What’s up with all the ‘We Buy Houses’ signs in Madison?

Here’s the deal…these guys are investors looking to pick your house up at a decent price so they can resell it for a profit.  As my website name might indicate we buy houses in Madison WI as well.  We also invest in properties in the surrounding areas including  Middleton, Oregon, Stoughton, Sun Prairie, Waunakee and others.

There are now quite a few of us out there.  So if you are interested in selling your house and wish to avoid having to use an agent in order to sell continue to read on.  I will explain who we typically buy houses from and then tell you why we are a good choice to go with.  Simple and straight forward.  I’ll also give you some good tips on what to do and what to ask if you do choose to sell your house in this way.

Who do we buy houses from in Madison WI?

While the explanation to this is quite simple it isn’t quite so simple for many of our sellers, so we have found out.  We mainly deal with people that need to unload their properties quickly.  However, there are occasionally those that need a longer time frame in order to get something in order.  Typical reasons that people choose to work with direct house buyers such as us are as follows:

  • Commonly sellers just don’t want to deal with an agent or the traditional selling process.  There are several sub-points to be made here of why sellers don’t want to deal with this.
    • Closing costs and fees
    • Buyers walking through house
    • Dealing with the back and forth haggle of contract negotiations
    • Extensive contingencies within contracts to buy
    • End buyer financing issues – this happens a lot
    • Lengthy listing periods and additional holding costs – it just takes quite a bit of time to get through the whole process
  • Avoiding foreclosure or behind on payments
Distressed Home Sales from RealtyTrac.com. House buyers are buying fewer distressed houses because of a lower supply.
Distressed Home Sales (REO’s, Foreclosures, and Short Sales) from RealtyTrac.
  • Multiple other liens on the property
  • Rehab costs in order to get the property market ready
  • Annoyed or retiring landlords – bad tenants can really suck
  • Inherited a house
  • Own a vacant house
  • Facing divorce
  • Significant damage from storms or other events (even fire or mold)
  • Downsizing or moving
  • Or perhaps the seller is just embarrassed of their situation and don’t want a whole bunch of people looking around

That covers quite a few of the potential cases but there are plenty more where that came from.  I am sure you get the idea.  Our typical seller wants to sell their house fast and sell for cash.  They have just had enough and want to wash their hands clean of the problem house.  This is where we step in…

Why We Buy Houses in Madison WI better than most!

Notice we put most in the above headline.  That is because we do buy houses better than most.  That doesn’t mean everybody though.

To be honest investors in general get a bad rap because of some bad apples out there that have displayed unethical and predatory behavior.  We believe this is wrong.  I would also say that there are many other house buyers out there that believe in the RIGHT way of doing business which is to do right by you, the seller.

For most investors and myself we really enjoy helping the seller out of a difficult situation.  Yes, we will have to buy the property at the right price in order to make a profit and continue to run our businesses and support our families.  However, the good ones will not take advantage of you through price gouging or any other unethical behaviors and will produce a great product for the neighborhood.

In short, look for the good buyers.  Easier said than done I know but you can do yourself a favor by asking some good questions of the buyer and doing a little research yourself regarding the potential selling price of your property and potential rehab costs in order to get the property in listing condition.  Generally house flippers follow a formula that looks something like the following:

(After Repair Value (ARV) * 70%) – Repair Costs = Maximum Available Offer (MAO)

Interestingly most investors don’t really even know or follow that guideline.  It is the most important formula a successful house buyer business in the industry will follow.  Some will also adjust by 5, 10, or even 15% one way or the other depending on market conditions and deal availability as well, or whether or not they can list it themselves after the repair (if they are an agent themselves).

While looking for the right person to sell your house to expect transparency above all.  This is the key to knowing you are working with the right house buyer in Madison or any other city.  If they are open and honest with you and perhaps even show you their entire deal and what they expect to make then you know you aren’t being taken.  Believe it or not the good ones will disclose these details with you if you ask.  So do just that.  Check out who we are or send us a message.

Finally, do a little research yourself to determine what a good fixed up property in the neighborhood would sell for listed on the Multiple Listing Service (MLS) by an agent.  This will give you a good starting point to understand and apply the formula I outlined above in order to come to a reasonable expectation of what the house buyer will be able to offer.  If you don’t understand the rehab process you may also consider bringing in a contractor or perhaps someone else you know that is knowledgeable of what it would take to get the property in listing condition.  From our experience most sellers (and frankly many of the house buyers as well) don’t truly understand what it will take to get the property in a good enough condition to be able to list.

Number of houses bought with cash over the years.
Cash House Buyers over the years, from RealtyTrac.

And don’t let anybody tell you that cash transactions don’t really happen.  Often realtors don’t understand what investors actually do or how they fund deals.  Often transactions are funded by smaller investors that are looking to achieve a good return on their cash (better anyways than the stock market).  There are many houses bought with cash every year as displayed in the graph here.  Frankly, some of the realtors out there don’t even want you to know this is an option or like that investors are out there buying houses directly from sellers because they gain no fees on the front end of the transaction.  That’s not to say there isn’t reason to be cautious as indicated earlier, just use the advice outlined above and do your own due diligence.

If you have any questions on how we buy houses check out our quick reference page here or contact us below.

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