We get questions from a lot of homeowners who are receiving postcards and letters such as the one pictured. For most people considering selling, we would put these in the category of “Too good to be True”, but thought we could use the points in one of the postcards to provide some information.
The “Old” Way
1. You pay a commission- TRUE, Commissions are negotiable in Colorado, and you could pay a negotiated rate, flat fee, or even an hourly rate. Check with a Realtor to see what they offer.
2. You Pay closing costs- TRUE and FALSE, all closing costs are negotiable in the Colorado Contract to Buy and Sell Real Estate. Many sellers do elect to accept offers requesting they pay closing costs; many contracts are also accepted with buyers paying closing costs.
3. Buyer gets financing- TRUE and FALSE, many buyers have financing, however, they are competing with cash buyers to purchase your property. You select the contract of your choosing, and it would be unlikely you would select a contract with financing if you prefer a cash transaction.
4. Make repairs from inspection- TRUE and FALSE, once again this is a negotiable item. Many inspection requests are rejected by sellers, while others choose to complete some or all of the requested items.
5. Mess with paperwork and scheduling- TRUE, a professional Realtor can guide anyone through this process; the proliferation of electronic contracts and signatures makes this easier than in the past.
6. Buyer usually dictates closing- FALSE, closing date, time, place are all negotiable in Colorado.
7. Move out at closing- FALSE, possession is negotiable; Colorado contracts allow for up to 60 days for a post-closing occupancy agreement to be established.
8. Financing contingencies- TRUE, if you select an offer with financing, your Realtor will track the deadlines and advise on considerations involved.
9. Showings, traffic and open houses- TRUE, the largest pool of potential buyers will want to see your home to make an informed decision; the larger the pool of buyers is for your home, the better chance you will get a higher price.
10. Remove trash and professionally clean- TRUE and FALSE, you decide. Experience shows a clean home in great condition will attract better offers; homes can also be offered in as-is condition. You can also ask your Realtor about services that will assist or complete cleaning for you.
The “New” Way
Each item on the list sampled is TRUE. Keep in mind, that nothing is actually free. The “New” way considers the overall condition of the property along with other factors to establish value of the home; negative issues are deducted from the offer price. If cleaning is needed, junk needs to be removed, repairs need to be made, or upgrades are needed the company will subtract the expense from the offer they make. Instead of paying a commission, where the amount is known, the “New” way builds in hidden profit margin, and it is unlikely you will ever know how much the company is making from your home. Many homebuying companies will also charge an upfront fee anywhere from 3-10% which is also discounted from the price paid. The “New” way is not really new at all, there have been cash buyers for decades; it is a repackaging of a common way for investors to buy homes at a low price and sell them at a higher price.
It is our view that you should consider all options before you risk the hard-earned equity in your home. We also recommend professional legal and tax counsel before selling your home. There are some situations where the convenience of selling quickly without full market exposure makes sense, but statistics show that it is a small sector of the market.