You may have seen reality shows about “flipping” houses and late-night TV ads featuring people offering to buy your home for cash. There are even house flipper video games.
You may not have given it much thought until you needed to relocate and sell your home fairly quickly. Or maybe a loved one just passed away and left you their home, which you have no use for and no interest in fixing it up before you sell it.
Should you sell it to a house flipper? It would save you the time and money involved in making repairs and upgrades necessary to get a good price, sifting through multiple offers (or, worse, having no offers) and possibly having the whole deal fall apart just before closing.
Who are house flippers?
Before you decide, it’s important to know just who house flippers are and what they do. Some are real estate agents, but many are primarily real estate investors. They buy homes for a relatively low price, fix them up and then sell them at a profit.
If your main interest is getting the home sold quickly rather than getting the best possible deal, selling it to a house flipper could be a good option. These sales typically close within a few weeks or less, and you sell it “as is.”
The flipper pricing model
You still want to make sure that the person you’re working with is legitimate and that you’re getting a fair deal. That’s where the “flipper pricing model” comes in.
House flippers typically pay no more than 70% of the after-repair value (ARV) of a home, minus the cost of repairs. That means the seller gets only about two-thirds of what they’d get if they sold the home themselves. To find out just how much money you’re potentially leaving on the table, you need to determine what homes in the area are selling for and how much it would cost you to have repairs and upgrades done.
There’s not really a right or wrong decision if you do what will work out best for you. However, you want to make sure that you choose a reputable house flipper who is working within that pricing model. Having legal guidance can help as well.