How To Sell Your House Our Way

Let's start with the basics of accounting, which teach you that it's not how much money you bring in (revenue) that determines success in a business deal. The true measure of success is profit (revenue minus expenses). So, when you're selling a home, the amount the buyer is paying for it isn't the only number that matters. You must also include how much money you spent to make the sale happen.

The equation would look something like this...
Profit = home sale price - cost of repairs and updates - service fees - realtor commissions - title insurance - other closing costs - seller concessions

And if you're going to be completely accurate, you also need to consider whether any of your monthly payments (mortgage, home insurance, property taxes, etc.) are going to be reduced when you move to your new place. If so, then every additional month you stay in that home is costing you money in those categories, too.

A seller with a home that needs few repairs and updates AND is very aggressive with negotiating lower commissions and fees could get expenses as low as 10 percent of the sale price of the home. On the other hand, someone with a home that requires a decent amount of work AND just accepts the commissions and fees as presented could have expenses near 20 percent of the sale price.

A realistic number to use as an estimate for homes around Humble is 15 percent, but you can raise or lower that slightly, based on how much work you know your home needs and how much hard ball you want to play with your realtor and the buyer to save a few thousand bucks along the way.

How Do Home Buyers Compare?

Let's look back at the formula from the previous section:
Profit = home sale price - cost of repairs and updates - service fees - realtor commissions - title insurance - other closing costs - seller concessions

​Everything after "home sale price" would be a zero if you buy from the typical investor, who will require no repairs and will cover your closing costs. Service fees such as staging and pest control aren't necessary, and neither are seller concessions. There are also no realtor commissions, since there are no realtors (unless you already hired one).
​
All of that said, here's a good strategy to determine whether you have a clear-cut best option.

1. Assuming you haven't already hired a real estate agent, do some research on recent sales in your area to get an idea of what your asking price should be. If you're not experienced at this, the hardest part will be removing emotion and making an honest comparison of your home to the others. Don't just look at square footage along with the number of bedrooms and baths. Also look at lot size and, especially, look at the photos to see the layouts and how updated theirs are compared to yours. 
2. Take the asking price you now have in mind and multiply it by .85 (projected sale price minus the 15% for realty expenses mentioned earlier), and that gives you a projected profit from selling on the real estate market. Remember that there's no guarantee you'll get your asking price, so your profit could be lower than this figure. 
3. Call an investor and request an offer. If it's close to the number you came up with for your projected profit, it's pretty much a no-brainer to accept it. That's basically giving you the same expected net return as from the realty option, while saving you months of time and potential headaches, not to mention avoiding the risk that you won't sell your house for the asking price.
4. If the pro home buyer's offer isn't close to your projected profit number (so the investor option, therefore, isn't a no-brainer), then call a local realtor and ask if they would be willing to run a market analysis at no obligation to see whether your home should sell for enough money to make you want to list it.  Most realtors will do this, assuming that you'll hire them to be your agent if you choose to sell your house. Don't tell the agent how much you want the asking price to be, because it could make them subconsciously want to fudge the numbers to gain a client. 
5. Once you have the realtor's opinion (it's an educated opinion but not a certainty that your house will sell for that amount), just say you need a little time to think about it. Now you have a very solid asking price to multiply by .85 and compare to the investor's offer. The difference between the two, assuming the realtor projection is higher, can be considered a "convenience fee" that you might be willing to pay to sell your house fast and not have to subject yourself to the stress that comes with having a home on the market.

NOTE: Contrary to public perception, most real estate investors and agents around Humble are not extremely wealthy. Please don't take the above steps and ask them to invest their time in you unless you're serious about selling your house one way or the other. And please don't ask one real estate agent to run a market analysis for you and then hire a different one to represent you. Nobody in this business expects to land every potential client, but please don't waste someone's time if he/she has no chance of working with you to sell your house.

Would you sell your home for $15,000 less profit if you knew it would save a lot of time and eliminate almost all stress?

How best to sell your house?

Your challenge is figuring out where your lines are drawn. How confident are you that your realty-related expenses would be greater or less than 15 percent (thereby increasing or decreasing your projected profit)? If the "convenience fee" is $15,000 (as in the table above), are you willing to sacrifice that much potential profit for the comfort of knowing that your deal will be done quickly and with almost no stress? And if not $15,000, would you do it for $10,000? How about $5,000? 

If you happen to be trying to buy a new home at the same time as selling your old one, the opportunity to close the sale of the old home in less than a month through an investor is a game changer. It may allow you to have cash for a down-payment on the new place and give you much more flexibility in financing the rest of what you'll owe. What kind of "convenience fee" are you willing to pay to go into your new home purchase with that security? 

If you can decide where that sweet spot is for you before reaching out to an investor and agent, it might help make the decision easier once you have real numbers in hand. Ultimately, it's a numbers game, and the numbers are different for each person, depending on their unique circumstances. The key is to do your research and give all of this some serious thought before you make a decision on the best way to sell your Humble house.

If you're serious about selling your house...

Just in case you hadn't already figured this from the previous paragraphs, if you're serious about the possibility of selling your house to an investor, DO NOT hire a real estate agent to work with you on the sale of your home ahead of time. We will not be represented by a realtor, so if you aren't either, that'll save you a good bit of cash, which is already assumed in the above calculations.

If you've already hired one, it's not a deal breaker. But you're probably locked into paying a commission, and you'll have to either pay that out of your pocket, or we'll have to decrease the amount of our offer a little bit to account for it.

If, however, you decide to list your home on the market rather than sell to an investor, that's when you should hire a realtor. And even if you sell to us (or another investor) without a realtor, you're still able to secure the help of an agent to find your next place to live. 

​Realtors are very helpful and are often well worth what you pay them, but if you've already identified an investor as your buyer, you won't need that service and shouldn't put yourself in a contractual agreement that will require you to pay that person anyway.