Realtors vs Investors
Has a realtor or real estate investor inquired about listing your home or made an offer to buy it?
Regardless of whether you’re ready to sell your home or not, it can be hard to know what to do in this situation. Realtor vs a real estate investor: which one is right for me and my home? This isn’t an easy choice, but it’s one that our team fully understands because we’re comprised of Realtors and real estate investors.
Why Sell Your Orlando Home to a Real Estate Investor?
Real estate investors come in all shapes and sizes (much like homes themselves), from professional groups with a significant real estate background to well-financed individuals seeking new investment opportunities.
Due to the recent changes in the Orlando real estate market, interactions with a dynamic group of interested parties is become more and more commonplace. There are a number of positive and negative aspects to consider when working with an investor. Selling your Florida home to an investor may be the perfect solution for you and your family, but understanding their intentions is key if you want to navigate this type of deal with clarity and confidence.
What Are the Types of Real Estate Investors You Can Work With?
When selling your home to a real estate investor, you can usually expect to work with one of four types: 1) a buy & hold investor, 2) a wholesaler, 3) a flipper, and 4) a buy/flip/hold investor.
Buy & Hold Investors
This kind of investor is interested in purchasing rental properties. They may choose to manage the property themselves or outsource that responsibility to a company that specializes in that kind of work, but their intention is not to immediately resell the property.
A wholesaler has no interest in holding onto a property. They intend to purchase a property and immediately sell it to another buyer, likely a different kind of investor mentioned in this list. They go after the best possible deals and expedite the process to ensure that the experience is beneficial for all parties involved. This kind of real estate investor come in low with their initial offer, but they will be able to purchase your house quickly.
Perhaps the best recognized kind of real estate investor is flippers, thanks to reality television shows like Flip or Flip and Brother vs Brother. Their plan is very simple: they aim to purchase the worst house at the lowest price, demo it completely, and rebuild a more appealing property for a profit.
This kind of investor is sort of an amalgam of the above mentioned. Like a Flipper, they seek out properties that have not been cared for and purchase them at a low rate, flipping them into a more modern and updated home. Instead of selling the new house, they turn it into a rental property.
Many investors engage in a combination of strategies, while others focus singularly on one area or do them all. The price their willing to offer depends on a number of factors, including the market in your area and the state of the property. If you list your Orlando house as something of a “fixer upper” in need of “TLC”, you may have investors seeking you out. You don’t need to wait for an investor to call, however一there a number of companies and individuals that will inspect your home and may potentially make an offer if you fit their buying criteria.
One thing to keep in mind when opting to work with an investor is that most homeowners will end up taking less than what they intended to list their home for. Keep in mind that the home will be purchased “as is” and the transaction process will be completely much quicker than listing with a Realtor.
Advantages of Selling to an Orlando Real Estate Investor
Homeowners tend to have a variety of expectations when the embark on the process of selling their home. They may believe that their house is perfectly poised to be snapped up off the Orlando real estate market in no time, or they might be hoping to simply unload a burdensome property. The point is that real estate rarely goes exactly as planned, and sellers may need to compromise if they want (or need) to sell their Orlando house fast. A short sale process is one of the key advantages to working with an investor. Other significant advantages are listed below.
Quick Cash Sale
Cash sales in this industry are rare if you are selling to another homeowner, and a speedy process is almost unheard of. If time is of the essence, you should consider working with a real estate investor in Orlando. They are willing and able to make the purchase, and without the need of home inspections, appraised values, etc., they can close the deal in a matter of weeks. In the event of an impending foreclosure you may be able to sell your home so long as the amount owed is not more than what the property is worth.
Flexible Payment Options
Though cash is likely, especially with professional investment groups (like ours), real estate investors do offer alternative payment options when it comes to purchasing your property. Whether it’s cash, certified funds, pre-scheduled cash, or assumption of an existing mortgage payment, the right real estate investor can offer a flexibility with payment that other homebuyers in Orlando can’t match.
No Need for Repairs
Investors, particularly flippers, will usually buy homes “as is”, which means there will be no responsibility for the seller to update or repair the house. Renovations and repairs are often a cost that most people cannot afford, and in that case real estate investors would be an ideal buyer.
No Need to Move (Right Away)
Although real estate investors in Florida often close quickly (sometimes in less than a week), there may not be an immediate need for you to vacate the property. This can be an incredible relief to homeowners who have not yet secured a new house. It’s actually quite common for the sellers to negotiate a lease-back agreement with the buyer, allowing them to gain equity before they even move out.
Closing Cost & Commission
Since there are no real estate agents involved, sales to an investor will not be subject to commission costs. Investors will often pay the closing cost as well, which can consume a lot of the equity of the home in a standard closing, but you should make it a priority to contact the investor and ask what fees you will be responsible for prior to signing the contract.
What Are the Disadvantages?
Investors Do Not Need a License to Buy
Without the involvement of a licensing agency, it’s difficult for you to know much about your potential investment buyer. Although this is not inherently negative, there can be some suspicion on the side of the seller as to what the investor’s intentions might be. Are they real
estate agents that are intimately familiar with the market and hope to purchase a property for cheap and immediately resell it? You’ll have to do a bit of research to find out. Feel free to ask an investor for his or her experience and credentials (here’s ours).
Selling Below Market Value
Most sellers that work with investors will end up with less than the market value on the house. This is because investors are aware of the benefits of a cash sale and are purchasing the property “as is”, so they will factor potential renovation costs into any offer they make. On top of that, they will be responsible for closing costs, holding costs, and back taxes. If your Orlando home doesn’t require significant repairs, you’ll make more money by selling it to a real estate investor.
Beware of Scams
This is where the above research really comes in handy. When working with an investor, be sure to get as much information from them as possible and do your due diligence. There is always a risk of fraud in any financial transaction, but this one is especially important to avoid. Ask for references and use the Better Business Bureau to get more information. Fortunately, in this digital age, it has never been easier to do some sleuthing of your own in order to vet an investor.
How Do Investors Differ from Realtors in Orlando?
So now you can see how working with an investor can be more cost efficient than a realtor, but there are other ways in which realtors and investors differ.
Realtors Need to Have a License
There is no need for an individual to obtain a license if they only wish to buy or sell property, which is the case for investors, but for an agent to represent someone else, they will need to be licensed. This requires the agent to be approved by a licensing agency and offers more transparency to the person(s) they are working with.
Both agents and investors aim to make money off of real estate, but they do so through different means. An agent will make a commission off of every sale they make in Florida, typically between 1-5%. An investor earns money off of the deal they make to secure a property. When broken down like this, it becomes clear what each party wants: real estate agents like to sell homes for a higher price so that their commission is higher in turn, and investors will attempt to purchase a house at a low cost to extend their profit margin.
Another key difference in the investor vs agent relationship is employment hierarchy. Once an agent has received an education and license, they need to find a broker to employ them. Investors, on the other hand, are usually self-employed. You can see this reflected in the marketing strategies used by agents and investors.
Orlando real estate agents rely on their public image and success rate to access clients, so they invest a lot of time, money, and resources in material and networking. Investors usually take a more grassroots approach. They may have a sign, handwritten even, on the side of the road. For them, what matters at the end of the day is identifying homes that they can purchase quickly, creatively revamp and then resell.
Find a Home Investor in Orlando
If you are new to the real estate world, hopefully our page has offered the crucial insight and guidance you needed to make the choice between an investor vs. a real estate agent. This industry is incredibly nuanced, and it is our duty to use the experience we’ve gained from our time Orlando’s real estate market to help you find or sell your home at the best price possible.
If you have any other questions that were not answered on this page, feel free to contact us. We have a diverse network of agents and investors in Central Florida, so please get in touch if you need to sell your Orlando home quickly or “as-is.”