1.  Who are “we” and why would you buy an ugly house?

 

We’re a network of investors who work independently and purchase properties nationwide. Every one of our many investors is independent from us. These investors are members of our House Buyers National Network and receive leads for properties throughout America so that they can easily make quick no obligation offers to homeowners looking to sell. Our network is specifically for home sellers who want to sell right away and helping connect them with nationwide investors who can make quick offers.

 

This site is not associated with Home Vestors.

 

The investors we work with are very experienced with purchasing ugly homes, and then rehabbing and selling for a profit. If you’re knowledgeable and experienced enough, it’s fairly possible to make a good profit off of this sort of deal, but it can also be quite risky and the fine details should be carefully assessed before purchasing. Ugly homes sometimes sit be on the market for long periods of time before they find an investor who qualifies for a conventional loan and wants to purchase the property.

 

2.  I own an ugly house, what should I do?

Find an investor who specializes in buying ugly houses.

 

You probably have a good reason for choosing to sell your ugly house to an investor, instead of spending lots of time trying to rehab the house and resell for retail price by yourself. Throughout this article we are going to tell you some secrets that are the key to making good decisions and will benefit everyone involved in the transaction. With this knowledge you can be an informed home seller and will not be as likely be prevented by any small surprises. If you stick to these guidelines then everyone can get what they need out of the transaction, and the process of selling your house can move along both quicker and easier.

 

If the transaction works out right, then all involved will benefit. The homeowner sells his house for what he needed to sell it for and within the time limit he needed it sold by. Your Investor should also be satisfied, he obtains a ugly home to rehab, and cheaply enough for him to still turn out a good profit.

 

Below are a few of the downsides to trying to rehab and sell by yourself, with the upside being, in the long run, making a larger profit.

 

1. Without having the right contractors, you might end up getting less money after you rehab and sell than if you had just sold it in the first place.
2. Not having enough experience to know how to get the right permits, get the right materials, and make sure the contractors do a good job.
3. Costs such as insurance, taxes, and even mortgage payments can take away a lot of equity and profit that may not have been lost if the house was sold outright.
4. The speed of selling now and getting as much cash as you can now vs. trying to sell later for more and maybe end up not making a profit.

 

   If you own a home you need to sell and want to know more about how to sell now, we can help you get no obligation offers from local investors. If you’d rather sell it a different way, for example rehabbing and selling on your own, we have many pages full of valuable information that can help you throughout the process.
 

3.  How to go about rehabbing and remodeling your ugly house on your own.

 

If you’re lucky enough to have enough spare time, experience, patience, and cash, then you may be able to rehab your home and resell without help, but its best to go over some no obligation offers with an investor before deciding. Before making your final decision sit back and estimate your costs and weigh them against any offers investors have made on your property.

 

In the case that you decide not to hold on to the house after rehabbing it then be sure to estimate how much it will cost you to sell it retail.

 

3.1  Selling your ugly house on the retail market without rehabbing it.

 

If you’re worried about getting a low price then it’s not advisable to try and sell it “as-is” on the retail market. Selling on a retail market is when the house being put by your Realty company on the Multiple Listing Service, MLS for short, so that a buyer can find it through their own Realtor. A discounted house sale usually isn’t its value after paying for repairs. It sometimes means the normal value, after subtracting repair costs and an additional 30%.

 

The good thing about selling on the retail market is you’ll most likely get offers by many different investors, but be ready to turn down any ridiculously low ones. The problem is you will need to pay a hefty commission of anywhere between 3-6% to your Realty company. If you add up that percentage plus, what it costs to close, holding costs, as well as any costs your buyer ends up asking you to pay for. Altogether you could end up spending 10% or more.
If you end up selling your ugly house without doing any repairs, than chances are he’s an investor. Try asking an investor if they prefer working with the seller directly or through a Realty company. That 10% or so can sometimes be the make a difference in getting a buyer, or not getting one.

 

Keep in mind that an investor needs to make a profit on each deal and can’t afford to buy a house if its price, rehab costs, means they just break even after selling. Sellers usually make the mistake of using the ARV (After Repair Value) formula, which is Property value – repair costs = how much I can sell for. Most of the time its almost 30% away from that, we’ll discuss the formula an investor uses for his offer price later on.

 

4.  The state of your house.

 

The main thing that would affect how much cash a homeowner can get for his house would be the amount of repairs it needs. Have a contractor inspect your house and give you an estimate on roughly how much you’d need to spend on doing a rehab, that way you’ll get a clearer picture of the worth of the house.

 

Because most homeowners aren’t experienced in the rehab/remodel and resell process, they usually don’t realize how time and money they’ll have to spend to get it back up to market value. Look over some market comparables, “comps” for short, to get a good idea about how much repair your home will need. You only need to rehab it up to the same state of the other comps. If you use 3 to 4 comparables (most appraisers and realtors use 3) like in below example:

 

Luxurious house located in a beautiful neighborhood, with all new: wood floors, tiles, freshly painted walls, kitchen and bathrooms stylishly remodeled, brand new appliances and hardware, then it’s going to very tough to get your house rehabbed enough to live up to those expectations. When estimating your house, be sure to include everyone one of the small details that your market comparables have, as appraisers and investors will want to know all of these.
 

4.1  Are these market comps necessarily ugly houses?

 

   Market comps are what investors and appraisers use to estimate the worth of your house. Realty agents need them to make a CMA (Comparable Market Analysis, Real estate agents don’t actually appraise properties themselves), an investor won’t make an offer until he’s looked over them, and the tax appraisal district will use it to decide on a value for your house for taxes. But your average Realtor or investor won’t go by the tax appraisal districts comps as they are quite old and outdated.

 

4.2  Below is what are most often used for market comparables:

 

a. Three or more houses that have been sold within the past 6 months. If any of these haven’t been active on the house market within that time period then don’t use them for comparisons.

 

b. These recently sold houses must be located on the same street, same section, and same subdivision.

 

c. The comparables should all be roughly the same age.

 

d. These comparables should all be roughly the same square footage, if there aren’t any then pick one slightly smaller or larger (try and stay under 500 sq ft in difference).

 

e. There should also be about the same amount of bathrooms, bedrooms, and other parts, the garage should also be about the same size.

 

All of these market comps are on the MLS (a collection of information of properties on the market nationwide and its exclusive to Realty agents and a selected="selected" few paying companies). This MLS sales information is hosted on the web and many Realty companies have a plug-in for it on their website. Yet the MLS doesn’t have a record of the more recent property sales; if you need this than have your Realtor make some market comps. There are also some websites such as “Zillow.com” which have a database of more recent sales, and are greatly improving at pulling comps.
 

5.  Information your investor buyer will need.

 

    Before investors begin making offers on your house, they’ll need most of the following information. A number of these details can be found online at your tax appraisal district’s site:

 

House’s Address.
Homeowner’s information.
Size (Sq. footage).
How many bed/bath rooms and garage size.
Number of floors.
Deadline for house to be sold by (as this can affect your closing date and other options).
Purpose for selling.
How much of the mortgage hasn’t been paid off yet, as well as any other liens.
House’s purchase date and last refinance date.
Cost of your monthly payment, along with the amount of payments behind you are if any.
What kind of repairs the house needs.
How old the roof and HVAC is.
Any damage the house might have acquired from fire, mold, termites, or flooding.
If you collected insurance after any of these damages.
An estimate of repair costs.
An estimate on the house’s worth from comparables you’ve made.
How much you’re asking for the house.
How much you’d accept in cash up front.
If you might be able to work with any other financial options.

 

5.1  If you’re planning on selling for cash up front...

 then say so at the beginning of the deal, as the majority of investors prefer different financing options. This can also help you pick out the more determined buyers, but keep in mind that your price difference can change if you’re willing to take back some of the financing, have your investor take over the mortgage, get a note taken back for a couple months until the house has been repaired/rehabbed, or any other financing options your investor may want you to use. 

 

   The average homeowner will prefer to do a cash deal, and if they’re asking too high a price and their home doesn’t have sufficient equity, than they aren’t likely to get a buyer. It’s important that a home seller be open to accepting a reasonable price, that way they’ll have no shortage of buyers.

 

6.  The formula sometimes used by an investor to make offers on ugly houses.

While some investors will make higher offers and some lower, there is a quite standard formula that most investors use to make cash offers on a house. This formula is mostly used on homes in need of repair, and rarely houses in retail condition.

 

Investors sometimes use the acronym called MAO (Maximum Allowable Offer) which shows them how to make an acceptable offer on a property. The formula is show here below:

 

MAO = ARV X 70% - Repairs

 

The After Repair Value is the worth of the house after its repaired/remodeled almost to perfection; the house needs to be in the best possible shape before the owner can try and sell it for a retail price. To put it plainly, what repairs does your house need before it’s up to par with the fanciest houses in the surrounding area that were sold within the past few months.

 

Investors use their market comps to estimate the ARV for (fully repaired) homes that lately sold on the market. They aren’t always the most expensive homes, just the average price of homes sold recently.

 

Repairs are pretty much anything that the house needs to be in “tip top shape” before selling for retail. At the very least you should clean everything (especially the carpets), paint, and take care of any hardware that needs to be replaced.

 

The “Maximum Allowable Offer” doesn’t necessarily mean that a profit can be made, it’s been described as “A price investors will offer that’s low enough to make a good profit, and so they’re not likely to lose their money. Offering more than the MAO, means that they’ll have a much higher chance of losing their cash, and the profit isn’t worth the risk of investing in that property.”

 

So the formula that most investors use to decide on an offer is the ARV – about 30% - money needed to repair the house enough for the retail market.

 

If you’re thinking that this offer sounds not high enough, then don’t start panicking, this is mainly just for upfront cash offers. If you don’t think it’s worth selling your home at that low a price, or there isn’t any equity to speak of, chances are you can still find investors that are willing to strike a deal. Cash deals aren’t your only option, and your average investor can help you find a financing option that suits you.

 

7.  Investor Buyers.

 

In the case of you getting offers from many different investors, choosing which one to do business with is not an easy decision. A good investor will try and find a deal that benefits both him and the seller, but there are quite a few investors who will use any means to make a profit and only tells the seller what he wants to hear, so he can trick him into making a bad deal. Being knowledgeable about and keeping a watchful eye out for these sort of scam, can help you avoid a lot of hassle, and help you meet any deadlines you might have.

 

7.1  Using disclosure to protect yourself.

 

Different states have their own laws on disclosure, it’s very important to know about these, but the easiest way would be to have your local Real estate agent to give you a seller’s disclosure form. If you’re not offered one by your investor buyer, then ask him for one.

 

The form’s purpose isn’t for the investor to see all the things that are bad in your home, as his inspector will do that job. The form is to protect the seller by insuring that he discloses all the details that the law requires him to. Some states have laws that if buyers haven’t had these details disclosed to him, he is legally allowed to cancel the contract whenever they please; this means that they wouldn’t have to work within the seller’s contract deadlines.

 

If a homeowner has already disclosed all of these details in a disclosure form that the buyer signs, the homeowner is automatically protected from the buyer weaseling out of a contract and claiming you didn’t disclose the proper information. If this happens to you, read up about your state’s Deceptive Trade Practice laws, of course if you used the form from the start then this won’t be a problem.

 

8.  How does a house get “ugly”?

 

8.1  Owner doesn’t maintain the property:

 

An experienced investor has seen all sorts of ugly houses in all kinds of areas. The main reason these homes get into this kind of shape is they go extended periods of time without maintenance. It’s important for an owner to regularly work on keeping his house in good condition, the sort of care that tenants usually won’t worry about themselves. .

 

8.2  How to maintain a property on a regular basis:

 

Here are some important things that need to be worked on regularly: annual/biannual coats of paint, detailed cleansing, using a pressure washer to clean any moss off brickwork, and cleaning any off caulk. Any caulk on the outside of your home, gaps in the siding, window perimeters, etc, is to seal the area to protect against leaks and can be the most crucial (yet commonly neglected) thing to be regularly maintained.

 

You should replace your house’s composite roofing around every 10 years; this depends mostly on what type of shingles were used. It’s best to trim any trees that overshadow your house as they collect moisture on the roof in wet weather, which not only seriously damages the roof, but feeds any moss that might be growing there. Any sections of the roof that are often moist or shaded should be replaced before others.

 

Having the right landscape isn’t only for beautifying your house’s exterior, it’s mainly to get the correct soil under the foundation to keep it solid and protect from cracking. The foundation of a house usually fails because of either sloppy landscaping, or bad/constantly wet soil. If your house is on an area of clay or expanding (or reducing) soil, you can preserve it even just by having the soil watered every now and then.

 

8.3  Inheriting a house and probate:

 

Most recently inherited homes are sold soon after to an investor, as the new homeowner might not be able to afford, or even want, to go through the rehabbing process, and would rather just sell and get it over with. If it so happens that your trying to sell this sort of house, yet haven’t gone through probation court yet, your top priority should be finding out if you need to go through probate, and what kind of documents you will need for your house. The title company your buyer works with will check that you resolved this already, and if you haven’t it can take quite a long time.

 

Be sure to research how this can affect your taxes before trying to sell the home. Here is the IRS’s official publication of information on this process Publication 559 (2006), Survivors, Executors and Administrators.

 

8.4  House damage due to flooding:

 

Our investors also buy ugly houses due to flooding.
If someone owns a house that has flood damage, they may want to just sell to an investor instead of trying to repair the damage themselves. Houses may get flood damage because they’re located in a flood zone, or flooded due to a hurricane. The investors in our network pay cash for these sort of homes, as these houses have trouble finding a buyer that will take any of the other financing options. Some flooded houses will grow all different sorts of mold such as a toxic mold called Stachybotrys. An investor possesses the money and resources to take care of these sort of problems, as the average homeowner may not.

 

8.5  House damage due to hurricanes:

 

In some of the states that have a hurricane problem, our investors seek out and buy houses that have serious hurricane damage. Sometimes the damage is so severe that there is nothing left worth salvaging, sometimes the property is completely cleared. In this situation an investor will still be willing to purchase the house for “lot value”.

 

A hurricane can cause damage to entire communities, or even cities.

 

Most homeowners don’t bother with repairing or rehabbing as they usually receive money from their insurance company, and would rather just sell their home to an investor for upfront cash. If you own a house damaged in a hurricane, talk to our investors and they will most likely be willing to make cash offers without hardly any hassle.

 

8.6  House damage from a fire:

 

If you’ve had a fire in your home than its probably seriously damaged because even if the fire didn’t burn out most of your home, the smoke has probably rendered your home unlivable.

 

How to prevent a fire: practicing fire safety is extremely important and is not something that should be neglected, but there are a few building flaws that can be a hazard.

 

Electrical flaws: Every house’s electrical systems should be up to a safe standard, but they might need to be updated regularly, such as getting any faulty parts replaced. There are a number of electrical parts in your home, and if these parts get worn, it can be a serious safety hazard. Be sure and check any switched, fixtures, breakers, or even outlets on a regular basis.

 

Gas hazards: It’s important to regularly check that any gas hoses or fittings that connect to your stove for any leaks, and making sure they aren’t cracking, or getting to worn or corroded. Homeowners who use propane gas have their own measures that need to be taken to prevent an accident. If any gas hoses are looking to old or have cracks, melted areas, or other problems they should be changed as soon as possible.

 

Also any hose clamps need to stay firmly secured.

 

8.7  Foundation damage from shifting:

 

If your house’s foundation shifts, or begins to settle and move, then it can be big issue and needs to be taken care of immediately.

 

Foundation damage is usually quite costly, but if it’s not fixed, it can make long term damage until its repaired.

 

If your home’s slab starts to crack or sink, then it can be caused by a number of reasons, mostly due to the landscape being faulty, or the kind of soil it was built on. There is a certain clay soil, that’s quite common in a few states, that settles extremely easily due to drying out, and also expanding or condensing in moist weather. If that area of ground gets too wet then it expands as it moisturizes the soil.

 

In dry weather it gets too dried out and doesn’t reshape and may even begin to pull away from your slab as it shrinks in size. This type of soil will spread out into different size patches, and can cause parts of the foundation to sink lower than the rest. Homeowners how lightly water the entire area in dry weather can avoid this sort of damage.

 

How to prevent a foundation problem: Foundation damage can usually be reduced or avoided altogether by simple maintenance, but if your foundation has a serious problem you might need professional help. Most of the investors in our network specialize in houses with the above foundation problems.

 

8.8  Toxic mold growth from leaks:

 

Molding can be a serious issue in most homes, and if not taken care of properly and quickly, it can cause a house to get to an unlivable state. In the Realty industry, mold is not an issue that your average investor is willing to work with as it scares away most buyers. If a homeowner finds toxic mold growing then they usually have to start a painstakingly long process of remediation and repair. As if that’s not enough, in most situations a homeowner is legally required to inform any would be buyers.

 

We buy ugly houses with toxic mold. There are investors within our network who aren’t scared off by mold issues, as they specialize in buying these sort of houses and how to repair them. Mold remediating and repairing can cost quite a lot of money, but these investors specifically search for these homes and are quite experienced in estimating how much they’d need to spend on repair, and they will consider that when offering to buy this kind of home.

 

Toxic mold can be a severe problem for homeowners making it extremely hard to get a reasonable price if they decide to sell. We don’t think that’s an unsolvable problem, and there are many buyers in our network seeking these houses out. These investors can get the mold re-mediated and then rehab the house to bring it back up to retail market value and a safe standard.

 

8.9  How to prevent toxic mold:

 

Mold grows because of water or moisture that enters your home, mostly from leaks, and the only way to stop it is to find and repair these leaks. For mold to thrive, it needs water regularly, so if you can prevent it from getting any, you can stop it from getting worse.

 

Every kitchen and bathroom needs to be properly ventilated, if it’s not then moist air from cooking, washing dishes, or taking a bath, creates a mold hazard.

 

Another crucial point to prevent mold is to have a well functioning AC unit. During the summer months your AC will filter out any moisture in the air, as well as keep your home nice and dry. This is especially important for homes located in the moister areas such as any states down south. Its best to run the air conditioner on a regular basis, even if the house is vacant.

 

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