A month ago, I sat at the kitchen table with a friend, sorting through her pile of bills. Illness and the loss of her job were making it hard to keep up with her mortgage payments. Suddenly those roadside signs touting “Cash for your home,” “We Buy Ugly Homes,” “Sell Your House Today” were sounding pretty good to her.

But how do these institutional buyers work?

Do they walk through your home and offer a fair and reasonable price? Will it cover your mortgage and expenses? Would it be better to go to the mortgage company and see what relief they can offer?

These are all questions that demand fast answers when creditors are knocking at the gates, but “haste makes waste” as your mother used to say. Better to make an informed decision based on facts, not emotions.

So, what are those “ugly homes” signs all about? After watching a friend struggle with her mortgage and bills, I decided to find out.

I was not surprised to find that some “ugly home” companies are more legitimate than others. Anyone considering this route should get a quote from three companies, if possible.

After calling one and making an appointment, I was pleasantly surprised at how informative the “Real Estate Solutions Advisor” was. His name was Tom, and the three of us walked through the home and he pointed out amenities that are “big sellers” in the current market. We went on to discuss tips, like how painting the kitchen cabinets and adding new hardware, or removing carpets and polishing up hardwood floors can increase the price.

Tom promised to call the next day to follow up with an offer… but he didn’t. So I called Tom myself. He was apologetic and told me he would definitely get back to us before the next morning. That was several weeks ago.

As we spoke to more investors and wholesalers who work with these companies, we learned that they typically offer about 65% of the market value. It makes sense; you want quick cash, it costs you. Just like selling a piece of jewelry or even a car – desperate times,  desperate measures.

If you are upside down or underwater on your mortgage, these wholesale companies aren’t interested. They are bargain hunters, looking to buy into instant equity. But if you have a mortgage balance of $160,000 and your home will likely fetch only $110,000 in today’s real estate market, you have negative equity of $50,000.

Read investment property calculator.

Related Article Read how to buy property with no money?

cat skeptical of fast-cash home buyersIt should be growing clear that “ugly home” buyers should be a last resort. But what are some better alternatives, for property owners in financial distress?

No matter what you do, don’t simply default and wait around to see what happens. Coming back from the later stages of the foreclosure process can be extremely difficult. Along with the mortgage payments you may be behind in, there would be mounting legal charges and fees. It can quickly become a financial quicksand. Putting off a sale because of repairs, emotional attachments to the home or just being overwhelmed is not an option.

First, consider negotiating lower payments with your mortgage company. Loan modifications, including programs such as HAMP, are an option in which your lender may alter the terms of your loan to make it easier to repay. For example, they may extend the loan term to lower the monthly payments, or perhaps even lower the interest rate.

Another option is a short sale, where the lender agrees on a lower payoff amount, to facilitate the sale of the property. Lenders may not like it, but selling a home through a Realtor on the MLS will yield a far higher sale price than a foreclosure. There is help available through the US government’s Making Home Affordable website.

Short on time? Consider auctioning off your home through a local auction firm. If you’re not upside-down, this can be a quick way to sell.

And of course, there are “cash for ugly homes” buyers. If you have equity, but don’t want to sell as-is and don’t have money for repairs, at least make sure you do your due diligence before selling to an “ugly homes” buyer.

Know ahead of time that you will not get a quote over the phone. A representative will come to the home and make a complete inspection, and they may not bother calling you back afterward. Get a good idea of what the home is worth, and talk to several licensed real estate agents. They can provide a free report, taking into account the sales of homes like yours (“comparable properties, or comps) in the surrounding neighborhood. Having the information of what your house may fetch in the marketplace is key before dealing with any buyer.

Most importantly, never forget there are always options. Sometimes a lowball offer that can settle fast is a tradeoff worth making.

Related Article Read : How to avoid 20% down payment on investment property?

Related Article Read : How to avoid capital gains tax on real estate?

FREE Webinar: Open $250K in Credit Lines for Investing

On Wed. 3/23/22 at 2pm & 8pm EST, Deni & Brian are hosting Fund&Grow for a free webinar to show you how to open up to $250,000 in unsecured business credit lines for real estate investing.

Free Background Check

Run a FREE housing & identity check!

Credit, criminal, eviction reports also available.

Want to create passive income?


We’ll email a series of videos in our free course,

to help you start earning income from rentals.

[mc4wp_form id=”501″]

Privacy Policy: Your info will never be shared or sold to a 3rd party. Even if Dr. Evil offers us 1 million dollars 🙂

Rental ROI Ebook

Want to earn more from your rentals?


Download our free Ultimate Guide to Higher ROI and be dazzled by the charming wit, disarming frogs and invaluable tips for higher profits and less work.


[mc4wp_form id=”501″]

Free Mini-Course: Passive Income from 2-4 Unit Multifamilies

Free Mini-Course: Passive Income from 2-4 Unit Multifamilies


Ready to build passive income from small multifamily properties?

Over the next week, we'll email you a free series of videos, so enter your best email and let's get started!

You're in! Check your email to confirm, and you can email us directly at [email protected] with any questions :-)

Free Webinar: Earn 15-50% on Passive Real Estate Syndications

LIVE masterclass on Tues. 10/25 @ 8pm EST

Your seat is reserved! Check your email to confirm.

Inside a group real estate investment

Here's a quick video breakdown of a past group investment — and how it's performed since our Co-Investing Club invested in it in early 2023.

You got it! Check your email for the link, and some other fun freebies.

Ready to Build Passive Income?

Ready to Build Passive Income?


We'll email you the course videos over the next week, so enter your best email!

You're in! Check your email to confirm.

Ditch Your Day Job: Free 8-Video Course


Our brand new course on how to reach financial independence and retire early (FIRE) with rental properties is open for one week from Oct. 23-30!

You're in! Check your email for the link, or click here for the 1st video!

How do group real estate investments work?

If you want the cash flow, appreciation, and tax benefits of real estate without hassling with loans or landlording, learn how to invest passively. 

Awesome! Check your email :-)

learn private equity real estate investing

Hack the Rich: 7 Secrets We've Learned from Private Equity Real Estate

In a live online meetup, we'll be sharing and discussing 7 secrets we've learned from the rich over the last few years of investing in private equity real estate syndications.

Awesome! Check your email :-)