the contract – in deals with wholesalers or with any other “we buy houses” companies.
Wholesalers, in particular, will often have clauses that give them the right to back out of the deal if they don’t find an appropriate investor to purchase the house. That can lead to some pretty severe complications, so always read the fine print!
Trust Solutions Home Buyers
We are a “we buy homes” business – the kind who will tell you everything from how we make money to the fact that listing with a traditional real estate agent will often net you a better price for your house. We buy houses in Edmonton. In fact, we buy them throughout the Prairies. Why are we telling you all of this?
It’s because we believe in transparency and we believe in the importance of our work. We serve those whose problems go unaddressed by traditional real estate. We offer fair prices and help people get out of difficult situations.
Are you interested in selling your home? You can trust Solutions Home Buyers.