Consider Selling Directly to a Home Buying Company

Options as an Absentee Owner

An absentee owner, also known as an out-of-state or long-distance landlord, is someone who owns a property but does not live in the same area or even the same state as the property. We have local expertise to help you as an absentee owner – we are a top “We Buy Houses in Richmond, VA” company. There are various reasons why someone might become an absentee owner:

Investment Property: Many real estate investors purchase properties in different locations with the intention of renting them out for passive income. These properties are considered investment properties, and the owners are absentee landlords.
Inherited Property: Sometimes, individuals inherit properties from relatives or family members who lived in a different location. Rather than selling the property immediately, they may choose to hold onto it and become absentee owners.
Job Relocation: When people move to a new city or state for work, they may decide to keep their original home and rent it out instead of selling it. This turns them into absentee owners of their former primary residence.

Being an absentee owner can present several challenges. Managing a property from a distance can be difficult, especially when it comes to tasks such as finding reliable tenants, handling maintenance and repair issues, and ensuring the property is well-maintained. Absentee owners often rely on property management companies or local contacts to oversee the day-to-day operations of their rental properties. Equip yourself better by reading these related blog posts: 7 Tips for Absentee Owners Who Need to Sell a House in Richmond, including Identify the Right Time to Sell, Find a Reliable Property Manager, Price Your Property Correctly, and Make Necessary Repairs and Upgrades.

Options for Selling an Absentee-Owned Property

As an absentee owner, you have several options when it comes to selling your property. Each option has its own advantages and disadvantages, and the best choice for you will depend on your specific circumstances and goals.

Traditional Real Estate Listing

One of the most common ways to sell a property is through a traditional real estate listing. This involves hiring a real estate agent to market your property, handle showings, and negotiate with potential buyers. The advantage of this approach is that you have a professional on your side who is familiar with the local market and can help you price your property competitively. Additionally, real estate agents have access to multiple listing services (MLS) and other marketing channels, which can increase the visibility of your property. However, you’ll need to pay a commission to the agent, typically around 5-6% of the sale price.

For-Sale-By-Owner (FSBO)

Another option is to sell your property as a for-sale-by-owner (FSBO). This approach allows you to avoid paying a real estate agent’s commission, which can save you a significant amount of money. However, you’ll be responsible for handling all aspects of the sale, including marketing, showings, and negotiations. This can be challenging, especially if you’re not familiar with the local market or the legal requirements involved in a real estate transaction.

Selling to an Investor or Home Buying Company

If you’re looking for a quick and hassle-free sale, you may consider selling your property to an investor or a home buying company. These companies typically purchase properties in as-is condition, which means you don’t need to make any repairs or renovations. They also offer a cash purchase, which can be attractive if you need to sell quickly. However, you may receive a lower offer than you would on the open market, as these companies are looking to make a profit on the resale.

Each option has its pros and cons, and the best choice for you will depend on your specific circumstances. If you’re looking for the highest possible sale price and don’t mind the time and effort involved, a traditional real estate listing may be the way to go. If you want to avoid paying a commission and are comfortable handling the sale yourself, an FSBO could be a good option. And if you need to sell quickly and don’t want to deal with the hassle of repairs or showings, selling to an investor or home buying company could be the most convenient choice.

What is a Home Buying Company?

A home buying company, also known as an iBuyer (instant buyer), is a real estate firm that uses technology and data to make all-cash offers on homes. These companies aim to provide a convenient and streamlined selling process for homeowners who want to sell their property quickly and without the hassle of traditional real estate transactions.

The business model of iBuyers involves using automated valuation models (AVMs) and data analytics to estimate the market value of a home. Based on this analysis, they present the seller with a cash offer, typically slightly below the estimated market value. If the seller accepts the offer, the iBuyer purchases the home directly, handles any necessary repairs or renovations, and then lists the property for sale on the open market.

The primary advantage of working with an iBuyer is the convenience and speed of the transaction. Sellers can avoid the time-consuming process of listing their home, hosting open houses, and negotiating with potential buyers. Instead, they receive a cash offer within a matter of days and can close the sale in as little as a week or two, depending on the company’s process.

iBuyers typically charge a service fee, which can range from 5% to 15% of the home’s value, to cover their costs and potential renovations. This fee is often higher than the commission paid to a traditional real estate agent but may be worthwhile for sellers who prioritize a quick and hassle-free sale.

It’s important to note that iBuyers operate in specific markets and have criteria for the types of homes they will purchase, such as age, condition, and location. Additionally, their offers may be lower than what a seller could potentially achieve on the open market, so it’s essential to weigh the convenience factor against potential financial trade-offs.

Advantages of Selling to a Home Buying Company as an Absentee Owner

Selling to a home buying company, also known as an iBuyer, offers several advantages for absentee owners who may be managing a property from a distance. One of the primary benefits is the convenience factor, as there is no need to coordinate open houses or showings. This can be particularly helpful for absentee owners who may find it challenging to prepare the property for traditional showings or be present during the selling process.

The sale process with an iBuyer is generally quick and convenient. According to industry data, the average time from initial offer to closing with an iBuyer is around 30-45 days, which is significantly faster than the traditional real estate market. This can be particularly appealing for absentee owners who may need to sell their property promptly due to various reasons, such as relocation or financial circumstances.

Another advantage of working with an iBuyer is the ability to receive a cash offer for the property. This eliminates the need to navigate the complexities of traditional financing, which can be particularly beneficial for absentee owners who may not be familiar with the local real estate market or lending practices.

iBuyers typically purchase properties “as-is,” meaning that the seller is not required to make any repairs or renovations prior to the sale. This can be a significant advantage for absentee owners who may find it challenging to coordinate and oversee necessary repairs or renovations from a distance.

Furthermore, data from various real estate sources suggests that the average time to sell a property on the traditional market can range from several months to over a year, depending on the location and market conditions. By contrast, iBuyers offer a streamlined process that can significantly reduce the time and effort required to sell a property, providing added convenience for absentee owners.

Potential Downsides of Selling to a Home Buying Company

While selling to an iBuyer can offer convenience and a quick sale, there are some potential downsides to consider:

May Get Less Than Market Value

One of the biggest drawbacks of using an iBuyer is that you may receive a lower offer price compared to selling through traditional means. iBuyers typically make offers below the estimated market value to account for their holding costs, repairs, and desired profit margin. On average, iBuyer offers can be 5-15% below the fair market value of a home.

Fees Charged by the Company

In addition to potentially receiving a lower sale price, iBuyers also charge various fees for their services. These can include transaction fees, repair deductions, and closing costs. The total fees can range from 6-14% of the sale price, which can significantly impact your net proceeds.

Limited Negotiating Ability

When selling to an iBuyer, there is often little room for negotiation on the offer price or terms. The offers are typically presented as “take it or leave it” propositions, giving you less flexibility than a traditional sale process.

Potential for Undervaluation

Since iBuyers rely heavily on automated valuation models (AVMs) to determine their offer prices, there is a risk that your home could be undervalued. AVMs may not accurately account for unique features, recent upgrades, or local market conditions, leading to a lower offer than your home’s true worth.

While the convenience of an iBuyer sale can be appealing, it’s essential to carefully weigh the potential downsides and consider alternative selling options to ensure you receive the best possible outcome for your situation.

How to Evaluate Cash Offers from Home Buyers

When considering a cash offer from a home buying company, it’s crucial to evaluate it thoroughly. These companies often present their offers as straightforward solutions, but there are several factors to consider to ensure you’re getting a fair deal.

First, review the offer price and compare it to recent comparable sales in your area. While iBuyers claim to use automated valuation models, their offers may still be below market value to account for their overhead costs and desired profit margins.

Next, consider the condition of your property and the estimated repair costs. iBuyers typically deduct the costs of necessary repairs and renovations from their initial offer. Evaluate whether their repair estimates are reasonable or if you could potentially net more by making the repairs yourself and listing on the open market.

Examine the closing timeline proposed by the iBuyer. While they tout a quick and convenient process, their timelines may not align with your needs. If you’re in a hurry to sell, their expedited closing could be advantageous, but if you have more flexibility, a traditional sale might yield a higher return.

Additionally, understand the service fees and other costs associated with the iBuyer transaction. These companies charge fees for their convenience, which can range from 5% to 15% of the sale price. Weigh these costs against the potential savings in repairs, staging, and marketing expenses of a traditional sale.

Finally, consider your personal circumstances and priorities. If you need a quick, hassle-free sale, an iBuyer offer might be appealing despite potentially leaving some money on the table. However, if maximizing your sale price is the top priority, a traditional listing with a real estate agent may be the better option, even with the added effort and time commitment.

The Home Selling Process with an iBuyer

Selling to an iBuyer (instant buyer) typically follows a straightforward process designed for speed and convenience. Here’s a step-by-step walkthrough of what to expect:

Request an Offer: You’ll start by providing some basic information about your property, such as its address, number of bedrooms and bathrooms, and any major updates or repairs needed. Many iBuyers have online forms or apps to streamline this initial request.
Property Evaluation: The iBuyer will conduct a preliminary evaluation of your home’s value based on the information provided and comparable sales data. Some companies may also send a representative to perform an in-person evaluation.
Receive a Cash Offer: Within a few days, the iBuyer will present you with a cash offer for your home. This offer is typically below market value, as the iBuyer factors in their own costs, risks, and desired profit margin.
Accept or Decline: You can choose to accept the offer as-is, negotiate for a higher price, or decline and pursue other selling options. Most iBuyers give you a limited window (e.g., 7-10 days) to make your decision.
Schedule a Closing Date: If you accept the offer, you’ll work with the iBuyer to schedule a closing date that works for you, typically within a few weeks.
Home Inspection and Repairs: The iBuyer will conduct a more thorough inspection of your property. Depending on the company, you may be responsible for certain repairs or the costs may be deducted from the offer price.
Closing: On the closing date, you’ll sign the necessary paperwork to transfer ownership to the iBuyer. The process is designed to be quick and streamlined, often taking place at a local office or even your home.
Receive Payment: Once the sale is finalized, you’ll receive the agreed-upon cash payment, typically within a few days of closing.

The entire process, from initial offer to closing, can take as little as 2-4 weeks with an iBuyer, compared to several months with a traditional real estate sale. However, the convenience often comes at the cost of a lower sale price.

Preparing a Property for an iBuyer Sale

As an absentee owner, preparing a property for an iBuyer sale can be relatively straightforward compared to a traditional real estate transaction. One of the main advantages of working with an iBuyer is that they typically purchase homes in “as-is” condition, meaning you may not need to invest significant time or money into repairs or renovations.

However, it’s still advisable to declutter and clean the property to present it in the best possible light. Remove personal belongings, excess furniture, and any clutter that could make the space appear smaller or less appealing. A clean, neutral environment can help potential buyers envision themselves living in the space.

Unlike a traditional sale, where you would need to stage the home and potentially make costly repairs or upgrades to attract buyers, iBuyers generally conduct their own inspections and factor any necessary repairs into their offer price. This can save you the hassle and expense of coordinating and overseeing renovations from a distance.

That being said, some iBuyers may require certain minimum standards to be met, such as addressing safety hazards or ensuring the property is in a livable condition. It’s essential to review the specific requirements of the iBuyer you’re working with and address any issues they highlight during their inspection process.

Additionally, while iBuyers typically don’t require extensive showings or open houses, they may request access to the property for their own evaluation and inspection purposes. As an absentee owner, you’ll need to coordinate with the iBuyer to provide access or arrange for a local representative to facilitate the process.

Overall, the preparation required for an iBuyer sale is generally less intensive than a traditional sale, but decluttering, cleaning, and addressing any critical issues can help ensure a smooth transaction and maximize the potential offer from the iBuyer.

Top iBuyer Companies to Consider

Several major companies operate in the iBuyer space, each with their own geographic footprint, business model, and pros and cons to consider as an absentee owner. Here’s an overview of some of the top iBuyer companies to be aware of:

Opendoor

Opendoor is one of the largest and most well-known iBuyers, operating in over 40 markets across the United States. Their model involves using automated valuation models and local real estate data to provide quick cash offers to sellers. Pros of Opendoor include their broad geographic coverage, easy digital process, and ability to close quickly. Potential downsides are that their offers may be lower than market value, and there are fees and service charges involved.

Offerpad

Offerpad is another major national iBuyer player, currently buying and selling homes in over 1,600 cities and towns across 24 markets. Similar to Opendoor, they use data and algorithms to make cash offers, aiming to provide a convenient and fast selling experience. Offerpad may be a good option for absentee owners looking for flexibility, but their fees can be high, and offers may not maximize profit.

Zillow Offers

Zillow is a household name in real estate, and through Zillow Offers, they are a direct buyer of homes in select markets. Their iBuyer program leverages Zillow’s rich real estate data to make competitive cash offers. A benefit of Zillow Offers is their brand recognition and resource, though their geographic coverage is more limited than some competitors.

RedfinNow

RedfinNow is the iBuyer arm of the tech-focused real estate brokerage Redfin. They currently operate in about a dozen markets, making all-cash offers and aiming for a fast, digital-friendly transaction process. RedfinNow may appeal to sellers who prioritize convenience, but their service fees are reportedly on the higher end.

In addition to these major national players, there are numerous regional iBuyers to consider based on your location, such as Offerpad (Southeast), Knock (Southeast/Midwest), Sundae (West Coast), and many others. Each has their own unique selling points and downsides to weigh depending on your priorities as an absentee owner seller.

Alternatives to iBuyers for Absentee Owners

While iBuyers offer a convenient solution for absentee owners looking to sell quickly, there are other options to consider that may better suit your needs and potentially yield a higher sale price. Here are some alternatives to iBuyers:

Flat-Fee Real Estate Services: These services provide limited real estate agent assistance for a flat fee, typically a few hundred dollars. You handle most of the work, such as marketing and showings, but can list your property on the MLS and benefit from some professional guidance.

Discount Brokers: Similar to traditional real estate agents but with lower commission rates, discount brokers can be a cost-effective option for absentee owners. You’ll still receive full-service assistance with listing, marketing, and negotiating, but at a discounted rate compared to standard commissions.

For Sale by Owner (FSBO): Selling your property without an agent can save you significant commission fees, but it also means handling all aspects of the sale yourself, including marketing, negotiations, and paperwork. FSBO can be challenging for absentee owners, but it’s an option if you’re willing to put in the effort.

Local Investors: Real estate investors, particularly those focused on your area, may be interested in purchasing your absentee-owned property. They often seek properties they can renovate and resell or hold as rental investments. While investors typically offer below-market prices, they can provide a quick, hassle-free sale.

Each alternative has its pros and cons, so it’s essential to weigh your priorities, such as speed, convenience, and potential sale price. Consider your specific circumstances, the property’s condition, and your familiarity with the local market to determine the best approach for selling your absentee-owned property.

Making the Right Choice for Your Situation

Deciding whether to sell your absentee-owned property to an iBuyer or through more traditional means is a major decision that requires careful consideration of your priorities and circumstances as a seller. There are pros and cons to each path, and the right choice depends on your specific goals, timeline, and the condition of the property.

If a fast, hassle-free sale is your top priority, an iBuyer may be an attractive option, especially if the property needs significant repairs or upgrades. The convenience of skipping listings, showings, and open houses can be invaluable for absentee owners juggling properties from a distance. However, you’ll likely receive a lower sale price compared to listing on the open market.

Alternatively, listing your property with a real estate agent provides the potential for a higher sale price but involves more time, effort, and upfront costs for repairs, staging, and marketing. This route may be preferable if your property is in good condition and located in a desirable area with high buyer demand.

To make the most informed decision, it’s crucial to evaluate all your options thoroughly. Obtain multiple cash offers from reputable iBuyers and compare them to estimates from local real estate agents. Consider the trade-offs between speed, convenience, and potential sale price. Weigh the costs and fees associated with each path, as well as the time and effort required on your part.

Ultimately, the choice should align with your specific priorities as a seller. If a quick sale and minimal hassle are paramount, an iBuyer may be the best fit. If maximizing your sale price is the driving factor, listing on the open market could be the way to go. Carefully assess your unique situation, crunch the numbers, and choose the path that best meets your needs as an absentee owner. If you need to “Sell My House Fast in Richmond, Virginia“, we have over 25 years of experience in this local market helping absentee owners that need to sell.