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Despite a recent cooldown, high prices and low inventory mean the housing market remains seller-friendly. If you’re selling your home, you may still get lucky and receive multiple offers — you might even get all-cash offers. And as you walk or 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 really 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 outright, 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 — which can be an individual person or a company — simply transfers the money to you.
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 financing, you don’t have to wait on the rigamarole of the underwriting process and wonder if your buyer will get approved. Cash buyers also have much lower closing costs, because no lender means no lender-related fees for things like application, credit check and loan origination.
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, and you’d be back at square one.
Another benefit is that it’s much faster. Joe Horan, founder of Wrightwood Homebuyers in Indiana, 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.”
Plus, cash buyers often buy homes in as-is condition. 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 properties directly, rather than on the open market. This can save you much of the time and effort involved in a traditional sale.
Who buys houses for cash?
There are many different types of homebuyers who might want to make cash purchases — besides just deep-pocketed individuals who can afford to do so. Here are a few common types of cash buyers.
- Cash homebuyers: Some real estate companies build their business around buying homes for cash, typically fixing them up to resell or keeping them as rentals. There are big national brands, such as the aptly named We Buy Houses, with franchises all over. But most housing markets also have smaller, local homebuying companies. Either way, you’ll likely get a quick offer and be able to close much faster, too — but you’ll also likely get a lower price, since these buyers need to turn a profit on the resale.
- House flippers: Similarly, house flippers typically buy homes cheap, make repairs and resell 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: Online-only iBuyers are large real estate tech businesses that make nearly instant cash offers. Unlike cash homebuying companies and flippers, they typically want houses that are already in good shape. And while iBuyers offer great speed and convenience, they often charge a fee, which can be equivalent to the commission you’d otherwise pay an agent.
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 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 chance of getting multiple competing offers.
Finally, while most of these companies are legit, the cash-homebuying industry can be a magnet for scam artists. 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 less than what they are worth.
Do you still need a real estate agent?
When buying or selling real estate, most people enlist the help of a local real estate agent. Agents are licensed professionals who can guide you through the home-selling process, which can be complicated. If you’re hoping to sell your home for cash, it’s still smart to use an agent — but it isn’t strictly necessary.
Specifically, if you sell directly to a company, rather than an individual, you typically don’t need an agent. In fact, these businesses often highlight this as one of their best features, since not employing an agent means not having to pay an agent’s commission.
Selling a house by owner for cash
A cash home sale on your own, without an agent’s assistance, is certainly possible, especially if you’re selling to a business. However, just because you can do it on your own doesn’t necessarily mean that you should. If you hope to earn top dollar for your home and not accept a lowball offer, real estate agents can offer valuable advice and assistance. They can help you avoid selling for less than your home’s true market value.
Taking the next step
Selling your home for cash means closing on the deal more quickly and getting paid fast, but it can also mean missing out on earning the best price for your home. 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, go through the typical listing process. A local real estate agent can help you price your home right, consider offers and negotiate the best possible deal.
Most of these companies are legit, yes. But they typically won’t offer you as much as you could make by selling on the open market with an agent, as their business model is to fix homes up and flip them for a profit. And it’s always smart to do your research and read the contract very carefully before signing anything.
Some states do require an attorney to handle a traditional real estate transaction, so check what the rules are in your state. If you’re selling to an iBuyer or cash homebuying company, engaging a lawyer likely won’t be a requirement — but having one look over your contract to make sure your interests are protected is never a bad idea.
Selling in the traditional way, with a professional local real estate agent who knows your area well, is the best way to get the best possible price for your home. Selling to a cash homebuyer or iBuyer is faster and more convenient, but their offers are almost certain to be lower than you’d get on the open market.