There is something for everyone in Knox County! Whether you are into sports, outdoor activities, arts, music or food, Knoxville has you covered. It is home to the University of Tennessee and there is a reason they are the Volunteers. The people of Knoxville are very giving and there is always a way to get active in the community. The Marble City is home to great school districts with the number one school district in the state being in its backyard. There are several large headquarters located in Knoxville, but also a lot of locally owned businesses. It has a big city feel mixed with a small-town vibe. The median home value in Knox County is $176,500, making the city affordable, with a population of 461,860.
Knoxville is divided up into four districts, the first being South Knoxville, which is affectionately nicknamed SoKno. South Knoxville hosts the Big Ears Music Festival in March (you can catch it March 21-24thin 2019). Several neighborhoods make up SoKno, including Island Home Park and Colonial Village, whichhas a lot of unique and charming homes. It is an area that draws in a lot of first time home buyers, young families and business professionals. Construction is still in place for a new development along the South Knoxville waterfront which will hold flats, apartment buildings, riverwalks, parks, and more. South Knoxville employers include the University of Tennessee, Regal Entertainment Group, and the UT Medical Center. SoKno is home to Downtown Knoxville, which makes it the perfect spot for a daytrip. Wander through Ijams Nature Center and the Historic Ramsey House, and then stop in for lunch at SoKno Taco Cantina. Spend the afternoon shopping in Downtown Knoxville and stop in for a coffee break at Honeybee Coffee Co. For dinner, we recommend Ye Olde Steak House or Sweet P’s Barbeque for something a little more casual.
North Knoxville is positioned directly above downtown Knoxville and is home to many neighborhoods such as Fourth & Gill, Old North Knox, North Hills, Whittle Springs which houses the beautiful Whittle Springs Golf Course, and Fountain City, home of the popular Fountain City Duck Pond. There are several historic neighborhoods in this area. There are a lot of craft breweries and coffee shops popping up in the area. It has a relaxed vibe, is convenient to downtown, and is close to the Zoo, making it a great area for all ages. Knoxville is all about shopping local, and you can find some great local spots such as the Hot Southern Mess Boutique, Chandler’s Deli, and Litton’s. One of the things we find to be particularly cool about this area are the Open Streets Events. These events are held twice each year and give residents a chance to explore their neighborhood and local businesses in a safe and fun way that caters to the whole family.
West Knoxville is situated west of downtown and is particularly large due to the way the city is laid out. This area houses bigger shops, restaurants, and venues for all ages. Among these venues include Main Event, Carl Cowan Park, and Gettysvue Polo, Golf & Country Club. You can easily spend a weekend shopping at both the West Town Mall and Turkey Creek, stopping for dinner at the Cheesecake Factory or Altruda’s Italian. While this area of Knoxville caters to more chain stores and restaurants, it also has plenty of local places! Stop in at the Farmacy for brunch, catch a movie at the Cinnebarre, grab dinner at Cazzy’s Corner Grill, and spend the evening with craft beer and pinball at Token Game Tavern. West Knoxville houses Bearden, Rocky Hill, Hardin Valley, and Farragut, making this portion of Knoxville a very family-oriented area due to the classic neighborhoods and great schools. The dining and shopping is fantastic!
The last district, Northwest Knoxville, is made up of neighborhoods such as Karns, Brentwood, Pleasant Ridge, and Amherst, and is located in the Knox County Public Schools District. It is home to the Dogwood Arts Festival, and plenty of outdoor places including Victor Ashe Park and Knoxville Muncipal Golf Course. You can find plenty of small-town restaurants in this district. Enjoy The Front Porch for lunch, Lulu’s Tea Room for a girls’ afternoon, and Ichiban Japanese Grill for dinner. This is a more laid-back area with lots of Southern Charm. It is great for families both old and new, as well as retirees.
Last but not least, Knoxville also encompasses Maryville and Alcoa. This area has a medium home value of $179,500. Notable employers here include Denso Manufacturing, Clayton Homes, Blount Memorial Hospital, and McGhee Tyson Airport. This is a very scenic area home to Maryville College. A daytrip to Maryville might look like an escape from the bustle of Knoxville, and there are plenty of places to relax! Wander through the Cade’s Cove Museum, with a stop at Full Service BBQ for lunch. Spend the afternoon relaxing at Blue Goose Vineyard or shopping at the Foothills Mall. Enjoy dinner at The Walnut Kitchen, and wrap-up your day (in the summer!) with a movie at Parkway Drive-In. The Maryville/Alcoa area is a great area because there are charming homes close to the small city, or you can live in a more rural area surrounded by nature! Neighborhoods here include College Hill, West Maryville, Westfields, Asbury Estates, and West Springbrook. It is a great area for all ages young and old. There are great schools in Maryville and it is close to Downtown Knoxville or the Smoky Mountains National Park!
Charlottesville, a city of almost fifty thousand people, lies where the Virginia piedmont begins to rise into the Blue Ridge Mountains. Founded in 1762, Charlottesville was the home of two US presidents and has many present day reminders of its foundation in history. The city provides many landmarks and places to visit whether you are there for a weekend visit or plan to make it your home.
The University of Virginia, founded by former US President Thomas Jefferson, is at the heart of the city with over twenty thousand students and a health care system that serves many of the surrounding counties. There are many restaurants to explore starting at the edge of the University with “The Corner” and stretching down West Main street to the downtown walking mall. Food for almost any craving can be found here. If you’re looking for a light breakfast or lunch option, try Bodo’s Bagels. If you’re looking for a lunch or dinner option that gives you a chance to eat locally sourced ingredients, Lampo Neapolitan Pizzeria can be great place to try near the walking mall. If you’re on the mall and want some good burgers and local brews, Citizen Burger Bar is a place you’ll want to put on the list.
Charlottesville is a great place to be for great music venues that provide quality shows on a weekly basis. Many of the breweries and vineyards surrounding the city will have local and regional bands, but downtown The Jefferson Theater will have have great nationally touring acts no matter what style of music you’re looking for. The Southern Cafe and Music Hall provides a bit more laid back environment to listen while you enjoy some of the cafe’s food and drink.
There is no shortage of entertainment in town with places like the Alamo Drafthouse Cinema where you can find newly released movies and have great food and drink ordered to your seat. The University of Virginia provides the Fralin Museum of Art for a more cultured display of the visual arts. You can find more information on their website about the rotating exhibitions and schedule of faculty lectures.
The city of Charlottesville can be divided up into several prominent historic neighborhoods. Each area has its own unique character and can provide any type of living for those looking to buy a home or rent in the city. The downtown area contains much of the dining and retail space in the city, but also has new developments that are adding residential options to what was previously commercial space. Norcross Station is one of the developments that has taken old commercial space and redeveloped it into 1-2 bedroom apts within a five minute walk to downtown. Fifeville is another neighborhood that has experienced significant revitalization in the past several years. The Fifeville Neighborhood Association is actively involved in creating a plan that will ensure sustainable development for the area. In the southeast corner of the city where Route 20 leaves the city, the historic Belmont neighborhood provides one of the most charming places to live in the city. At over 400 acres of quiet streets and Belmont park at it’s center, the neighborhood is family friendly and enjoyable. Belmont not only has residential streets though, at its western side is the IX Art Park where Three Notch’d Brewery and many other eating options can be found.
The Economy of Charlottesville is centered around the University and Health Care System which are the number one and two employers in the city. There are also numerous start up companies primarily in the IT services industry. The median household income was $50,727 in 2016, and the total population of the city was 48,019 in 2017 (US Census). Both the population and economy has grown significantly in the past 10 year, with over a 10% growth from 2010-2017. One just has to walk through the downtown area to witness the millions of dollars being poured into the redevelopment of old commercial spaces and construction of new apartment buildings.
Albemarle County surrounds the city of Charlottesville and has a population of 107,702 as of 2017. It was formed in 1744 and like many of the surrounding counties has many landmarks and dwellings of great historical significance. Most of the county is part of the Piedmont rolling hills, and provides some of the most sought after living in all of Central Virginia.
Just outside of Charlottesville is the most famous landmark in the county, Thomas Jefferson’s Monticello. It sits atop the 1200 ft high Montalto only 3 miles from the City. It can be toured regularly and the grounds and dwelling offers some of the most impressive views of the surrounding country. It is the only private home in the United States to be designated a UNESCO World Heritage Site; needless to say it is well worth the visit. More information about scheduling a tour and buying tickets can be found at their website. If a more informal activity is needed, Carter Mountain Orchard is a great place to take the family to enjoy great food, music, and pick your own fruit. It is only over the hill from Monticello, and provides even more stunning views of the City of Charlottesville and the surrounding mountains. Any time of the year can be a great time to visit, but fall with the brightly covered mountains and apples ready to be picked is certainly a memorable time to visit.
With over 25 wineries and breweries scattered throughout the county, there are many options to visit the rural parts of Albemarle county. And while you’re there, why not make a day of it and visit three or four tasting rooms? With places like Keswick Vineyards and Castle Hill Cider in the Keswick area of the county, it is easy to explore all of what Albemarle county has to offer.
There are other historical places to visit in Albemarle County, including the home of the fifth President of the US, James Monroe. The Highland Estate, located just a few miles outside of Charlottesville and adjacent to Thomas Jefferson’s Monticello, provides a window into the time of the early 1800’s when it was James Monroe’s home.
Most of the housing development in the county has grown out of the City of Charlottesville. The neighborhoods to the south of town are built for those wanting a easy commute into town. Likewise, much of the development and growth in the county has occurred in the 29 corridor north of Charlottesville. Here construction is underway in the 800-1500 unit Brookhill development that is planned to be a pedestrian oriented mixed use area. Crozet is one of the most popular communities to live in Albemarle County, thanks to its small town feel and proximity to Charlottesville. It is a vibrant place with an active group of community activists and planners. Much of the county’s new construction and real estate development has occurred here, and doesn’t show any signs of slowing down
Albemarle county has encouraged high-density growth in designated areas instead of developing rural parts of the county. The result? Much of the rural areas instead have seen significant investment in redeveloping and remodeling instead of new construction. The investment in real estate is evidenced by the growth the county has experienced in the past decade. The recent 8.8% growth in population from 2010 – 2017 has certainly been boosted by the growth in Charlottesville. There are 45,356 housing units with a median value of $317,000, much higher than surrounding counties. This, and the the median household income of $70, 342 (US Census) is evidence of the over 50% of the workforce who commute into Charlottesville.
Fluvanna County lies to the east of Albemarle and is bordered primarily buy Louisa and Buckingham counties. The county seat is Palmyra, a town on Route 15, the main thoroughfare for the county. It is primarily a rural county, with only 25,000 residents (US Census).
Over a third of the counties residents live in the gated community of Lake Monticello. It is popular as a retirement community, or for those who want the lake living while also being close enough to Charlottesville to commute to work. Many families also enjoy the lake as a weekend getaway, with many families from Northern Virginia and other parts of Central Virginia owning second homes in the community. The rest of the population of Fluvanna County is scattered throughout the rest of the 209 square miles with small concentrations in both Palmyra and Fork Union.
Although there is not that much development in Fluvanna county, there are still things that can be found for entertainment. The Rivanna River Company hosts float trips that start in Charlottesville, but follow the Rivanna River to the take out in Palmyra. There are also some smaller wineries scattered throughout the county, including the Cunningham Creek Winery that hosts wine tastings and live music on most weekend in the summer.
Fluvanna County still enjoys its proximity to Charlottesville with most residents commuting to Charlottesville for work. The median income is $66,425 amongst the 9,829 households. There is moderate growth in the county shown by the 127 building permits applied for in 2017.
Orange County begins to the Northeast of Charlottesville and provides some great options for rural living and exploring. It is a county with 36,073 residents and is mostly densely inhabited in the eastern end of the county in Lake of the Woods and the surrounding development. The town of Orange provides some quieter neighborhoods and the county’s only high school.
In the western side of the county that borders Greene and Albemarle county, Gordonsville and Barboursville both have small and quiet downtown areas. In Gordonsville, The Exchange Hotel Civil War Museum contains exhibits and artifacts from the time that this elegant hotel was transformed into a war time hospital. Just outside the town of Orange is the home of the Fourth president of the US, James Madison. Montpelier is the third president’s estate to be established in Central Virginia and only lies about thirty minutes North of the homes of Jefferson and Monroe. You can enter the extensive trails and grounds without paying but will need to purchase a ticket to tour the mansion.
The town of Orange boasts several restaurants that are well worth the drive from Charlottesville. As you come into town from the south, the first option is La Finca Grill with Peruvian style latin cuisine.
On E Main street The Light Well offers live music, local beers, and great casual dining.
The economy in Orange County relies primarily on food and beverage establishments. For employment, most residents commute to either Charlottesville or Fredericksburg. The median household income is $66,900 and median home price is $236,100.
Waynesboro, an independent city in Augusta County, sits just below the Blue Ridge on the west side of Afton Mountain. It’s a city of about 22,000 and provides easy access along the I-64 corridor to both Charlottesville and Staunton.
For a small city Waynesboro provides plenty of good options for entertainment and dining. In downtown at the Basic City Beer Co. you can find a substantial collection of hand crafted beers brewed on site. Several nights a week there are local food trucks making it a great one stop for an evening. Just a few miles up the road in Afton, Veritas Vineyard and Winery will satisfy any cravings for a nice relaxed wine tasting. With views of the Shenandoah Valley, you can’t go wrong stopping here for an afternoon.
Shenandoah Valley Art Center is a great place to check out regional artist’s work in the rotating monthly exhibits. Anything from pottery to fine art paintings and photography can be found on display here and provides a great taste of what the Shenandoah Valley has to offer . Although it is about a 20 minute drive away in Staunton, the American Shakespeare Center is well worth the short trip. As the only true replica of The BlackFriars Playhouse, it is truly how Shakespeare’s work was meant to be enjoyed. Find out what shows are scheduled here.
Waynesboro has many types of neighborhoods to choose from if looking for a house to buy or rent. In Charleston Park, newer construction of colonial style houses can be found. Two of the larger neighborhoods are closer to downtown though, including The Tree Streets and BCMM and LC. Houses in The Tree Streets are sought after for their quiet streets and historic homes, while houses in BCMM & LC are usually a little bit more affordable.
As an average, Waynesboro is a more affordable place to live than Charlottesville to the East. The median home value is only $158,000 and the median household income is $45,097 (US Census). Employment near Waynesboro is primarily government services, but in nearby Stuarts Draft Mckee Foods employs nearly one thousand people at their bakery plant. Stuarts Draft also has other significant manufacturing and distribution facilities with a large Hershey Chocolate Factory and Target Distribution Center. Waynesboro can provide a great place to live that has reasonable commutes to numerous job centers.
The world is full of rent to owns and lease options. For people who can’t get a mortgage, these appear to be a way to move beyond renting and own a home. The problem is the traditional rent to own works better for buying furniture than buying houses.
The Problem with Traditional Rent to Own Programs
At New Again Houses®, we hear rent to own horror stories weekly.
“The landlord kicked me out after 5 years and sold the house.”
“The seller took my payments and didn’t make his. The house was foreclosed on.”
“The house is in such bad condition, no bank will give me a mortgage.”
“I’m at the end of my contract and I still can’t qualify for a mortgage.”
Many of these rent to owns are done with individual landlords who have little accountability when things go wrong. They aren’t members of the Better Business Bureau and don’t even have a Facebook page. If you put your money toward buying a house, you need to be sure the seller is legitimate, committed to selling the house, and you have a path that leads to a 30 year fixed rate mortgage.
It’s not enough to sign a rent to own contract. Eventually, you’ll need to qualify for a mortgage and that doesn’t just happen magically with time. You’ll need help with credit issues and the $29.99/month credit repair plans can cause more problems than they solve. Self-employed or commission based? That’s tricky and you’ll need help getting your finances in line with mortgage regulations. Then, there’s the house. Old windows with peeling paint? That could be a deal killer for an FHA loan. No heat pump? Old roof that’s survived a few hail storms? Knob and tube electrical wiring? The lenders and appraisers will go running in the other direction.
Our Bridge to Own® Program Solution
At New Again Houses®, we’ve developed the Bridge to Own® program to solve the problems keeping you from owning one of our remodeled homes. We won’t let you move in until we’ve done the following:
We look at your finances to ensure you can qualify with a licensed mortgage company or bank.
A credit expert develops a detailed plan to get your credit to the required score.
A licensed mortgage broker reviews the file to make sure we haven’t missed anything.
We invest in the house remodel so it will pass any lender’s inspection and be a good investment.
We talk through the contracts so you fully understand your responsibility in the process.
The Bridge to Own® program is not seller financing and it’s not your traditional rent to own. It’s a short term bridge that enables you to get a 30 year low fixed rate mortgage within six months. To get started, contact us today to see how our unique program can help you buy a home.
The Ultimate Guide to Sell Your House Fast for Cash
If you are in the market to sell your house fast for cash, this is your ultimate guide to helping you navigate the process and make decisions that are in your best interest. We’ll discuss a few important questions in detail:
How can I find a reputable person who buys houses as is with cash?
What is a fair cash offer for my house?
What are my other options to sell my house?
What is the best process for me to sell my house fast to a cash buyer?
We’ll go in depth on how cash home buyers determine their offers and what you can do to make sure you get a fair offer.
How can I find a reputable person who buys houses as is with cash?
As flipping houses has become more and more popular on television, an entire industry has grown around buying houses as is. You’ve seen the We Buy Houses signs around town and online. The advertisers fall into three broad categories:
National lead generation engines
Local cash buyers
Many of these advertising to buy houses aren’t buyers at all. Instead, they are lead generation companies who take your information and sell it to local investors who will contact you. When you call, you’ll likely speak to someone out of state. They take your information and sell it to one of their franchisees, who often wholesale the lead to actual cash buyers. There are others numerous lead generators advertising online. They include www.webuyhouses.com, www.experthomeoffers.com, www.housebuyersofamerica.com, www.expresshomebuyers.com and others. Rather than contact a middleman who sells your information as a lead, it’s beneficial to search for a local company or individual who has the resources to buy your house with cash. Since the actual cash buyers don’t have to pay a wholesaler, they can pay you more by purchasing your house directly.
There are all types of buyers online and many of them are wholesalers, rather than actual cash buyers. Wholesalers use advanced (and not so advanced) marketing methods to find motivated sellers, lock the seller into a contract, and sell the contract to the actual cash buyer. The wholesalers are middlemen who take a cut that could have gone into the seller’s pocket. So how do you know if you are contacting a national lead generator, a wholesaler, or an actual cash buyer to sell your house? Do your research online. Any legitimate cash buyer should have a website describing what they do and who they are. Wholesaler websites often look similar to one another. They talk about all the houses they buy, but they won’t have detailed information about their current projects, before and after photos, or any Google reviews. They will have testimonials on their site, but anyone can manufacture testimonials on a website. Selling a house is a big decision, so dig deeper than just a website. When you search for their business, how many Google reviews do they have? Are they members of the Better Business Bureau and do they have any reviews there? If not, they might not be legitimate. Wholesalers typically don’t have information about their current projects because they don’t have any projects. They are in the business of marketing, negotiating, and selling contracts. They don’t have a construction company that is going to add value to your house. They are in the business of flipping “we buy houses” leads, not flipping houses.
You will probably sell your house for the best price if you bypass the middlemen wholesalers and go straight to the cash buyers who are going to add legitimate value to your house through a remodel. You find them by searching for people who will buy my house fast, sell my house fast, or we buy houses. Don’t be afraid to go to page two of the search results, because the national lead generators have paid Google to get at the top of page one as a sponsored advertisement. Your best local buyers might be on page two of the search results. Look through the website for the following:
Evidence of being local
Photos of recent construction projects
Links to their Better Business Bureau® page
Legitimate Google reviews
If you are a motivated seller or have inherited a probated property, your information is probably of public record from the recording of the probate at the courthouse. Therefore, you might receive postcards and letters from people wanting to buy your house. Many of these are wholesalers looking to sell the contract they offer you. One of the most common types of letters are called yellow letters. They typically come in a regular hand written envelope with a short note written on yellow ledger paper. It appears to be an individual wanting to purchase your house, but this is a wholesaler attempting to tie up your property on a contract they will immediately sell to the end buyer. Ignore the yellow letters and find an actual cash buyer with a simple online search. If they don’t have a legitimate website, Google reviews, and a Better Business Bureau® membership, keep looking. If you suspect the individual is a wholesaler, keep looking online until you find an actual cash buyer so you aren’t giving away your equity to a middleman. You don’t want to give up equity and you also don’t want to tie up your property on a contract with a suspect buyer who doesn’t have the cash to close.
When you do find a prospective buyer and call them, ask them what they plan to do when you sell your house to them. If they are vague, press them on whether they will add value through construction, sell your contract, or just use the house as a cheap rental without investing anything into it. It might not matter to you if they are a shady landlord who won’t invest anything in your house. For most sellers, however, the house isn’t just a house. It’s a family home and it’s important that the new owner invests in it so it continues to be a place where families raise their children. If this is important, ask the prospective buyer about their intentions and verify their claims online through their website, Better Business Bureau®, and Google reviews.
What is a Fair Offer?
Choosing whether to sell your house fast as is to an investor depends on several variables. The first is your sense of urgency. If you need cash fast, this is the easiest way to turn your equity into cash. But, you still shouldn’t give it away. Here is the typical formula house flippers use to determine their maximum offer. It’s commonly referred to as the 70% Rule.
Estimated Sales Price x 70% – Rehab Costs = Max Offer
This leaves the rehabber a 30% gross margin when they sell the house. That doesn’t mean they are going to walk away with $30,000. They will pay at least half that margin in holding costs, cost of money, insurance, and transaction costs before paying any overhead. Their maximum offer will typically yield around a 8-15% net profit, which is fair given the risk and work that goes into flipping a house. The problem is if you sell to a wholesaler who will take a 5-10% cut off the top, less will go into your pocket as the seller.
Using the formula above, assume you are selling a house that needs $40,000 in rehab to be able to sell it for $100,000. The maximum offer you should expect would be:
100,000 x 70% – 40,000 = $30,000
If the buyer purchases for $30,000 and adds value through efficient construction, he will likely make a $10,000 – 15,000 profit after paying for all the costs associated with flipping a house. $30,000 might seem like a low offer, but this is probably a fair return given the risks and work.
The location of your property is obviously important and you need to be honest about it. Because you grew up in a home and have a sentimental attachment, you might be biased about the location and the value. Identify the average neighborhood in your town or city. If your house is in a better location than that, you should get more than 70% (or the $30,000). Conversely, if the house is in a less favorable location, the buyer will expect a lower sales price to offset the increased risk of buying a below average location. Be honest and don’t take a buyer’s assessment personally. For them, it’s ultimately about the numbers and risk level of buying the house. They have to be honest about its potential sales price and you should as well.
A buyer also has to be honest about the construction costs required to sell your house again or rent it to a quality tenant. The most common mistake sellers make is underestimating the cost of construction. Most municipalities require permits for most everything now, so a rehab requires licensed contractors who are professionals. If you’ve ever tried to hire a “handyman” on the cheap for even small projects, you probably understand the problems with such a person managing a full rehab budget of $40,000 or more. Hiring reliable people who can execute a quality rehab costs money and that needs to be accounted for in the construction budget. As a rule, homeowners tend to spend far more for remodeling projects than they originally budget. So it’s safe to assume the actual construction budget for your house will be significantly more than what you expect. Here’s a great article from Angie’s List on the difference between perception and reality when it comes to remodel costs and how popular televisions shows on HGTV have widened the gap.
A legitimate cash buyer is going to be objective about the estimated sales price and construction budget when formulating an offer. If you truly want to sell your house fast to a cash buyer, you’ll need to be as objective, as well. Otherwise, you risk overvaluing your house and spending more than you should on holding costs.
What are My Other Options?
When you choose to sell you house directly to an investor, you choose to accept a lesser sales price in return for selling your house fast as is for cash. If you have time or money to invest into the house itself, selling to a cash buyer might not be your best option. Let’s look at your options.
List it with an agent. If your house is in move in condition, you should certainly list with an agent. It makes little sense for you to sell a house in move in condition to an investor. It’s probably not in move in condition, however. If you are interested in being able to sell your house for cash, the house probably needs both cosmetic and functional work. More than likely, it’s not only dated, but it also has peeling paint on the exterior, an older roof, an older heat pump, and the plumbing and electric haven’t been updated recently. That means you will need to find a buyer on the market who has cash to put into their house AND not many entry level home buyers have that kind of cash sitting around. More importantly, the house probably can’t get financing because it wouldn’t pass the FHA appraisal process. Therefore, you are going to have to sell your house to a cash buyer since the house can’t be financed. Cash buyers are the same investors who would be buying directly from you or a wholesaler. They are using the same formula above. You might get a little more since you are listing it, but you will pay a real estate agent 6% plus any additional holding costs for the time it takes to go through that process. The offer might be contingent on an inspection or financing, either of which could go wrong and delay your sell. In order to net more than the $30,000 directly from a cash buyer, you would have to sell your house for $35,000 and pay an agent and possible additional fees. If you use an agent to sell your house, don’t use friends and family. For every quality agent, there are twenty who do it on the side and not very well. Hire a good agent, making sure they take professional photos and put some time into the listing.
2. Fix up the house yourself and sell it. This is probably how you would net the most money, but it might not be as large a difference as you think. Consider construction costs. In most cities, you will need to pull a permit and hire someone to do the work. Finding, managing, and paying such a person can be time consuming and exhausting. You will probably underestimate the construction budget. As a rule of thumb, you can estimate between $25 – 40 per square foot to remodel a house. $25 would be light cosmetic improvements and perhaps, a roof or heat pump. If you need to replace the windows, roof, and heat pump you should expect to spend around $35 per square foot. Run into plumbing and electrical issues and that number increases to $40+ per square foot in an average market. So here’s what your numbers might look like on that theoretical $100,000 house:
– 6% agent commission– 6,000
– seller paid closing costs – 3,000
– construction costs– 40,000
– insurance for 4 months– 600
– utilities for 4 months– 600
– property taxes– 500
Net Proceeds $49,300
That’s $19,300 more than the initial offer, but then you’ll pay taxes unless it’s been your primary residence. That also assumes you have the $40,000 for the rehab, time, and energy to execute the remodel. This might make sense. If you consider this option, first place a value on your time. If your time is worth $10/hr, this option makes sense. If your time is worth $30/hr, it might makes sense to sell your house to an investor who has experience managing a remodel.
3. Rent it. This option requires some thought and some honest introspection. Do you want to be a landlord? Landlording is hard work. You will need to screen tenants, say “no” to many sad stories, evict the inevitable bad tenant, and respond to regular maintenance calls on nights and weekends, because toilets only flood on Saturday evenings. Seriously, landlording is a commitment and the profits aren’t lucrative. Use the house above as an example again. If you update the essential electrical and plumbing systems with minor cosmetic improvements, you’ll probably invest at least $20,000 into the house in order to attract tenants who aren’t desperate. Assuming the house is around 1000 square feet, you’ll be able to rent it for around $750/month. Professional landlords budget close to 50% of their rental income to the following:
Vacancy rate of 5-10%
Capital Expenditures (roofing, heat pumps, systems, etc)
Management and accounting
The pros who manage hundreds of rentals know they are eventually going to pay close to 50% of every rental dollar in expenses before paying any mortgage payments. So, let’s assume you have the $20,000 in cash and don’t need to take out a mortgage. You should expect to net $375/month before taxes. That’s $4,500 per year before tax as long as you can keep quality tenants. Choose one bad tenant and they can game the courts to live free for months and cost you hundreds in legal costs. Landlording makes sense for some people, but don’t forget to count all the costs when you consider this option. You should also consider hiring a professional property manager to effectively manage the rental and tenants. That can be easier said than done as quality property managers are difficult to find in many markets.
What is the best process for selling to a cash buyer?
If, after analyzing your situation, you choose to sell your house directly to a cash buyer, use the following process to ensure you protect your interests.
Research websites, the Better Business Bureau®, and Google reviews to find a local reputable cash buyer who can buy your house fast as is. Make sure they aren’t a wholesaler or national lead generator who will act as a middleman with no intention of adding value to the property. Sell your house directly to a local investor who can give you the best price.
Have a conversation with the person and company about their plans for the house.
Have the seller come and evaluate the property to make an offer. Don’t be afraid to talk to them about their intentions and recent projects they’re working on or completed. This will help you determine if they are a legitimate buyer.
Ask the buyer about their numbers, including the construction budget and their projected sales price. Then apply those numbers to the generic formula: Sales Price x 70% – Construction Budget = Max Offer to see if it’s a fair offer.
The buyer should present a contract offer. Make sure it doesn’t require a long inspection period. It should be a cash offer with no financing contingency. The buyer should pay your closing costs. And, lastly, if they’ve presented themselves as the end buyer, ask them to write in a phrase stating, “Assignment of contract is not permitted.” This will force them to disclose any intentions of wholesaling the contract to an end buyer. Be sure you are clear regarding any responsibilities you have to clean up the property in any way and if the contract includes any personal property at the house.
Insist on using an actual real estate attorney to close the transaction, as opposed to a less expensive title company. If any probate or deed issues arise during the title search, an attorney can usually solve those problems for you. If you don’t use an attorney to close, you may have to hire an attorney to work through any probate or deed issues on your behalf in order to sell the property.
Schedule the closing at your convenience. You do not need to bring the original deed or any paperwork. Make sure the settlement statement is correct. If you’ve acquired the property through probate or inheritance, be sure and contact the closing attorney as early in the process as possible. Oftentimes, probate attorneys neglect to file certain paperwork which causes delays in selling inherited property.
Consult a CPA for advice on minimizing your tax liability on the sale. A good CPA might be able to find ways to save you quite a bit of tax savings.
Choosing to sell your house fast to a cash buyer in as is condition has benefits and disadvantages. You will likely give up some equity in return for speed, simplicity, and minimal contingencies. It’s not always the best option, but it is the best option for many sellers. Use the information above to make the best decision for your particular situation. If you do decide to sell your house fast for cash, invest some time in finding a credible buyer.