Author Topic: Suggestions for Companies that Buy Houses As-Is  (Read 1129 times)

jeff2017

  • Stubble
  • **
  • Posts: 107
Suggestions for Companies that Buy Houses As-Is
« on: November 02, 2018, 03:38:39 PM »
Grandfather recently passed away and my Mom & Uncle are in the process of determining what to do with my Grandmother's house.

This is a small house 3 Bed, 1 Bath, large oversized 2 car garage, in a large Metro Midwest city.

Positives: new roof 2 years ago, new AC unit.

Negatives: outdated, wall paper, old carpet, 1 bathroom (a second could be added in the basement), the driveway is in bad shape.

My Question: What would be the best tips regarding finding potential suitors to buy this house? They had 2 people, I believe they were a WeBuyUglyHouses or one of the larger companies. They both allegedly think there is $50K in repairs and the first offered $105K and the second offered $110K.

Zillow suggests the house is worth $174K. Not sure where to go from here and $50K seems a bit steep.


BiggerFishToFI

  • Stubble
  • **
  • Posts: 104
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #1 on: November 02, 2018, 03:57:32 PM »
List it with an agent? Tons of regular buyers will also buy fixer-uppers, especially in hot markets.

If it were me I might try to flip it myself. New carpet and paint can go a long ways. Chance there is hardwood under the carpet? Even better.

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1874
  • Location: Northern California
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #2 on: November 02, 2018, 04:27:06 PM »
As long as the house is in a condition that a regular buyer can get the mortgage needed to buy the house you don't need those as-is cash buyers. Those companies are looking for stellar deals on properties that are hard to sell because lenders are unwilling to finance them. I doubt the actual cost of the needed repair would be more than about half of the $50k unless there are real problems you didn't mention or the driveway is very long/steep. A local real estate agent should be able to provide a reasonable estimate of the value and suggest strategies for selling (x price as-is, y price after fixing z, etc.). Honestly what you describe sounds like the kind of houses that I was looking for when we were house hunting - something basically livable as-is, but that we could invest some DIY improvements into to have a nicer home over time. Priced right you should get some investors making low ball cash offers testing seller motivation as well as some conventional offers looking for a good deal (but not expecting to make at least $20k in equity immediately). If you get any all cash asking price offers, you probably set the asking price too low.

jeff2017

  • Stubble
  • **
  • Posts: 107
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #3 on: November 02, 2018, 04:49:48 PM »
Thanks for the responses.

One correction, house is located in the suburbs of a large Metro city and FWIF the SF is 1,025 SF and has a full finished basement.

Houses that recently sold in the neighborhood sold for $165K and $170K.

I just spoke to my parents and they said they did speak with a realtor who suggested there is a "minimum repair vs maximum repair".

Apparently the "must replace" items include the driveway and back patio (it is a decent size), many of the windows have to be replaced (a few have cracks and some apparently are NOT functional).

Other apparent issues are some of the siding is not in great shape, the carpet needs to be replaced (there IS hardwood underneath), walls will need to be repainted, the flooring in the bathroom and kitchen are not in great shape.

Basically, all of your typical fixes for a house a 99 old person lived in.

IMO, this sounds like the type of home for a young family, as the house has these problems, but is definitely livable, it's just old and outdated.

The realtor seemed to thin that if she was hired, she could likely sell it "as is" for $125K minus her commission, so she suggested listening to the cash offers and if then do the math to see if they make sense or not.




jeff2017

  • Stubble
  • **
  • Posts: 107
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #4 on: November 02, 2018, 04:51:36 PM »
Conceptually, I just find it hard to believe $110K is worth taking. The house is in a livable condition and the market is good here for sellers.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4605
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #5 on: November 02, 2018, 04:55:45 PM »
Get a couple of agents that specialize in the area to look at the house and give you estimates of "as is" value and a list of what would have to be done to sell to a conventional buyer.  Have them provide comparable sales with details about the condition at sale.  My guess is that a DIY owner-occupant buyer looking for something to move into and fix up would be interested.  If it can be financed in current condition, you might be looking at something like $140-$150k instead of $174k if the driveway is expensive and must be replaced.  More if the issues are merely cosmetic...

The house buyer formula is to pay 70 percent of after repair value less the fix up costs.  That's quite a discount from what a conventional buyer will pay.  So if the house is worth $180k in good condition and all repairs will cost $25k, they will pay you ($180k x 0.70) - $25k, or $101k.

Just saw your post.  The numbers don't add up to me.  Talk to a couple more agents and get some prices for basic repairs.  Pull out the carpet and refinish the hardwood floors - get an estimate for that.  The real question is what has to be done to get the house to be financed with a conventional mortgage.

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1874
  • Location: Northern California
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #6 on: November 02, 2018, 05:41:01 PM »
The realtor seemed to thin that if she was hired, she could likely sell it "as is" for $125K minus her commission, so she suggested listening to the cash offers and if then do the math to see if they make sense or not.
Sounds to me like the agent just doesn't think the house is worth her effort to sell.

Apparently the "must replace" items include the driveway and back patio (it is a decent size), many of the windows have to be replaced (a few have cracks and some apparently are NOT functional).

Other apparent issues are some of the siding is not in great shape, the carpet needs to be replaced (there IS hardwood underneath), walls will need to be repainted, the flooring in the bathroom and kitchen are not in great shape.

Still doesn't sound like any items that would prevent conventional lending (unless non-functional windows prevent bedrooms from counting as bedrooms because they don't offer egress - my lender required security bars removed from at least one window for each bedroom). Adding the windows, siding, and patio to the list of repairs makes the $50k estimate sound more realistic. Knowing that the carpet is over hardwood means that there's a great value add by removing carpet and refinishing (would probably require updating kitchen/bath flooring to get the full value of the refinished hardwood - even if just updating with a fairly inexpensive new finish).

Are mom and uncle inheriting or are they taking care of it for their mother who owns the house but is not capable of living in the house on her own (you said grandfather passed, but called it grandmother's house)? If inheriting, improving the value before transferring out of the estate could trigger estate income taxes; if taking care of grandma, her financial situation comes into play.

jeff2017

  • Stubble
  • **
  • Posts: 107
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #7 on: November 02, 2018, 06:25:37 PM »
The realtor seemed to thin that if she was hired, she could likely sell it "as is" for $125K minus her commission, so she suggested listening to the cash offers and if then do the math to see if they make sense or not.
Sounds to me like the agent just doesn't think the house is worth her effort to sell.

Apparently the "must replace" items include the driveway and back patio (it is a decent size), many of the windows have to be replaced (a few have cracks and some apparently are NOT functional).

Other apparent issues are some of the siding is not in great shape, the carpet needs to be replaced (there IS hardwood underneath), walls will need to be repainted, the flooring in the bathroom and kitchen are not in great shape.

Still doesn't sound like any items that would prevent conventional lending (unless non-functional windows prevent bedrooms from counting as bedrooms because they don't offer egress - my lender required security bars removed from at least one window for each bedroom). Adding the windows, siding, and patio to the list of repairs makes the $50k estimate sound more realistic. Knowing that the carpet is over hardwood means that there's a great value add by removing carpet and refinishing (would probably require updating kitchen/bath flooring to get the full value of the refinished hardwood - even if just updating with a fairly inexpensive new finish).

Are mom and uncle inheriting or are they taking care of it for their mother who owns the house but is not capable of living in the house on her own (you said grandfather passed, but called it grandmother's house)? If inheriting, improving the value before transferring out of the estate could trigger estate income taxes; if taking care of grandma, her financial situation comes into play.


Hadn't thought about that, the realtor is a family friend, but you never know.

Regarding the windows, perhaps not all need to be replaced, I don't know, just know they referenced the bedroom window being cracked.

Grandfather was the last remaining, so no widow and they do not want to keep the house. They also apparently don't want to do any of the repairs or fix up work, they just want to sell it, and be done, not ideal, but it is what it is.

I spoke again and I think made some progress though. My parents said they are leaning towards putting it on the market for a few weeks and see how that goes before moving forward with any of these cash buyer people. Found out it is NOT my parents that are so ancy, it is the others, I think they just want to be done with the situation, not for money reasons, just to move on (although we all knew this death was coming). They plan to talk again tonight, hopefully make progress to head that direction.


Papa bear

  • Pencil Stache
  • ****
  • Posts: 781
  • Location: Ohio
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #8 on: November 02, 2018, 06:26:27 PM »
What metro area? Maybe I’ll buy it =)


Sent from my iPhone using Tapatalk

tralfamadorian

  • Handlebar Stache
  • *****
  • Posts: 1007
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #9 on: November 02, 2018, 08:04:22 PM »
The ugly house people in general will offer you 70% of ARV minus repairs. They're fudging the numbers to make their cut seem smaller. Taking the lower comp of $165k, 70% would be 115.5k so they think they can "turn" the house for $5-$15k. "Oh look, see that cracked window! I'll have to replace all of them. It'll cost at least $10k." When really, they'll have the pane replaced for $25.

Given the repairs you listed (cracked window panes, remove old carpet, paint, LVP in kitchen/bath, remove back patio, repair driveway) and the midwest locations, these are easy repairs on a low budget.

The realtor is sending signals that she only wants to sell easy houses so though it's a family friend, I would look around and talk with some other realtors. Depending on how hot the market is, you may be able to sell at close to ARV-realistic repairs.

lhamo

  • Walrus Stache
  • *******
  • Posts: 8840
  • Location: Seattle
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #10 on: November 02, 2018, 08:30:00 PM »
Does the neighborhood show up on listing aggregators like Zillow, Redfin, etc.?  If so, you might want to browse through recent sales and see if you can find any houses that appear to have recently been flipped (purchased and then resold at a higher price within 6-12 months).  There may be individual investors already active in the neighborhood who would give you a better price than the bigger companies.  You can also look for names of agents who handled those listings -- they may also be more experienced/have a pool of buyers they have worked with in the past who would give you a more competitive price.

Doing this research will also give you a better idea of what the unremodeled houses go for in comparison to the final sales prices.

Here in Seattle, there tends to be a good margin between unremodeled price and flip price.  And some really crazy flips like this one:

Original listing (sold for 736k):  https://www.redfin.com/WA/Seattle/4518-NE-110th-St-98125/home/319924/nwmls-935487

Post-flip (asking 2 mill):  https://www.redfin.com/WA/Seattle/4518-NE-110th-St-98125/home/319924

They won't get that asking price -- sales have tanked the past few months and there are better houses/views nearby at better prices.  But interesting to see just how much of a differential there can be in an expensive market.

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1874
  • Location: Northern California
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #11 on: November 05, 2018, 09:51:16 AM »
I spoke again and I think made some progress though. My parents said they are leaning towards putting it on the market for a few weeks and see how that goes before moving forward with any of these cash buyer people. Found out it is NOT my parents that are so ancy, it is the others, I think they just want to be done with the situation, not for money reasons, just to move on (although we all knew this death was coming). They plan to talk again tonight, hopefully make progress to head that direction.
Is this being handled as part of an estate or a trust and who is authorized to act as administrator/executor/trustee? When it comes down to it, what to do is this person's decision (subject to liability to all beneficiaries to act as a fiduciary).

affordablehousing

  • Bristles
  • ***
  • Posts: 251
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #12 on: November 07, 2018, 12:09:48 PM »
How much do you care and how many ways do you have to split the money? Sounds to me like you could do a really minor flip for $10K on this yourself and sell it for the neighborhood average, or you could forgo the effort and take a cash offer. It does sound like the realtor just didn't think they could make enough money versus the time it took to sell your house. Once $50K gets divided 3 ways, and someone has to step up to do more proactive repairs, it might be easier to just let the flipper make their profit and cut bait.

Car Jack

  • Pencil Stache
  • ****
  • Posts: 839
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #13 on: November 08, 2018, 08:52:17 AM »
Our family just went through this, but for a living relative who went into an assisted living facility.  The house we just sold sounds to be in much worse condition than yours.  3 decker in a large New England city built in 1890.  Lead paint throughout, some knob and tube wiring, leak in the heating oil tank, asbestos insulation, 3 level front porch that has been sinking so much over time that the corner posts on the 3rd floor have pulled away and are 3 feet from the roof. 

Zillow says $295k, which simply takes square feet and equates it to sold comps (aka, useless for our purposes).  There was absolutely no way anyone in the family was going to go rehab the place.  The most common rehab suggestion was a gas can and a match.

Sold to a family of tradesmen who planned to do their own rehab for $130k minus real estate agent fees.  Sold as is as drawn up by our lawyer.

Any agent who didn't graduate from Clown College can do this.  Just give it to them and sell the turd.  What it brings for offers is what it brings for offers.  I'd suggest that potential buyers bring their inspectors before making any offers and that the sale be as is.  This reduces any liability when they find that the water doesn't work right or there's mold in the basement.

Dicey

  • Walrus Stache
  • *******
  • Posts: 8747
  • Age: 60
  • Location: NorCal
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #14 on: November 18, 2018, 01:19:49 PM »
Does the neighborhood show up on listing aggregators like Zillow, Redfin, etc.?  If so, you might want to browse through recent sales and see if you can find any houses that appear to have recently been flipped (purchased and then resold at a higher price within 6-12 months).  There may be individual investors already active in the neighborhood who would give you a better price than the bigger companies.  You can also look for names of agents who handled those listings -- they may also be more experienced/have a pool of buyers they have worked with in the past who would give you a more competitive price.

Doing this research will also give you a better idea of what the unremodeled houses go for in comparison to the final sales prices.

Here in Seattle, there tends to be a good margin between unremodeled price and flip price.  And some really crazy flips like this one:

Original listing (sold for 736k):  https://www.redfin.com/WA/Seattle/4518-NE-110th-St-98125/home/319924/nwmls-935487

Post-flip (asking 2 mill):  https://www.redfin.com/WA/Seattle/4518-NE-110th-St-98125/home/319924

They won't get that asking price -- sales have tanked the past few months and there are better houses/views nearby at better prices.  But interesting to see just how much of a differential there can be in an expensive market.
Off topic, but wow, what a difference! I don't mind flips that involve such extensive work. It's the lipstick on a pig, all flash and no substance flips that drive me nuts.

On topic: What Car Jack said.

tralfamadorian

  • Handlebar Stache
  • *****
  • Posts: 1007
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #15 on: November 18, 2018, 02:13:38 PM »
Does the neighborhood show up on listing aggregators like Zillow, Redfin, etc.?  If so, you might want to browse through recent sales and see if you can find any houses that appear to have recently been flipped (purchased and then resold at a higher price within 6-12 months).  There may be individual investors already active in the neighborhood who would give you a better price than the bigger companies.  You can also look for names of agents who handled those listings -- they may also be more experienced/have a pool of buyers they have worked with in the past who would give you a more competitive price.

Doing this research will also give you a better idea of what the unremodeled houses go for in comparison to the final sales prices.

Here in Seattle, there tends to be a good margin between unremodeled price and flip price.  And some really crazy flips like this one:

Original listing (sold for 736k):  https://www.redfin.com/WA/Seattle/4518-NE-110th-St-98125/home/319924/nwmls-935487

Post-flip (asking 2 mill):  https://www.redfin.com/WA/Seattle/4518-NE-110th-St-98125/home/319924

They won't get that asking price -- sales have tanked the past few months and there are better houses/views nearby at better prices.  But interesting to see just how much of a differential there can be in an expensive market.
Off topic, but wow, what a difference! I don't mind flips that involve such extensive work. It's the lipstick on a pig, all flash and no substance flips that drive me nuts.

On topic: What Car Jack said.

Indeed. However, given what the Seattle real estate market is like this fall vs last fall, I bet these folks are really wishing they finished this in one year instead of two.

Dee18

  • Handlebar Stache
  • *****
  • Posts: 1526
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #16 on: November 18, 2018, 03:06:11 PM »
Two ideas.  Where I live you can sell a house “as is.”  This means you will not do any repairs.  Realtors don’t always like this because if you fix up the house the price will be higher and their commission will accordingly be larger.  But you could decide to list it that way.  Second, rather than a “we buy house for cash”person, you might contact a couple local companies that do rehabs, especially if the house is in a neighborhood where that might be likely.  I did that when selling my house last year and got a fair price with no effort on my part, no repairs (it was 95 years old and had some major issues) and got to time the sale exactly as I wanted.  The company took out walls, added a huge bath, redid the kitchen etc and sold it for a bunch more, of course. 

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1874
  • Location: Northern California
Re: Suggestions for Companies that Buy Houses As-Is
« Reply #17 on: November 19, 2018, 08:41:59 AM »
Second, rather than a “we buy house for cash”person, you might contact a couple local companies that do rehabs, especially if the house is in a neighborhood where that might be likely.  I did that when selling my house last year and got a fair price with no effort on my part, no repairs (it was 95 years old and had some major issues) and got to time the sale exactly as I wanted.  The company took out walls, added a huge bath, redid the kitchen etc and sold it for a bunch more, of course.
Yes, reaching out to the people who are actually flipping houses in the area could cut out the wholesalers and get you a better price.