It’s no secret that the national housing market is a seller’s market, with real estate agents in most markets reporting that a combination of low inventory, high demand, and historically low interest rates are causing homes to sell at high valuations.
HomeLight has in-depth analysis in their Top Agent Insights for Spring 2021 report touching on interesting points such as the fact only 10% of real estate agents believe that pent up buyer demand will soon be satisfied, and 73% report that the spring and summer seasons will likely show increased buying activity even if inventory increases.
If you’re thinking of putting your home on the market, now’s a great time to do so as there’s high demand and multiple options to sell your home with minimal stress. One of the options to quickly sell your home is by selling to a house-buying company.
What are house-buying companies, and how do they work
As the name implies, house-buying companies are businesses that buy homes from homeowners and then either focus on selling the home for a profit, or turning it into a rental for ongoing income. One of the most common types of home-buying companies are home flippers which purchase properties with the intention of quickly improving the property and then selling for a profit.
Buy-and-hold companies, on the other hand, purchase homes with the intention of renting them to tenants for a profit. Just like home flippers, buy-and-hold companies prefer purchasing homes that can be quickly renovated so they can quickly start getting a return on their investment
A relatively new type of company in the industry are iBuyers. These are businesses that use various computer-based models to analyze real estate market information to make informed offers without having a representative actually visit the property. iBuyers frequently focus on homes that are in relatively good shape compared to other homes in the market.
How to get an idea of your home’s value
Before you put your home on the market it’s important to have a general idea of what your home is worth. Fortunately you don’t need to be a real estate expert to determine your home’s worth, as there’s many options for homeowners to get a free home appraisal.
In the past, home appraisals used to require calling up a professional and paying hefty fees for them to come onsite and evaluate the property. Today, companies are leveraging automated valuation models (AVMs) to power free appraisal tools. While every company uses their own formulas, most models consider information from tax assessor and auditor records, user-submitted data (e.g. upgrades added since the home was bought), and MLS listings and sales.
While online home appraisal tools are a great way to get a benchmark of your home’s worth, there’s a few significant limitations such as the fact home measurements may not be up to date, the models don’t always account for granular nuances in neighborhoods (e.g. school district quality), and they also don’t factor home condition or value of unique elements.
Generally speaking, while free home appraisal tools aren’t perfect, they’re a great way to help you start dialogues when working with real estate professionals.