Do you want to sell your house for cash? Do you wonder if it matters if you choose between a cash offer or a financed one? You'll get paid either way, but selling a house for cash comes with unique risks and rewards.
Cash offers can be attractive to some owners because they are able to speed up the process of buying a home and close quickly. Cash offers are also popular with home sellers who want to sell their properties as-is and avoid the hassles of painting, staging or renovating.
What is a Cash Offer
Cash offers are made by buyers who intend to purchase a property without taking out a mortgage and pay the full cost of the home up front.
Cash buyers are those who have enough money to pay for the property. Cash buyers can be one or more of the following: investors, flippers, iBuyers, or those looking for a second house.
Is it Better to Sell Your Home for Cash?
Your goals will determine whether you sell your home to a cash purchaser (or not). Cash buyers are ideal if you want to minimize delays and save time and money on staging. If you want to receive the highest offer possible, it may be best to stick with a traditional sales that includes a mortgage.
Close quicker
Cash offers close quicker than financed ones because you just have to wait for the results of your title search. Mortgage buyers must wait for appraisals and loan approvals, which can take a few extra weeks.
No home staging or repairs
Cash buyers tend to ignore minor defects, clutter, or wear and tear. You won't have to worry about staging, or repairs. This might not be the case with a conventional home buyer. Unstaged homes may turn them off. Cash buyers tend to overlook all but the most significant defects and repairs.
No appraisal or financing concerns
Cash buyers do not have to worry about approval by a lender, so you can be sure that the deal will go through even if the appraised value of your home is less than the seller's offer.
The Cons of Selling Your Home to a Cash Buyer
Purchases at Low Prices
Cash buyers will often purchase your home as-is because they can make lower offers. Most of the time, home loan buyers can offer higher prices than cash buyers because they are able to borrow a larger amount.
Sale is not guaranteed
Cash offers are not guaranteed to close. Although they can be made faster and without issues, the offer is still contingent on inspection. Cash offers can be subject to inspection conditions. The buyer may be able to back out of the contract if the inspection results are negative. There are no guarantees as to whether your buyer will pay cash or through a mortgage.
You don't get competing bidders
You'll lose out on the opportunity to compare competing offers if you sell your house to a cash purchaser before you put it on the market.
How to Sell your House for Cash
You can streamline the process of selling your house if you choose to sell it for cash.
- Get the value of your house
Knowledge is power. Find out the value of your house before you consider any offers.
Asking your agent to prepare a free comparative market assessment (CMA) is one of the easiest and fastest ways to find out how much your home is worth. CMAs are a real estate agent’s evaluations based on comparable recent home sales.
You can hire an appraiser if you do not plan to use a real-estate agent and want a formalized estimate of the value of your property.
Cash buyers tend to offer lower prices than those who finance. Get a cash offer know that their offers will be more attractive to sellers, as they have fewer conditions and don't depend on approval. They also know that their offers can close quicker than financing offers.
- Cash Offers
Ask your agent to focus on cash buyers. The demand for housing soared in late 2020. This led to an seller’s market. Cash offers were common during this period. In a balanced housing market you may receive a few offers, but don't expect to see a lot of cash buyers bidding on your home.
- Avoid scams
Be on the lookout for scams when you are reviewing cash offers. Cash buyers are not all ethical. There are many honest and reputable ones, but there are also scammers in the industry.
Avoid real estate scams by following these tips:
- Do not send money anywhere else than the title company
- Only use the wire instructions provided to you by the title company
- Be wary of out-of-town buyers or buyers who are unavailable to speak or meet
- Ask for references
- Ask for proof of funds
- Require a sizeable, nonrefundable deposit
- Trust your gut - if something doesn't feel right, it probably isn't
- Review the cash buyer's offer and terms
Carefully consider the terms of any cash offers you receive.
Any buyer's written offer (aka purchase agreement) should include details like the sale price, the earnest money deposit, contingencies and the closing date.
Hampton Roads cash home buyer sends an offer, they should also include proof of funds to prove they have the money to buy the house. Serious cash buyers are typically willing to put down a larger escrow deposit that can equal 5% - 10% of the purchase price.
As you review offers, examine every aspect of the agreement, not just the purchase price. If you're interested in a faster closing or don't want to put any more time and energy into the home, you'll want to make sure the terms of the purchase agreement align with your goals.
- Conduct home inspection and title search
Once you've signed the purchase agreement, your buyer will schedule an inspection and run a title search. This is one step of the home buying process both cash buyers and financed buyers share. Where they differ is in the disclosures and potential hurdles en route to closing.
Traditional home buyers must wait until their lenders provide paperwork, like the Loan Estimate and Closing Disclosure, before they can close. Cash buyers are free to close once the title search is clear.
If the title search reveals a cloud on title, cash buyers will likely renegotiate but may be able to close if they agree to buy the house with encumbrances. If title defects are discovered during a title search for a traditional buyer, most lenders will deny the loan.
If there are liens or other encumbrances holding up closing, your attorney can help resolve these issues and clear the title.
- Hire an attorney for closing
An attorney can help protect you from scams or other problems and should offer some peace of mind.
Selling a home to a cash buyer may be faster, but it isn't always easier. Rely on your attorney before and during closing. They can ensure your paperwork is in order and the title is ready to be transferred to the buyer.
- Close on the house
Congratulations! You've made it to closing, and you're ready to finalize the sale of your home to a cash buyer. Closing day is when you receive the money from the sale of your home, and the buyer takes ownership of the property with the transfer of title.
Before attending the closing, most buyers (including all-cash buyers) will want to complete a final walkthrough of the house. The buyer will check that the home is in its promised condition. They will check on requested repairs and check that you removed any personal property not included in the sale.
A cash buyer will wire the money or bring a cashier's check to the closing. A traditional buyer will bring some money to closing (also known as cash to close). And the lender will wire the remaining balance to the title company before you get your share.
Closing day can be an exciting day. In all your excitement, don't forget to bring any necessary items, documents or money you'll need to settle any expenses.
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