Whether it’s flipping a split-level house with its harvest gold kitchen from the ‘70s or hunting for their next rental property in a desirable location, house buying companies purchase homes for real estate investment purposes before they ever hit the market.
If your dream house just came on the market and will be long gone before you can sell your current residence, or you’re downsizing and don’t have the resources to update your home, you might consider contacting a house buying company. Because these companies typically buy homes “as is” and have the ability to pay all cash, they can help sellers move quickly and with much less hassle than they’d likely experience when listing.
This guide covers how the process typically works with these operations — and what to expect. While selling to a We Buy Houses company offers a number of conveniences, house buying businesses generally pay less than market value for the homes they purchase, and sometimes significantly so.
With all-cash sales accounting for 26% of home purchases in October 2022, you might want to weigh your options for selling to a cash buyer. We’ve researched the different types of house buying companies, what it’s like to sell to a company that buys homes for cash, and the pros and cons. We’ve also compiled a list of some of the top house buying companies nationwide and details about each, including where they operate and how they’ve been reviewed by past customers.
Why sell to a house buying company?
“Selling to a cash buyer is a huge time saver,” says Will Holly, owner of Holly Nance Group, a boutique real estate investment firm in New Jersey that purchases 100 to 150 homes per year.
With work and family obligations, you might not have the time to oversee needed renovations or repairs before listing your home, so working with a company that buys houses is a viable alternative. Maybe the roof is nearing the end of its lifespan, the paint is peeling, or the entire house should have a cosmetic makeover, but you’ve decided against making a substantial investment in your old home when you’d prefer spending your money on building a new home in a 55+ community.
Not all sellers have the time or budget to prep their house for sale or make extensive renovations necessary for a proper listing. Our analysis shows that it costs an average of $31,308 to sell a house.
“With a cash buyer, you have certainty,” says Holly. Selling to a house buying company eliminates the uncertainty of getting a mortgage approved. Mortgage interest rates have more than doubled over the past year, making it more difficult to qualify for financing.
In addition, some sellers despise the idea of strangers wandering around their home during open houses and repeated showings. It raises their blood pressure and they want an easy, fast solution.
Are house buying companies legit?
While it’s always a good idea to keep an eye out for scams or anything that just doesn’t seem right, most house buying companies are legit. You can rest assured that this business model has been around for a while.
People have been flipping homes as we know it today since the ’80s and well-known real estate investing operations like We Buy Houses and We Buy Ugly Houses® have existed since the late ’80s to mid-’90s.
iBuyer companies, such as Opendoor and Offerpad, emerged in the mid-2010s as a newer house buying concept.
These high-tech businesses operate a little differently than other cash-for-homes companies. For example, iBuyers lean heavily on digital tools to make offers and provide a mostly online selling experience.
However, house buying companies are generally going to pay less than market value for your home, even if they are 100% legitimate. The amount each offers may differ, but the price discount can be steep regardless of which house buying company you go with. To better understand just how much money you might be leaving on the table, get a preliminary estimate of your home’s worth today by answering a few brief questions on HomeLight’s Home Value Estimator.
These companies can also provide a quick and flexible closing, reduce or eliminate the need for repairs, and in many cases will cover all of the seller’s closing costs. But Holly cautions, “Not all home buying companies pay closing costs.” He recommends asking exactly what fees the buyer will pay as you compare offers to determine your take-home amount when the transaction is finalized.
Your sale price might be less when you sell to a house buying company, but it’s all about weighing the trade-offs and determining what’s best for your situation. “Most homeowners end up being more profitable by the time they save and the headaches they avoid,” Holly remarks.
How do companies that buy houses work?
While the process varies from business to business, selling your home to a house buying company typically involves the following steps:
- Decision: A homeowner decides a traditional listing isn’t for them. Perhaps their house requires a lot of work, they need a quick sale, or they do not want to host any showings or open houses.
- Contact: A seller contacts a company that buys homes in their area and provides basic information about their property. Companies may also reach out to sellers about buying their home.
- Preliminary offer: At this stage, some house buying companies will provide a preliminary offer that is subject to change after a house assessment.
- Assessment: The company schedules a walkthrough of the property to evaluate its condition, usually within 24 to 48 hours.
- Firm offer: The company makes a firm offer (usually within 24 hours, sometimes on-site after the walkthrough) that you can accept or decline. Most of these companies will not negotiate on price, so the offer is typically “take it or leave it.”
- Closing: If you accept the offer, you and the company will each sign the contract and the closing process will begin. Some firms offer a large deposit or assist with moving costs, and a few may even pay for the home upfront.
- Payment: The seller receives payment quickly, generally within seven days to a few weeks, although this varies by company. Sellers who work with a house buying company often enjoy flexibility in selecting a move-out date that works for them.
|How do house-buying companies determine what to offer? “Most house buying companies will do a comparative market analysis similar to a Realtor® to determine what your home can be resold for after repair,” says Robert Taylor, an experienced rehabber in Sacramento. “They’ll then deduct for commissions, resale costs, and repairs, plus a small profit margin.”|
What are the different types of house-buying companies?
Not all house buying companies are the same. These entities can range in size, areas served, and business goals. Here’s an overview of the main categories of house buying companies you’re likely to encounter in today’s market.
1. House flippers
House flippers are real estate investors that purchase homes at a discount with the intention of remodeling to add value, then resell those properties quickly for a profit. House flippers look for specific improvements to boost equity, such as cosmetic updates, mechanical repairs, an addition, or a change to the layout.
Holly flips half the homes he purchases and rents out the other half. He typically aims for a 10% to 15% return on his investment.
Examples of house flipping companies:
- HomeVestors / We Buy Ugly Houses®
- Certain investors on HomeLight’s Simple Sale platform
2. Buy-and-hold companies
Buy-and-hold companies purchase houses with the intention of renting them to tenants for a profit. “Similar to flippers, they will look to acquire properties that offer enough potential equity or cash flow that they are able to make an acceptable return on investment for their owners or stakeholders,” explains Owen Dashner, owner of Red Ladder Property Solutions in Omaha, Nebraska.
Most of these investors use the “BRRRR” model, which stands for “Buy, Rehab, Rent, Refinance, Repeat.” Although many buy-and-hold companies focus on multi-family buildings desirable to renters, the two examples below purchase, renovate, and lease single-family houses.
Examples of buy-and-hold companies:
- Invitation Homes operates in 16 metropolitan areas such as Atlanta, Chicago, Miami, Houston, and Las Vegas.
- American Homes 4 Rent serves major cities in 22 states including Arizona, Colorado, North Carolina, and Tennessee. This company also builds new home rental communities.
An iBuyer, also known as an instant buyer, uses real estate market data and technology to make immediate offers on houses, typically sight-unseen, after being contacted by the owner. Most iBuyers focus on buying houses that don’t need a lot of work, but they charge a service fee to sellers. Data from zavvie shows that service fees for iBuyers in early 2022 were 5%, which is “not out of line” with the typical 5%-6% real estate agent’s commission.
Upon completing a thorough home inspection, which is after the buyer accepts their initial offer, an iBuyer also may request a credit called a “concession” to cover repair expenses. Concessions averaged 2.9% in Q1 2022.
“With rates going up and less activity, the market is less forgiving,” says Holly. He expects some smaller house buying companies to go out of business in the current real estate climate.
But buying homes for cash has been a losing proposition for larger companies as well, noted by the departure of two major iBuyers, Zillow Offers and RedfinNow. RedfinNow shut down its operations in November 2022, while Zillow Offers closed up shop in Nov. 2021.
Example of iBuyer companies:
4. Trade-in and ‘buy before you sell’ companies
Many people need to sell their existing home in order to have enough funds to cover the purchase of their new home. Some companies provide or specialize in what are known as trade-in or “buy before you sell” programs to facilitate a smoother process.
Generally, trade-in companies will offer to buy your current home or present modern, convenient options that free up your equity to buy a new house and remove the need for a home sale contingency.
Example of home trade-in companies or “buy before you sell” platforms:
- HomeLight Buy Before You Sell
- Orchard Move First
5. Local investors
Some home buying companies focus on purchasing houses in specific regions, states, and cities. These companies may have a national or multi-state presence under a unified brand bolstered by local offices run by associates affiliated with the umbrella company. Other local investors may be even more “mom-and-pop” in that they have small teams and may only work with a handful of homes per year.
Holly purchases houses in New Jersey under the $600,000 price point, preferring to steer clear of high-end homes. “It’s a different strategy and they sit longer on the market,” he explains.
For sellers seeking a cash offer from a house buying company, working with a local firm may put additional money in your bank account. According to Holly’s experience, “A local company with an office near your home will pay more.”
Example of local investors:
- These are the individual investors and businesses that appear when you do a search for something like “cash home buyers in [my city].”
- Some of these companies may specialize in your specific location or be associated with a brand serving a broader area.
- HomeLight’s Simple Sale platform connects sellers with local investors who purchase homes for cash.
13 of the Top House Buying Companies in 2023
We’ve put together a list of some of the leading companies across the nation that purchase homes for cash along with key details about each one.
Disclaimer: The specifics of house buying programs listed below can frequently change. Please visit the company’s website for the most up-to-date information on each individual company’s process, locations, and additional facts.
HomeVestors / We Buy Ugly Houses®
Part of HomeVestors of America, We Buy Ugly Houses is the largest professional house buying franchise in the U.S. Since its launch in 1996, the company has purchased over 125,000 homes. It specializes in buying distressed properties for cash, enabling sellers in precarious situations to close in as few as three weeks. We Buy Ugly Houses is known for its bright yellow billboards and branding featuring caveman Ug Lee. Review our overview of the operations and history of We Buy Ugly Houses for a more in-depth look at the company.
Fees: Sellers pay no closing costs; We Buy Ugly Houses covers them.
Reviews: Headquartered in Dallas, Texas, HomeVestors of America is BBB accredited with an “A+” rating. Although the company only received 1.52 out of 5 stars based on just 21 reviews, 2022 comments from customers on the BBB site speak to the firm’s high level of professionalism and describe the franchisees they worked with as “honest,” “kind,” “knowledgeable,” and “helpful.” Customers mention receiving “no pressure” and experiencing “great peace of mind” by working with We Buy Ugly Houses. But some reviews complain about unsolicited phone calls, texts, and junk mail. Since franchises are independently owned and operated, BBB ratings and reviews of individual We Buy Ugly Houses franchises vary so be sure to do your own research on the local business serving your area.
Simple Sale (a HomeLight platform)
Simple Sale, a solution from HomeLight, is an online marketplace where sellers across the country can request a cash offer for homes in almost any condition. Simple Sale has a network of cash buyers on its platform, and partner investors have a wide range of investment strategies, including fix-and-flip and buy-and-hold.
This enables Simple Sale to provide cash offers for an extensive array of properties, even those that need some or a lot of work. With Simple Sale, you can get an all-cash offer in as few as 72 hours. The offer is commitment-free, so if the numbers make sense for your situation, you can sell your home in as little as 10 days, skipping the months it can take to sell the traditional way.
Locations: Available throughout most of the nation — input your address to see if Simple Sale provides cash offers in your area.
Fees: No prep costs, no agent commissions, and no fees charged by HomeLight. Individual investor fees may vary.
Reviews: Simple Sale is a HomeLight platform, and HomeLight has a 4.6-star rating on Google based on more than 500 user reviews. HomeLight has been BBB accredited since October 2019 and has an A rating.
We Buy Houses
Since 1997, We Buy Houses has been helping homeowners quickly sell homes in any condition for cash. Not to be confused with We Buy Ugly Houses, the company is not a franchise business, but rather offers a license to its marketing and branding programs for professional real estate investors that already have “established processes for buying and selling real estate,” according to an informational page on the WeBuyHouses.com website. The company says it is trusted by over 1 million homeowners and will provide a no-obligation cash offer in 24-48 hours.
Keep in mind that “We Buy Houses” is no longer a trademarked term; so not every company you see using “We Buy Houses” in their name or marketing is going to be associated with the WeBuyHouses.com brand we’re describing here. Make sure you’re aware of who you’re working with and don’t assume “We Buy Houses” to be the only indicator of a company’s legitimacy.
Locations: The company serves over 200 markets in more than 30 states and has local offices throughout the country. You can enter your ZIP code on the website and answer a few questions about your home to be connected with a licensee in your area.
Fees: Sellers pay no closing costs; We Buy Houses covers them.
Reviews: We Buy Houses has been BBB accredited since August 2020 and has an A+ rating. Customer reviews differ among local offices, so it’s important to do your own research and see what people have to say about working with the licensee nearest you. Your local We Buy Houses office may also have a Facebook page with reviews.
Having purchased over 4,000 homes since beginning operations in 2003, Express Homebuyers expanded from initially making all-cash offers for homes in Maryland, Virginia, and DC to many states throughout the nation. The company prides itself on having swift operations — it says it will make you an offer in as little as a day and close in just seven days, according to the company’s Facebook page.
As an added perk for sellers who need extra cash right away, Express Homebuyers says it will provide up to a $10,000 cash advance to help with expenses.
Locations: Based in Springfield, Virginia, Express Homebuyers identifies 27 states plus Washington, D.C. as “top states” where it operates. Click on the state where you live for information about cities that the company serves.
Fees: No closing costs; Express Homebuyers covers them.
Reviews: Express Homebuyers has been BBB accredited since 2004 and has an A+ rating. Customer reviews are largely positive with an overall BBB rating of 4.89 out of 5 stars. Reviewers in 2022 speak to a “quick, easy, and worry-free” selling process navigated with the help of professional company representatives. They also praise the company’s level of flexibility and several reviewers mention being satisfied with the “fair price” they were given by Express Homebuyers.
It should be noted that the BBB site reports a complaint brought against Express HomeBuyers by the Office of the Attorney General for the District of Columbia (OAG). The lawsuit alleges that the company sent letters to DC homeowners falsely claiming that they owed past due property taxes and urging them to act quickly so they would not lose their home to a tax sale or foreclosure. A judge granted a preliminary injunction against Express HomeBuyers in March 2022.
Founded in 2018, HomeGo provides cash offers to homeowners in three easy steps. First, a representative of the company will conduct a 30-minute home walkthrough. Next, HomeGo says it will provide a firm cash offer on the spot. In the final step, closing takes place in as little as seven days, and sellers have the flexibility to move when they want. Don’t fret if there’s no time to clean out the garage or attic since the company will take care of unwanted items left behind.
Locations: HomeGo is a national company with over 30 offices from coast to coast in 22 states plus the District of Columbia. View a full list of the company’s current locations.
Fees: No closing costs; HomeGo covers them.
Reviews: Accredited by the BBB since July 2018, HomeGo has an A+ rating and has received an average 3.15 out of 5 stars. Customer reviews for 2022 note that the transaction was “simple and well explained,” the sales process was “easy and stress free,” and closing went “smoothly.” Several reviewers complain about receiving unsolicited junk mail offering to purchase their home for cash including photos of their home.
Founded in 2012, MarketPro Homebuyers provides solutions to sellers in the Mid-Atlantic region with a focus on Washington, D.C., Maryland, Pennsylvania, and Northern Virginia. The firm says it differentiates itself from other house buying companies by providing “white-glove service from start to finish, integrity, and client satisfaction.” MarketPro Homebuyers purchases homes in as-is condition, provides transparent cash offers during a same or next-day in-person or virtual appointment, and generally closes in as little as a week with the flexibility to close on your timeline.
Locations: MarketPro Homebuyers serves over 18 counties throughout Virginia, Maryland, Pennsylvania, and Washington, D.C. Click on your state’s link for more information about areas where the company operates.
Fees: No closing costs; MarketPro Homebuyers covers them.
Reviews: Based in Rockville, Maryland, MarketPro Homebuyers has been accredited by the BBB since October 2018. The company has an A+ rating and received an average of 4.51 out of 5 stars. In 2022 reviews, customers describe the company and its representatives as “professional,” “responsive,” and “knowledgeable.” Several reviewers mention that they received a “fair deal.” Homeowners also complain of unsolicited mail, texts, and calls by MarketPro Homebuyers about purchasing their home.
Sundae is a marketplace that connects homeowners selling distressed properties with multiple local investors who want to buy them. Sellers speak with an advisor over the phone or fill out an online form. The next steps are a brief home visit by a market expert followed by a home inspection and seller disclosure. Your home is then listed on the Sundae investor marketplace along with photos and a 3D tour. Sundae provides sellers with their highest offers to review after four business days. If you find an offer to your liking, you can close in as few as 10 days or within 60 days depending on your timeline. Sellers may also be eligible for a cash advance of up to $10,000 prior to closing.
Locations: Based in San Francisco, Sundae serves about two dozen metro areas across the U.S., including locations in California, Texas, Seattle, Las Vegas, and Atlanta. The company is expanding operations so check its location page for an up-to-date list.
Fees: None; Sundae says sellers can sell as-is and pay zero fees.
Reviews: Sundae is BBB accredited with an A+ rating and an average 4.04 out of 5 stars based on 87 reviews. Customer reviews in 2022 describe the representatives at Sundae as “knowledgeable,” “helpful,” and “professional.” Sellers note that the process was “smooth,” “easy,” and “stress-free.”
Having first emerged in the mid-2010s, iBuyers or instant buyers are a newer type of house buying company. Utilizing algorithmic tools known as automated valuation models (AVMs) to price homes, iBuyers typically purchase properties in better condition than other house buying companies. They provide a convenient way to sell your house either entirely or mostly online. For more information on iBuyers, we recommend HomeLight’s guide to the top 6 iBuyer companies for 2023.
Launched in 2014, Opendoor is considered the nation’s pioneering iBuying platform. It buys homes directly from sellers who can easily receive a no-obligation offer in minutes by submitting information online.
According to the company’s FAQ page, Opendoor typically buys homes in the range of $100,000 – $600,000, but in some cases will go up to $1.4 million depending on the market.
Opendoor buys homes in various conditions, but criteria like a short sale, unpermitted additions, major foundation issues, flood or fire damage, or dated materials may impact the company’s decision to purchase a home.
Locations: Opendoor serves over 50 metropolitan areas nationwide, including Atlanta, Dallas-Fort Worth, Denver, Las Vegas, Los Angeles, Miami, Minneapolis-St. Paul, Nashville, and Phoenix.
Fees: Opendoor currently charges a service fee of no more than 5% of the home’s sale price and estimates closing costs of 1%. But as an iBuyer, Opendoor typically pays closer to market value for properties than traditional house flippers.
Reviews: Headquartered in Tempe, Arizona, Opendoor’s BBB business profile was being updated at the time this article was written. We suggest checking the BBB site for new ratings and reviews when they become available. The company previously held an A+ rating and received 3.4 out of 5 stars. Sellers were pleased with the strength of Opendoor’s offers compared to some other companies and the feedback provided by its customer service team. Although Opendoor has only 37 reviews and 1.7 out of 5 stars on the customer review website Trustpilot, comments note that the process is “easy” and “faster” with Opendoor providing a better price than other home buying sites. There are also complaints about the company lowering its final offer.
Launched in 2015, Offerpad is one of the largest iBuyers by transaction volume along with Opendoor. Sellers provide information about their property by spending three minutes to fill out a questionnaire, according to the company website. The option to upload photos or take Offerpad on a 15-minute virtual walkthrough of the home potentially results in a more competitive offer. Sellers typically receive a no-obligation cash offer within 24 hours. If you’re moving locally, Offerpad will even pay a professional moving company to haul your furniture and belongings to your new home.
Locations: Offerpad operates in over 1,800 cities and towns in 16 states, including Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Missouri, Nevada, North Carolina, Ohio, South Carolina, Tennessee, and Texas.
Fees: Offerpad charges a 7% service fee and estimates closing costs at 1%. However, iBuyers such as Offerpad usually pay closer to market value for homes than conventional companies that flip houses.
Reviews: Offerpad is BBB accredited with an A+ rating and averages 4.17 out of 5 stars based on 264 reviews. Reviews for 2022 commend the company for providing “amazing” service, a “hassle-free” experience, and a “competitive purchase price.” Customers appreciate the convenience of a flexible closing date. But there are also a number of complaints about contracts canceled shortly before closing and price reductions below the initial offer.
Trade-in and ‘buy before you sell’ companies
Trade-in and “buy before you sell” companies aim to solve the tricky process of buying and selling a house at the same time.
Typically, these companies enable sellers to unlock equity from their home to put toward their next residence. This may be accomplished through offering to purchase your existing home or with a convenient bridge program, or a combination of both. In doing so, sellers are generally able to remove the home sale contingency from their offer so they can better compete when bidding for a new house.
HomeLight Buy Before You Sell
HomeLight Buy Before You Sell allows you to move into your new home now and get the full sales price for your old home. HomeLight will provide a guaranteed offer price on your current home — the price the company will pay if your home hasn’t sold within 90 days after closing on your new home. Your equity can then be channeled toward an interest-free down payment loan or mortgage payment coverage so you can move forward with confidence to purchase your next home. You’ll be ready to make an offer with no home sale contingency. You can move into your new home immediately upon closing.
Then, you and your agent will list your prior home within 10 days of closing on your new home. If the home doesn’t go under contract within 90 days after the closing of your new home, HomeLight will purchase your home for the guaranteed offer price. If your home sells for more than the guaranteed offer price, you’ll receive the additional cash after program fees and costs.
Locations: HomeLight Buy Before You Sell is currently available in Arizona, California, Colorado, and Florida. HomeLight’s other services for homebuyers and sellers, such as Agent Match and Simple Sale, are available nationwide.
Fees: Ask your HomeLight Buy Before You Sell certified agent for details on program fees. A certified agent will be happy to provide a no-obligation consultation.
Reviews: HomeLight Buy Before You Sell is a HomeLight platform, and HomeLight is BBB accredited with an A rating. HomeLight has a rating of 4.6 out of 5 stars on Google based on more than 500 user reviews. Reviews of HomeLight’s buyer assistance programs on the company’s website emphasize its ability to help everyday real estate buyers purchase their perfect next home and provide the flexibility needed for a less stressful move. One client referred to the HomeLight process as a “real estate miracle.” A real estate agent notes that because HomeLight’s buyer programs enable clients to remove the home sale contingency from their offers, he was able to negotiate a “great price” on his client’s new home.
Founded in 2016, Flyhomes has helped consumers buy and sell $3.7 billion worth of real estate, according to the company’s About Us page. Among other products, Flyhomes offers a “buy before you sell” program. It works by pre-underwriting sellers for a new home, then providing them with a short-term loan to make a competitive offer. Next, Flyhomes helps sellers list, stage, and show their previous property to attract a top-dollar offer. Once the seller’s former home is sold, the Flyhomes mortgage team assists with refinancing to secure a long-term loan for the new residence.
Locations: Flyhomes is currently available in five states. The company offers services in Seattle, the San Francisco Bay area, Southern California, Denver, Boulder, and Boston, as well as the Texas cities of Austin, Houston, and Dallas.
Fees: Fees include the usual costs associated with buying and selling a home, such as the loan origination fee, appraisal, title and escrow charges, broker’s commission, and transfer taxes, according to Flyhomes’ FAQ page. Clients who purchase a new home with a Flyhomes Cash Offer also pay holding costs typically amounting to $100-$200 a day.
Reviews: FlyHomes is a BBB accredited business with an A+ rating. The company has no customer reviews on the BBB site, but it has an average 5-star rating based on 308 Yelp reviews. 2022 reviews note that Flyhomes’ “buy before you sell” program gives clients “peace of mind.” Reviews state that the process is ”smooth” and “seamless” and that the company’s agents are “professional” and “responsive.” One client reports saving tens of thousands of dollars on the purchase of a new home.
Orchard Move First
Orchard’s Move First program helps sellers make stronger non-contingent offers on their new home by utilizing the equity in their current residence with an interest-free loan that is paid back after the sale of their existing property, according to the company’s website. This enables homeowners to buy before they sell. Orchard then handles cleaning, listing, and showing a seller’s previous residence. The company also manages repairs and updates to obtain maximum value through its Concierge program. You’ll pay nothing upfront for this service and the costs will be deducted at closing without interest or additional fees.
Locations: Orchard currently operates in 13 U.S. markets, including Atlanta, Austin, Houston, San Antonio, Dallas-Fort Worth, Denver, Portland, and Seattle.
Fees: About 6% of your home sale price, which varies by market, similar to the amount paid when working with a traditional agent. The company also charges $1,500 to use its service.
Reviews: Orchard is BBB accredited with an A+ rating and 2.71 out of 5 stars. With only 14 reviews on the BBB site, a number of which are unfavorable, the company fares better on Trustpilot where Orchard received an average 4.4 out of 5 stars based on 457 reviews. In their 2022 reviews, customers describe the process as “simple,” smooth,” and “essentially painless.” They praise the company’s “professional,” “knowledgeable,” and “responsive” service. Customers also express relief at not having to worry about the sale of their existing home.
Knock Home Swap
Founded in 2015, Knock says it offers convenience, certainty, and cost savings with its Knock Home Swap program, according to the company website. Knock Home Swap allows sellers to move into their new home before selling their existing house. First, the company underwrites a new home loan and provides a down payment advance so you can make a non-contingent offer when the perfect house comes on the market. If your home needs a little TLC, you can get up to $25,000 for prep and updates to help boost your sale price. This amount can be paid back after your home sells.
Knock also provides an equity advance for up to six months that will cover your old mortgage so you can settle into your next home instead of dealing with noisy contractors or strangers wandering around during showings and open houses.
Locations: Knock Home Swap is offered in 15 states, including Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, Michigan, Minnesota, North Carolina, Oregon, South Carolina, Tennessee, Texas, and Washington. Click on the Knock Home Swap cities map to search for locations in your state.
Fees: Knock charges a 1.25% commitment fee on the new home purchase that can be paid at closing or incorporated into the equity advance. Additional fees include real estate agent commissions and closing costs.
Reviews: Knock has a BBB rating of B+ and 4.53 out of 5 stars. 2022 reviews indicate that customers appreciate being able to use Knock Home Swap’s equity advance to buy another home before selling their current property. Comments describe the process as “smooth” and “painless” and the company representatives as “professional” and “responsive.”
Pros and cons of using a house buying company
Still not sure if you’re a good candidate for working with a home buying company? Here’s a quick comparison of some of the most notable benefits and drawbacks of this arrangement.
- Sell fast: Most property investors buy houses with cash, which eliminates what are often the two most time-consuming steps of the closing process: the lender-required appraisal and financing approval. Settlement delays occur with 7% of real estate contracts, according to an October 2022 survey by the National Association of Realtors® (NAR). While purchase loans take an average of 51 days to close, cash homebuyers can close in as few as 10 days to two weeks.
- Skip repairs: Buyers on the open market are more likely to want turnkey homes so they can move right into their new residence without waiting for renovations to be completed first. Even if buyers have the funds to make repairs, they often prefer to avoid the hassle and headaches of working with contractors. But house buying companies frequently purchase as-is homes since they have the capital and expertise to update a house, removing most, if not all, of that burden from the seller’s shoulders.
- No staging or open houses: When selling on the open market, homeowners face an endless cycle of cleaning, staging, and showing the home. An investor typically does one virtual or in-person assessment before providing an offer. They will look at the bones of the property and care less about whether the house is pristine or show-ready. So many of the day-to-day inconveniences of having a house on the market evaporate when working with a house buying company. No need to remove pets, put away family photos, or disrupt your schedule to make yourself scarce during an open house or showing.
- Flexible move-out dates: Buyers frequently want to move into their new house as soon as possible, which can be a challenge for sellers who need extra time to haul items away or plan their next move. But a home buying company is generally more flexible so you can stay a bit longer if needed. Although some buyers may agree to rent the property back to you for a short period of time in a sale-leaseback transaction, it’s often even easier to coordinate a longer move-out time frame with a house buying company that offers some level of built-in flexibility.
- Lower offers: House buying companies usually seek a price that’s below market value in exchange for paying cash, closing quickly, and providing more flexibility than in a traditional sale. A lower offer is often necessary so the company can cover its costs, make renovations, and turn a profit when purchasing a home.
- Less competition for your home: An offer from a house buying company eliminates the chance to start a bidding war on your home or receive multiple offers to drive up the price. But don’t expect your home to generate multiple bids in today’s cooler real estate climate. Over 89% of agents recently surveyed by HomeLight say that bidding wars have declined in their markets and the NAR reports that homes received an average of 2.4 offers as of October 2022, down from 3.7 a year ago. House buying companies also view your property through an objective business lens, so they’re unlikely to sweeten the price based on emotions or sentimental value.
- Potential risk for scams: Although many homebuying companies are legitimate, some are not. It’s always a good idea to be vigilant about possible scams. Always do your research, compare your options, and consult with a trusted advisor before accepting any offer.
FAQs about companies that buy houses for cash
We’ve already covered a lot of ground in our exploration of house buying companies and the real estate landscape teeming with cash buyers. However, you may still have some additional questions, which we aim to address below.
1. Is a homebuying company the right choice?
Sometimes. In many cases, a lack of time, money, and expertise for making significant repairs are reasons why sellers work with a house buying company rather than listing. Others prefer to avoid repeated showings. However, a house buying company is often not the right choice if your primary selling goal is to maximize the sale price.
2. What are the main reasons for selling to a house buying company?
How you choose to sell your home is always a personal decision, but here are a few scenarios that could make working with a house buying company seem more appealing.
- You’re relocating for a job or have another time-sensitive life change.
- You inherited a home and want to liquidate that asset.
- You don’t want to deal with the hassle of staging and showings.
- You lack the time, budget, or motivation to make needed repairs.
- You’re selling a problematic rental property.
- You want to avoid going into foreclosure.
- You found your dream home and need to make an offer fast.
- You need cash to get out of debt.
- You’re going through a divorce.
When you’ve got a very complicated situation, Holly says it might be preferable to sell to a house buying company that is better equipped to deal with intricate matters such as an estate sale or foreclosure. “In more complex situations, sometimes it’s the only way to go,” he remarks.
3. Which house buying site is best?
Your home may be a better match for certain house buying companies than others. iBuyers are a sound option for those selling homes in good condition at a particular price point; rental investors are better suited for rentable properties in high-yield areas, and house flippers typically seek homes that are in disrepair. If you’re unsure where to start, consider requesting an offer through Simple Sale, which provides all-cash offers for a variety of property types in locations across the country.
4. What are the best alternatives to house buying companies?
Selling to a house buying company isn’t the only route to a swift and easy transaction. A top-rated real estate agent can help you take the necessary steps to attract a quick offer while addressing any obstacles to settlement. A knowledgeable agent who understands your goals can guide you with pricing, marketing, and connections to local investors or qualified individual buyers who are eager to purchase a home like yours and close the deal fast.
5. Are house buying companies legit?
Most We Buy Houses for Cash companies are legit, and you can rest assured that this business model has been around for decades. However, it’s always a good idea to keep an eye out for scams or anything that just doesn’t seem right. Always thoroughly research companies ahead of time. Verify all professional licenses, get a referral if possible, and vet the company with online customer reviews.
“It’s not easy to unwind a contract after you sign it,” says Holly, stressing the importance of taking extra precautions to ensure that you are dealing with a reputable firm. If the company doesn’t have the cash it promised to pay you or can’t close during the timeline you expected, it could take months to resolve disputes during which your house could linger on the market and potentially decline in value.
Even if the company is on the up and up, Holly says to be on guard for wholesalers posing as cash buyers. They’ll pay even less for your home, and then will mark up the price when they quickly flip it to an actual house buying company that will renovate and sell the property.
6. How long does it take to sell a house for cash?
House buying companies can typically close on homes in as few as seven days to a couple of weeks. But they usually can provide a longer closing interval to sellers who need more time to pack up and move. Sellers should keep in mind that factors like title issues, inheritance complications, and HOA rules can cause settlement delays, even when working with a company that buys houses for cash.
7. What closing costs does a cash buyer cover?
It’s common for house buying companies to pick up all the closing expenses associated with a sale, including escrow and title costs. House buying companies are often willing to help cover a seller’s closing costs knowing that someone facing financial hardship doesn’t always have the funds to do so.
8. How much do house buying companies pay?
Each house buying company may offer different amounts for homes depending on the types of properties they purchase and their business specifics. Over the past 13 years, most cash buyers have paid an average of 11% less than financed buyers, according to one research paper.
Many house buying companies follow the 70% rule, meaning they’ll offer 70% of your home’s “after repair value” (ARV), which takes into account deductions to make repairs and renovations. iBuyers tend to look for homes in better condition and frequently pay much closer to market value, typically in the 90% range and sometimes more. The Modern Marketplace Report published by zavvie indicates that iBuyers offered 98.7% of market value in the first quarter of 2022, down from the peak of 104.1% in last year’s Q2, but the cooling real estate market could continue the downward trend of iBuyer offers.
Final thoughts on house buying companies
Homes are on the market for a median of two weeks, twice as long as one week last year, according to the NAR’s 2022 Profile of Home Buyers and Sellers. While that means you may still get an offer quickly, sellers also need to consider an additional 51 days for mortgage processing and approval if they’re working with a financed buyer.
Selling to a house buying company by contrast typically results in a much faster process with a lot less hassle, although you aren’t likely to get as much for your home. “You’re paying for convenience and fully aware that you’re not getting top dollar,” Holly notes.
If you’re intrigued by the idea that a house buying company could offer to buy your home tomorrow, but are a little skeptical about whether you’d be happy with the outcome, HomeLight can connect you with a top real estate agent in your area for further advice. Alternatively, get started with your home sale today by requesting a no-obligation cash offer through Simple Sale.
Writer Valerie Kalfrin contributed to this story.
Header Image Source: (fizkes / Shutterstock)
- "Existing-Home Sales Slumped 5.9% in October," National Association of Realtors (November 2022)
- "Mortgage Rates Continue to Drop," FreddieMac (December 2022)
- "The History of House Flipping," MM Lending (2019)
- "What is the BRRRR Method?," The Motley Fool (August 2022)
- "Modern Marketplace Report Q1 2022," zavvie (June 2022)