Do you need to connect with cash home buyers in Houston for a fast sale?
Perhaps you’re relocating for your dream job in two weeks, but you don’t have the time or money to replace the roof on your University Place ranch that has sprung a leak. Or maybe you’re downsizing to suburban Shenandoah so you can spend your retirement playing golf, but you don’t want to dip into your 401(k) to update the decor of your two-story colonial.
Whatever your reason for needing a quick sale without making expensive repairs, Houston is teeming with cash home buyers ready to make you an offer no matter your home’s condition.
We’ve gathered insights from real estate experts to create this guide for navigating Houston’s cash home buyer market so you can sell your property in as fast a time frame as you require.
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Inside the Houston cash-for-homes market
Houston is ranked second by Norada Real Estate Investments for the 21 best places to invest in real estate in 2023. The Greater Houston area is expected to continue being a hot investor marketplace this year as its 7.2 million population grows more rapidly than most U.S. metros.
“We get a massive amount of investors coming to us looking for us to help them with investment properties, and a lot of them are cash,” says James Krueger, a top-performing real estate agent who sells properties 42% faster than the average Houston agent.
With interest rates dancing between 6% and 7%, the slowdown in home sales that is likely to persist through early 2023 makes cash offers even more appealing to sellers with a short timeline or houses that need updating. “Local home buyers can be a good solution for a seller,” says Ben Naumann, managing member of Christian Home Buyers, a home-buying company serving the Greater Houston area.
However, first-time or fair-weather investors facing high interest rates and inflation have created some challenges in the Texas market.
Seasoned Houston real estate investor Vaughn Ramcharitar, co-owner of Greater Houston Houses, says experienced real estate investors understand the cyclic market and purchase properties even during tough times. But newcomers who invested in Houston’s sizzling real estate market are backing off during the downturn. “When there’s a bump in the road they move on to something else,” he explains.
In the last six months, Ramcharitar has seen a surge of wholesalers and inexperienced investors trying to unload properties. In the past two years, they could easily sell homes above market price, particularly to out-of-state buyers. But that’s no longer the case. “Houses are sitting for months even if they’re priced reasonably. There are just not enough buyers who have a good credit rating and can get bank underwriting,” he says.
Investors either keep properties they purchase as long-term rentals or flip them on the open market. “The newbie with little experience doesn’t have the money to keep it long term. It takes a lot of money to fix the house and keep it with holding and carrying costs,” Ramcharitar points out.
For local investors in the Houston area, the cash-for-homes market is heating up. Ramcharitar typically purchases four to six houses per month. But he expects this number to double over the next few months due to increasing call volume.
Let’s examine the factors affecting Houston’s cash buyer landscape.
Rental demand ignites investor activity
Known as the Energy Capital of the World, Houston attracts job seekers in many sectors, including energy, medicine, space, and manufacturing. With employment at a record high in Metro Houston, the area entices investors looking for opportunities to meet the growing demand for rental housing.
Many aspiring Houston homeowners are delaying their plans to buy a house. Soaring interest rates, record prices, and short inventory supply leave renting as the most viable option, thus making Houston desirable for buy-and-hold investors looking for a steady income stream. According to Houston Association of Realtors (HAR) data for December 2022, single-family home rentals soared 24.3% year-over-year with the average lease price up 5.5% to $2,154.
“Local investors are concentrating on the rental market,” says Ramcharitar. Investors are buying homes to keep as long-term rentals that they can sell when the time is right rather than try to flip them in the current market with few buyers.
In the past, Ramcharitar flipped half the homes he purchased and kept the other half as rentals. But now he holds on to about 90% of his investment properties. He buys homes for cash, fixes them up, obtains refinancing, and then rents them out. Houston’s rental market is so active that he doesn’t even advertise for tenants. They sign the lease just a couple of weeks after the home is renovated and ready for occupancy.
Foundation and stucco issues afflict Houston homes
With its humid subtropical climate and clay soil, Houston homes are prone to foundation issues as well as the growth of mold and mildew. Flash flooding occurs in the Bayou City since the clay soil doesn’t absorb water and contributes to foundation problems. Ramcharitar says large oak trees with pervasive, spreading roots also crack foundations. If fault lines run through your Houston neighborhood, Krueger says you’re more likely to have foundation damage.
Foundations can be expensive and difficult to repair with costs in Houston ranging from $3,000 to $7,000. Signs of possible foundation issues include cracks in drywall, brick, and concrete as well as uneven floors, doors or windows separating from their frames, and buildup of mold and mildew.
Aging homes with a stucco exterior may have problems due to the abundant moisture in Houston. “Stucco doesn’t do well, but everyone wants stucco because it looks pretty,” says Krueger. According to HomeAdvisor, stucco repair costs from $600 to $2,475 depending on the severity of the damage. But if extreme weather ravages your Houston home, you might have to pay between $2,164 and $8,528 to replace stucco on a 1,500-square-foot house. And if you have a larger home with complex stucco issues, Krueger says you could end up paying a whopping $20,000 to $50,000.
Rather than making pricey repairs to resolve foundation or stucco issues that could chase away potential buyers, selling as-is to an investor might be an option worth considering.
Older homes need expensive upgrades
With more than three-fourths of Houston homes built before the year 2000, it’s not surprising that sellers turn to cash buyers when older homes require a substantial investment, such as a new roof or central air conditioning unit.
About 40% of sellers reach out to Ramcharitar because their aging homes need costly repairs. “They don’t have the funds to fix the home and sell it on the open market,” he says.
Ramcharitar says air conditioners work continuously for about nine months of the year because of Houston’s hot, humid climate, so their lifespan might be only five or six years. A new central A/C unit could set you back $1,700 to $3,000 plus another $1,800 to $2,800 for installation.
In older subdivisions, mature oak trees damage roofs as overhanging branches allow squirrels and other critters access to the roof and attic. Expect to pay $6,000 to $8,500 if your Houston home needs a new roof.
While problems with the roof or air conditioner may overwhelm sellers and turn off buyers, Ramcharitar doesn’t walk away from a property with issues. He routinely works with multiple crews of contractors so he completes renovations at a lower cost and with fewer headaches than most homeowners.
Naumann says buyers may not get a mortgage if big-ticket items like the roof or A/C aren’t in good condition. Houston sellers can bypass expensive fixes by selling to cash home buyers who will handle needed repairs.
Natural disasters and extreme weather leave fixer-uppers in their wake
Houstonians have seen more than their fair share of natural disasters like hurricanes, tornadoes, extreme rainfall, flooding, and even winter storms. These severe weather conditions damage Houston homes and require costly repairs if not covered by homeowner’s insurance.
Copper pipes may burst when the temperature plummets and power outages occur. Ramcharitar says homeowners have to repair the damage or replace copper pipes with more durable PEX. Other signs indicating your home needs new pipes include rust-colored or unusual-tasting water, low water pressure, clogged drains, and faucet leaks.
One local repiping company estimates the cost of pipe replacement at $2,000 to more than $16,000 depending on the type of material, home size, and the number of bathrooms and plumbing fixtures. PEX involves less demolition, so it’s cheaper than other products.
Houston’s heat and humidity are conducive to termite infestation. “If untreated for many years, they destroy the wood and damage the integrity of the structure,” says Ramcharitar.
But termites aren’t the only pests plaguing Houston houses. According to a study by Porch Group, a home services software company, the city leads the nation in pest infestation with nearly 15% of homes having rats, mice, cockroaches, or mold.
With Mother Nature wreaking havoc on Houston homes, sellers may turn to a cash buyer rather than take on the expense and hassle of getting rid of pests and making repairs.
Investors offer alternatives to foreclosure and bankruptcy
About 60% of sellers who contact Ramcharitar are behind on their mortgage payments. They may not be able to afford their home if a divorce or illness leaves only one person to pay the bills for a house purchased with two incomes. If you’ve received a foreclosure notice, you probably don’t have three or four months to wait for your home to sell on the open market.
“Foreclosure is like a bullet to the head,” says Ramcharitar. While some homeowners opt for foreclosure in a distressed situation, others decide to declare bankruptcy. “Having bankruptcy on your record is like dropping an atomic bomb on you and your family,” he comments.
Rather than succumb to foreclosure or bankruptcy, selling to a cash buyer in Houston could keep you from harming your credit when facing a financial setback.
Common types of cash buyers in Houston
Krueger says iBuyers are purchasing fewer homes in Houston. “Consumers are exploring more and more options these days,” he notes as iBuyer activity slows down.
While iBuyers such as Opendoor are taking a step back as rising interest rates increase the cost of doing business, other types of cash home buyers investing in Houston’s real estate market include:
- Local buy-and-hold investors targeting properties for the rental market
- Buyers who cannot get financing such as individuals who are from other countries or who don’t have income earned in the U.S.
- Wholesalers who purchase homes and immediately flip them to another cash buyer
- Small or family-owned house-buying companies
- Large investment firms and institutional investors transforming single-family homes into rentals
- Flippers targeting distressed properties and fixer-uppers
How much will Houston cash buyers pay?
Don’t expect to get top dollar if you sell your Houston home to a cash buyer. “You’ll get speed and convenience in exchange for some of the property’s equity,” says Naumann.
Many Cash-for-homes investors in Houston typically pay 70% of after-repair value (ARV), which is the property’s worth after being renovated to sell on the open market. Then they deduct the cost of repairs to determine the offer price. But Ramcharitar says this formula doesn’t work with every property.
“It depends on the market segment. For homes with a history of flooding or a condo association with monthly fees, the formula may be 60% to 65% of ARV minus repairs,” he explains.
Location, layout, and style of the home impact a cash offer. Ramcharitar says you might get up to 80% of ARV for a single-family three-bedroom home with two bathrooms in a decent neighborhood with good schools.
“Make sure you are selling to a true cash buyer, not a wholesaler,” advises Ramcharitar. Wholesalers typically purchase homes and flip them right away to an actual cash buyer. Since there’s no middleman, end cash buyers have more flexibility and can make better offers. And a deal could end badly with a wholesaler who doesn’t have the cash to go through with the sale or can’t find a buyer to take the property off his hands.
Tip: Try HomeLight’s free Home Value Estimator to get a ballpark value estimate in less than two minutes.
Ramcharitar also recommends decluttering your home and getting rid of unwanted items in a yard sale. After purchasing a property, the house-buying company first gets a dumpster and disposes of the home’s contents. You could potentially get a higher price if the investor can avoid this step.
Although you’ll typically receive a discounted offer from a cash home buyer, you’ll save on costs that take a sizable piece of your profit, such as 6% real estate agent commission.
Ramcharitar says sellers also pay 2% of the sales price for closing costs and another 2% for title insurance. He adds that negotiations and home inspection issues could further reduce the price by 10%.
After factoring in prep and repair costs as well as paying property taxes, mortgage payments, and utility bills for several months until closing, you might only pocket 75% to 80% of your home’s value. A house-buying company generally pays closing costs. You’ll usually get your money in as few as three or four days after closing, thus saving on monthly expenses.
When you sell to a cash-for-homes company, the offer price will typically be less than with an agent-assisted sale. Before committing to a cash home buyer company in Houston, HomeLight suggests you consult with a top local real estate agent to get a better idea of what your home might be worth if sold on the open market. Then compare cash offers to what an experienced agent might be able to get for your home. HomeLight can connect you with a top-performing agent in your Houston market.
Benefits of selling to a cash buyer in Houston
Selling to a cash buyer may be especially advantageous if the owner is deceased and there’s no will. “We have a lot of people whose mother and father passed away and didn’t have a will,” says Naumann. In such cases, Texas requires an Affidavit of Heirship before the house can be sold. Cash home buyers help sellers obtain this document and save potentially thousands of dollars if going through the traditional probate process.
“The average consumer knows what their home is worth. They have a bottom line they’ll take in exchange for the convenience of a cash buyer taking the house off their hands,” remarks Ramcharitar.
While the cash offer you receive may be lower than a traditional agent-assisted home sale on the open market, there are notable benefits of working with a cash home buyer in Houston, especially if you need a fast, convenient sale.
- Speed: You can typically sell your house in as few as 10 days. “The majority of calls I get are from sellers who need a quick sale,” says Ramcharitar. When you’ve received a foreclosure notice and time is of the essence, a cash sale could be the fastest solution.
- More certainty: With a pre-offer walk-through, a cash home buyer can typically provide a firm cash offer that comes with few contingencies, or no contingencies at all. If you’ve lost your job, are going through a divorce, or dealing with a medical issue, you have enough uncertainty in your life. You don’t need the added stress that comes with the risk of the buyer’s financing falling through or a home inspection turning up unpleasant surprises.
- No repairs: If your home is in need of repairs you can’t afford or don’t want to handle, you can skip them altogether. Krueger says most people don’t spend enough on getting their home ready to list on the market. He says Houston sellers typically spend about $6,000 to prep their home. Rather than invest a great deal of time and money to update your home, you can leave this up to someone else while you begin the next chapter of your life.
- Less hassle: You won’t need to worry about showings, open houses, fielding offers, negotiating, low appraisals, or the risk of the buyer’s financing falling through. If you have young children, you won’t be constantly picking up toys and cleaning the house for showings at any time of the day or night. “It’s very inconvenient and an invasion of privacy having strangers go through the home,” says Ramcharitar. When you work with a reputable cash home buyer in Houston, you’re likely going to experience a smooth journey from offer to close.
- Save money on closing costs and other fees: Although you’ll probably give a discount by selling to a cash buyer, you’ll save on various costs that cut into your profit with a traditional sale such as real estate agent commission averaging 6% in Houston. Home-buying companies generally pick up the remainder of closing costs that total about 8% including title search and title insurance.
There’s not much difference other than a quicker timeline and an easier transaction.
- James Krueger Real Estate AgentCloseJames Krueger Real Estate Agent at Krueger Real Estate5.0
- Years of Experience 14
- Transactions 915
- Average Price Point $312k
- Single Family Homes 738
What’s the process of selling a house for cash in Houston?
“There’s not much difference other than a quicker timeline and an easier transaction,” Krueger compares the process for selling a house for cash in Houston to an agent-assisted sale. The steps are generally the same as with a traditional home sale, albeit in a much shorter time frame:
1. The seller finds a buyer, or the buyer’s marketing efforts lead to a seller. Although there are many reputable house-buying companies in Houston, Ramcharitar cautions sellers to check the investor’s credentials and how long they’ve been in business. Are they BBB accredited and do they have good ratings and reviews? Ask for references from sellers they’ve worked with. Examine public records for deeds recorded under the buyer’s name to verify that they purchase and sell properties.
2. The seller and buyer agree on a price and terms. Ramcharitar advises asking for proof of funds such as a bank statement to ensure the buyer has enough resources to cover the price of the home. Otherwise, you could lose valuable time if you have to search for a new buyer because the investor lacks the cash to close the deal.
3. Both parties sign a contract and submit it to a title company. Naumann recommends a standard third-party contract such as one prepared by the Texas Real Estate Commission (TREC). Some cash buyers have their own agreements with terms that might not be in the seller’s best interests.
“Never let anyone force you to sign anything,” says Ramcharitar. He suggests consulting a real estate attorney if you have questions about the contract. Carefully read the fine print to look for hidden fees that could take a huge chunk out of your cash offer or reasons why the buyer could back out. With a cash home buyer, there are usually no financing or inspection contingencies typically found in traditional real estate contracts. So you won’t be holding your breath until the buyer’s loan approval comes through or be on the hook for needed repairs discovered during the home inspection. Since as-is contracts are the norm when selling for cash, an unreliable air conditioner that’s worked continuously in Houston’s hot, humid climate isn’t your problem, although the buyer might deduct replacement costs from the offer price.
4. The buyer does due diligence during the option period in Texas. The option period is the number of days the buyer has to thoroughly inspect the property and terminate the contract for any reason. Krueger says the due diligence period in Houston is typically 10 days for an agent-assisted sale. But there is generally no due diligence period for a cash buyer. Ramcharitar inspects the property and then gives a verbal offer followed by a written one. The contract is executed immediately.
5. The buyer and seller sign the closing documents. In an agent-assisted sale, most Houston sellers pay closing costs totaling 8% of the sales price. Real estate investment firms and house-buying companies generally pick up these costs.
Play it safe with a non-refundable earnest money deposit
While no loan approval or appraisal makes cash sales less risky, there’s still a chance that the investor could back out. “Ask the investor if something goes wrong and you change your mind, what do I get?” advises Ramcharitar.
Some transactions take up to 30 days to close. If the investor plans on immediately flipping the property and can’t line up a buyer for the right price, they might contact the seller just a day before closing to reduce the offer because of an expensive repair or threaten to back out of the deal. At this point, the seller has moved on with their life and settled into their new home. If they don’t accept the lower price and terminate the agreement, the investor takes back the earnest money and the seller is left with a house they can’t afford. Or if forced to accept the slashed price, they could lose thousands they had counted on when signing the contract.
Ramcharitar recommends that Houston sellers ask for a non-refundable earnest money deposit. He explains that earnest money doesn’t automatically go to the seller if the buyer defaults. Unless investors sign a notice of termination of contract and release of earnest money, which many do not sign, they can walk away from a deal with their earnest money in hand and leave you with nothing but the headache of starting the sales process all over again. He suggests a non-refundable earnest money deposit of $5,000 or $10,000 depending on the size of the home.
Disclose known defects
Just because you’re selling your home in as-is condition to a cash buyer doesn’t mean you’re off the hook when it comes to revealing large issues like foundation problems or termite damage that may impact Houston houses. Texas law requires sellers of a single-family home to provide written disclosure of known defects of the property either before or on the same date that the purchase contract takes effect. Naumann recommends completing a disclosure statement even if selling to a cash buyer. “It’s better to fill out the form to protect the seller,” he says, noting that you may avoid legal liability if a problem arises after the sale.
Sellers can complete either the Seller’s Disclosure Notice provided by the Texas Association of Realtors if working with a real estate agent or the TREC form. Both documents ask questions about the property’s condition including systems such as HVAC, electrical, and plumbing, major appliances, structural components, termite damage, water intrusion, and health hazards.
Sellers must also disclose whether the property is in a flood zone, of particular importance during powerful thunderstorms and hurricane season. Other items specific to the Texas disclosure form include diseased trees on the property and proximity to the coastline and military bases.
Although there are some exceptions to providing a disclosure form, such as if you inherited the home you are selling or the property is being foreclosed upon, consult a real estate attorney to determine if a written disclosure is required in your situation.
What’s the timeline for a cash sale in Houston?
“The average turnaround is quick with a cash deal,” says Ramcharitar. While a cash sale in Houston is typically completed in three to seven business days, he’s experienced even faster closings.
However, many Houston subdivisions have a Homeowner’s Association (HOA) that could add a few more days to the timeline since you need HOA approval and the proper HOA documents to close the transaction.
An agent-assisted sale takes much longer as the process involves prep work, staging, showings, and open houses. Then you wait for offers and counteroffers in addition to loan approvals, appraisals, home inspections, and further negotiations if problems arise during inspections.
The average Houston home spent 63 days on the market in February 2023, according to the HAR. When you add another 45 days typically required to close on a purchase loan, you might have to wait nearly four months to sell your home when you list it on the open market. And if your home hasn’t been updated in decades, it’s likely to take much longer to find a buyer and sign the contract. If you live out of state and inherited a home as well as the monthly payments and upkeep, selling to an investor or house-buying company could put cash in your pocket in only a couple of weeks without the hassle or inconvenience.
How do I find cash buyers in Houston?
“Partner with HomeLight,” Krueger advises sellers in Houston who are looking for a cash buyer. He recommends HomeLight’s Simple Sale platform if you need a quick cash sale and want to avoid the uncertainty of a mortgage approval.
While finding a reliable cash buyer on your own can be overwhelming, Simple Sale connects sellers with the largest network of home buyers in the U.S., making it easy and safe to get a convenient, no-obligation cash offer in Houston.
Here’s how it works:
1. Enter the address of your Houston home.
Answer a few quick questions about the property. Is it a townhome in Briar Meadow or a historic loft in Downtown Houston? Does it need a little work, a lot of work, or none at all? How soon are you looking to sell? It could be ASAP or in six months. Our easy questionnaire makes getting set up on the platform a breeze.
2. We’ll provide an all-cash offer within a week.
You won’t be obligated to accept any offer you receive. In addition, HomeLight can also introduce you to a top real estate agent in your neighborhood for an expert opinion on what your home is worth if sold on the open market. It’s good to know your options.
3. You sell your house in its current condition.
No additional repairs, prep costs, agent commissions, or hidden fees. This can save you time and money — a study conducted by HomeLight found that, on average, sellers spend over $31,000 to sell a house. This includes prep and repair costs. Fortunately, foundation issues and older A/C units are often no problem; our platform will provide a full cash offer for homes in almost any condition.
4. You can sell your house fast for cash in as few as 10 days.
A 10-day closing translates as selling your home around five times faster than you would with a buyer who needs traditional financing. According to data from Ice Mortgage Technology, purchase loans take an average of 45 days to close. With a cash offer provided through HomeLight, you’ll also have the ability to pick a move date that works best for your schedule. That’s the ease of Simple Sale!
If you have the time and energy to search for cash buyers on your own, Houston real estate experts offer these tips:
- Call local title companies for recommendations about reputable investors. “Any legitimate cash buyer goes through a title company,” says Ramcharitar.
- An investor-savvy real estate agent can help you connect with cash buyers even if your goal is to avoid the traditional listing process. With networks that include house flippers and landlords looking for their next investment property, top real estate agents have the inside track to finding cash buyers. They’ll also know if your home aligns with an investor’s buy-box consisting of parameters around the condition, price point, and location of homes they typically purchase.
- Check out local real estate investor clubs on Facebook and other sites to locate cash buyers close to home.
- Call rental management companies that may work for mom-and-pop investors. They might put you in touch with potential buyers looking for additional properties in your area.
- Drive around your neighborhood to find indications that homes are undergoing renovations such as dumpsters or contractor signs. Ask contractors for the name of the investor they are working for or if they are flipping the house themselves.
- With 10.98% of Houston’s housing inventory unoccupied, be on the lookout for vacant houses in your development that are being renovated. These are likely owned by flippers, so leave a note with your contact information.
Selling your house for cash in Houston
According to the National Association of Realtors® (NAR), 29% of transactions in January 2023 were all-cash sales, up from 27% last year.
Although you may not get top dollar by selling to a cash buyer, after deducting real estate agent commission as well as closing and holding costs, Ramcharitar says a conventional sale may only generate 75% to 80% of the listing price. But with the ability to close a cash deal in just a few days, you’ll get your money much sooner and be able to move on with your life without baggage such as a foreclosure or bankruptcy.
You might feel overwhelmed when you need to sell your home quickly in Houston. This can be especially true if you live out of state, face an imminent financial demand, or encounter a tight moving-date deadline. Fortunately, there are individual buyers and investors willing to pay cash for your Houston home. And with a platform like Simple Sale, you’ll also see price estimates of what you might receive if you sell through a top local real estate agent.
Whether you’re selling a pristine two-story Folk Victorian-style house in Houston Heights or a single-level ranch home in Braeswood Place that needs a major overhaul, request a cash offer from a trusted cash buyer in Houston whenever you’re ready to move.
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