We are homebuyers in Connecticut and since we buy houses in Connecticut frequently, our advice is that when reviewing offers for your Connecticut property. You need to remember that just because an offer looks good on paper, doesn’t mean it is the best choice for you. it important that you know how to find comps. While the highest offer might appear to be the best, this isn’t always the case. You also need to make sure that you are getting the best out of multiple offers for your property. There are many numbers you will need to factor in when reviewing offers for your property in CT. Below, we discuss some of the costs you may face when selling your home in the New Haven CT area.
I Want A Fair Offer For My House In Connecticut
Many people express doubt when the subject of a fair all-cash offer from direct buyers surfaces. So I wanted to talk a bit about how we work. Responses we encounter often.
- “It is the nature of the business to offer next to nothing for my home”
- “We Buy Houses” companies thrive on the misfortune of others”
- Dishonest, vultures, sneaky cold are often keywords used describing real estate investors.
Not All “We Buy Houses In CT” Companies Are The Same
Yes, we understand the doubts and the hesitation in doing business with a “We Buy Houses” company. We know most of these companies lowball people and take advantage of others in distressed situations. Also, most people think that it is in the nature of this business to offer lower than market value for houses. Let’s talk about this:
The truth is: Yes, investors (sometimes) purchase houses below market value. There would be no margin for profit otherwise. However, most people stop there. That is all they see and read.
But dare to dig deeper and discover the details about such a transaction!
People often think that home investors take advantage of people’s misfortune. Here is where we aim to prove that notion wrong. Disclaimer: not all “We Buy Houses Quickly For Cash” businesses adopt the same code of integrity and honesty we do! I find the best way to explain things is through an actual example. Please know that this is not always how things work out, as the numbers depend on the condition of the property and the seller’s circumstances.
My effort will be to show that we do not lowball offers simply because the seller is in dire need to sell.
So Let’s Dive In
Imagine you have a property that you are considering selling. After a thorough market analysis, we determine that your home is worth $100K in its current condition, (we just picked a number).
From our market analysis we also concluded that if the property was completely fixed up and updated, the market value would be $130K (again, we picked a number for this example).
After a walkthrough we realize the house needs, oh… let’s say, a new roof ($20K in repairs).
So here are the numbers:
House As Is: $100K
Repairs Needed: $20K
ARV (After Repair Value) : $130K
OPTION 1: Listing it with an agent.
Listing it with an agent would require you to make repairs.
- You want the most money for your property, and that is why you list it with an agent correct? Then what is the point of listing it with an agent if you do not bring them home to fixed condition so that you CAN get the most money for your house?).
- As you are responsible for the agent’s fees and commissions, the agent will most likely require you to make repairs. (the more repairs, the better the condition of the property, the higher the selling price and the more the agent will get in commission, 6% of the sales price.
You would need to replace the roof ($20K) to be able to list the home at an ARV of $130K. However, no one makes offers on houses at ARV. Offers come in lower. The seller and buyer negotiate a settling price (under $130K). But for the sake of this example let us assume listing price is offered. Keep in mind that the After-Repair-Value (ARV) is simply what similar/comparable homes are sold for in your current market and vicinity. This is not the appraised value of the home.
Now here is what needs to happen:
- The seller would pay for repairs out of pocket before even listing the property
- The seller needs to do the work him/herself, or hire contractors.
- Managing contractors may be a hassle in itself
- The buyer would need to get their financing in place which may or may not go through.
- Lengthy process for a seller to receive their money.
- Seller pays closing costs, selling fees, holding fees, maintenance fees, mortgage, etc. for as long as the property stays on the market.
- House will stay on the market between 6 to 18 months.
- The seller has to endure constant walkthroughs of the property
- The property may not even sell…
Assuming all went well and the property sold at an ARV price of $130K,
The seller will net, (After Repair Value – Cost of repairs needed = net Profit): $130,000 – $20,000 = $110,000
However, the seller still needs to pay selling costs for the transaction, which is on average 19% of the selling price:
- Sales price reduction: 7%
- Agent fees: 6%
- Closing costs: 3%
- Other costs ( Inspection, deferred maintenance, etc.) : 3%
Selling costs are: $130,000 x 19% = $24,700
Thus actual seller profit: $110,000 – $24,700 = $85,300
(This number may not be In cash for your property)
OPTION 2: Selling to a home buyer, cash for your CT house.
Here are the numbers again:
House As Is: $100K
Repairs Needed: $20K
ARV : $130K
From these numbers we could present you fast cash for your house offer as follows:
- We could present you with an all-cash offer at $80,000 for your Home in Connecticut.
- We would fix that roof (for $20,000). Total spend thus far would be $80,000, + an extra $20,000 to fix the roof.. = $100,000.
- Selling it for $130,000 ARV would net us $30,000. From that $30,000 we subtract all the closing and selling fees still netting us a profit of about $2,000 to $6,000.
Notice that our profit did not come from you. We did not make our profit by taking advantage of you, the seller. We make our profit off the buyer after we flip it, buying the property from us.
Doing transactions this way truly is a win-win for everyone involved. You will get top cash for your Connecticut house and walk away free and clear and hassle-free.
With an agent you would have netted $85,350 dollars, but:
- You would have to deal with contractors and their annoyances
- People walking through your property for as long as the house is on the market.
- Your home would be listed between 3 to 8 months
- Your house may never even sell at the price you set.
- In the meanwhile, you are still responsible for the upkeep, bills, etc.
- You may not even receive cash if the property sells.
We would have offered you $80,000 dollars:
- You would get cash in a few weeks.
- No headaches, no hassles. We do all the repairs
- No need to clean. Take what you want and leave the rest. We will take care of everything
- No waiting on buyer financing.
So yes. We did offer a below market value for your property. But you would have received a (net) below market value for your home also if you had listed it. Getting a market value number for your house is offset by the repairs and all other costs associated with listing it with an agent. So the fact is that although you received market value for your property, you have spent a significant amount of money on repairs and other costs, and thus your net take home for the transaction is still below market value!
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I Want To Sell My House In Connecticut
When choosing the best offer for your New Haven house, it’s important to run the numbers right when reviewing offers from home buyers in Connecticut because you don’t want to end up stressing about it afterward. The closing cost, repairs, risks, and timeline to name a few are crucial. Learn more about the reviewing offers and how fast we can sell your property in the New Haven CT area, feel free to reach out to us at any time.
If you want to sell your house in CT, just fill out the quick form below. Or simply give us a call right now at (203) 529-4712. We can help you sort it out!
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