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If you’re selling your home in this hot seller’s market, you may well get offers from multiple buyers. Each offer will outline the amount that buyer wants to pay, and how they’re going to pay. You might even see some that are referred to as all-cash offers. And as you drive around town, you may also see advertisements from businesses that say they buy homes for cash. Sounds appealing, right? But these deals can be complicated. If you’re interested in selling your home for cash, here’s what you need to know.
What does it mean to sell your house for cash?
The actual meaning of selling a home for cash can be a bit unclear. Especially because you’ll wind up with money in your bank account no matter how you sell your home, and a Hollywood-style briefcase full of bills is unlikely to be involved.
In essence, someone who makes a cash offer to purchase your home is offering to buy your home without having to apply for a mortgage. They have enough money to cover the full purchase price, liquid and ready to go. If you agree to the sale, the buyer simply transfers the money to you.
Why should you sell your house for cash?
There are several benefits to selling a home for cash. For one thing, it simplifies everything. Because there is no lender, you don’t have to deal with the rigamarole of the loan approval process.
Another benefit is that it’s much faster. Joe Horan, founder of Indianapolis-based Wrightwood Homes, says: “Since there are no lenders in the transaction, it cuts down on the timeline, as well as typical lender requirements such as buyer income and appraisals.”
Cash offers also have a smaller chance of falling through, since cash buyers have the full amount needed to buy the home upfront. If someone is relying on a loan to make the purchase, there’s always a chance that their application will be denied. No financing means no purchase.
Plus, you can usually sell your home as-is with a cash offer on the table. This means you don’t have to worry about making repairs or staging it before listing.
In fact, many cash sales happen before a home is even listed for sale. For example, you might sell to a large real estate business or a house flipper that buys pre-list properties. This can save you much of the time and effort involved in a traditional sale.
Reasons not to sell your house for cash
Of course, there are negatives to cash sales as well. One of the top reasons to avoid selling your home for cash, especially pre-listing, is that you’ll likely get less money for it. “You usually get slightly lower offers, because buyers are aware that a cash transaction is easier,” Horan says. It can also be hard to negotiate on price, particularly if you’re selling to a large business. Their offers are typically take-it-or-leave it deals.
In addition, when you go through the traditional listing process, you have a better chance of getting multiple competing offers. Buyers who are borrowing money may also be able to afford a higher offer.
Finally, the cash-homebuying industry can be a magnet for real estate scams. Many people looking for a quick cash sale are experiencing financial difficulties, and scammers might try to prey on their desperation to buy homes for far under their value.
Do you still need a real estate agent?
When buying or selling real estate, most people enlist the help of a real estate agent. Agents are licensed professionals who can guide you through the process, which can be complicated. If you’re trying to sell your home for cash, it’s still smart to use an agent — but it isn’t strictly necessary.
Selling a house by owner for cash
Selling your home for cash on your own, without an agent, is possible. This is especially true if you’re working with a large real estate business. You can contact the buyer, wait for their offer and decide whether or not to take it.
However, just because you can do it on your own doesn’t mean that you should. Real estate agents can offer valuable advice and assistance during negotiations. They can also help you avoid scams or selling for less than your home’s true value.
Who buys houses for cash?
There are many different types of homebuyers who might want to make cash purchases. Here are a few things to keep in mind when considering buyers.
Are companies that buy houses for cash legit?
You may have seen TV spots or road signs around town advertising companies that are looking to buy homes. Common claims include phrases like “we buy any home” and “we buy ugly houses.” These companies aim to make cash offers on homes that might be in poor condition. Then, they fix them up and sell them for a profit.
Not all of these companies are scams, necessarily, but some might not be above-board. Use careful judgment and always do your due diligence to make sure the company you’re selling to is reputable. In addition, be aware that you might not get the best deal if you sell to one of these businesses.
House flippers are individuals or small companies that buy homes, improve them and sell them for a profit. Many flippers try to get a jump on the competition by making offers on homes before they get listed for sale.
iBuyers include large real estate tech businesses that use software to determine the value of homes and make instant cash offers on them. You might want to get quotes from multiple iBuyers before you choose which one to sell to. Often, iBuyers charge a fee for the convenience of selling to them — typically a percentage of the sale price.
How much do they pay?
How much a cash buyer pays for a home can vary. However, you can usually expect to get less money from a cash sale than going through the traditional process of listing your home and getting competing offers from potential buyers. For some sellers, the faster and easier transaction is worth getting a slightly lower price.
Selling your home for cash means closing on the deal more quickly, but it can also mean missing out on some extra money. If you need cash fast or want to make sure your home sale doesn’t fall through, consider a cash buyer. To get the highest possible price for your home, though, you should probably go through the typical listing process.