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Steve McLinden, the Bankrate.com Real Estate AdviserHome sale to fast-cash 'rehabber' OK for some

Dear Real Estate Adviser,
Is it a good idea to sell your house through a "fast cash for your house" agency? I ask because my home requires a lot of repair work. How do they operate? Are they on the up and up?
-- Fast Eddie

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Dear Eddie,
These services have a legitimate niche in the industry, especially for distressed or time-constrained sellers. They are not unlike other rehab-and-resell businesses, in that they try to buy well below market value and resell at market value.

The vast majority of such companies are "on the up and up," although there are a handful of unsavory ones who prey on the desperate or unwitting by offering them only the equity in their homes and nothing remotely close to market value.

The only knock on the better-known national and regional chains is that their home purchases too often are converted into rental units, which reduces the percentage of resident-owners in areas where residents are trying to maintain neighborhood integrity. In that respect, however, they are not unlike other home investors and "rehabbers."

If you plan on selling to one of these companies, be prepared to discount your home significantly. While these firms are slow to offer up trade secrets, business stories in recent years indicate that such house investors pay between 10 percent and 35 percent of what a house would fetch if it were in excellent condition. As a rule, nicer homes in good neighborhoods will yield more, and beat-up homes in bad neighborhoods will yield less.

Sellers who have the time, energy and wherewithal to fix up their places themselves and sell directly to buyers through an agent or by FSBO, or for sale by owner, will likely fare much better on sale price.

But many homeowners, for any variety of reasons, don't want to endure that process. There are many reasons behind an attempt for a quick sale.

Reasons that owners attempt a quick sale:

And there are some advantages to going this route.

Advantages of a 'fast-cash' sale:

When these buyers take over a house, they will typically add new carpets and paint, fix holes in the wall and make other cosmetic touches. But they might also have to upgrade electrical and heating/air-conditioning systems and do other major fixes to make the place palatable to a renter or another buyer. Obviously, the more they have to do, the lower their offer will be to you.

So if you've got an as-is home that you want to move fast, then "fast-cash" is something you might consider. But make sure you research the company thoroughly and run a Better Business Bureau search on them before signing on the dotted line.

Good luck on your sale.

To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page, and select "buying, selling a home" as the topic.

Bankrate.com's corrections policy -- Posted: Aug. 19, 2006
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