subject: Should You Work With An Investor When Selling Your House? [print this page] Many factors contribute to the success or failure when trying to sell a house in the current marketplace. It's not hard to see why some sellers give consideration to selling a house for cash in order to avoid the many challenges altogether. When you work with a real estate investor who is in a position to close fast and pay cash you can avoid the long wait and frustration of losing a sale due to failures with buyer financing. Although you may not be in a position to work with an investor because selling a house for cash isn't for everybody, making yourself aware of the various real challenges and finding the best solutions for your own situation is the wise course of action as you prepare to sell your house.
So, here is a bit more detailed explanation of the challenges so you can make better decisions for yourself. Everyone can see that the marketplace is overcrowded with houses for sale. There may be several houses on one block with signs in the yard, in fact, making it more difficult for a certain house to stand out from the crowd.
And there is another serious issue that is not immediately apparent as well, one that a seller may not discover until he or she has made it all the way through the sales process and is waiting for a sale to finally close. That's when the harsh realities regarding buyer financing may become obvious. Since most buyers have to obtain a mortgage in order to purchase a house, the issues I'm describing the majority of sellers, with the exception of sellers who are trying to sell a house for cash.
The main issue, although there many separate issues involved, is valuation of the house by each lenders' appraisers. The valuation of a house for the purposes of obtaining a mortgage loan is a very complex calculation having elements that are mandated by the federal government and now, somewhat recently, additional elements forming an "overlay" of enhanced requirements placed on each borrower by most private lenders. In other words, as the mortgage application and approval process proceeds along during the closing process the requirements placed on a borrower may continue to change.
These changes can literally destroy a borrower's chances of obtaining a mortgage loan, terminating the sale as well. Although lenders are constrained by federal requirements and in some cases state requirements as well, they are always looking for a way to charge additional fees. Actually, added fees are not the basic problem I'm describing here. I am referring more particularly to the loan-to-value ratios required by lenders on the secondary mortgage market that have a trickle-down effect and dramatically affect buyers as well. That's the real problem facing lenders who will eventually sell their loans on the secondary market and need to comply with all the secondary market requirements. As they come to understand this, more and more sellers are choosing to avoid financing issues altogether by selling a house for cash to a real estate investor.
