You’ve probably spotted the signs around your neighborhood: “We buy houses,” “Cash for homes,” or “Sell us your home as/is!” You may have even groaned at how pervasive they’ve become.
If so, you’re not alone. These signs, which come from real estate investment groups that scoop up houses across the country — often paying 10% or more below the market value — are becoming more and more common in today’s hot real estate market.
The goal? Flip each house into a more expensive property, or turn it into a rental unit.
Real estate investors are offering cash for homes in just about any neighborhood in any part of the U.S. these days, no matter the condition of the property, says Nick Bailey, chief customer officer at RE/MAX. In January 2021, median existing home prices jumped to $303,900 — 14.1% higher than last year, according to the National Association of Realtors (NAR). For investors, who strive to purchase homes below the market value and sell for the highest price possible, “are getting more attention … because it’s easier to buy and flip when prices are going up,” Bailey says.
With home prices rising, homeowners might be tempted to sell their homes quickly, especially if they’ve lost their jobs or are under financial strain from COVID-19. And since most homeowners don’t realize how much their homes are worth, or that a few repairs could up its value for a relatively low cost, an information gap is adding fuel to the fire, according to Eric Sussman, an adjunct real estate professor at the University of California Los Angeles (UCLA).
Is selling your home to an investment group always a bad idea? Not necessarily, real estate experts say. But you need to proceed with caution.