When someone makes a cash offer for your house, selling your house can go much smoother.
Without a lender involved, cash buyers can close fast without the fear of financing falling through.
If you’re wondering if a cash offer is right for you, this article will lay out how cash offers change the process FOR YOU when selling a home.
So keep reading.
What Is A Cash Offer For My House?
You’re probably imagining that someone shows up to your house with a briefcase full of hundreds and you just give them the keys to the house for the cash.
As awesome as that would be, selling your house for cash isn’t quite as wild west as that. But it is nearly that easy to sell your house to a cash home buyer.
When a buyer offers you cash for your house, they are offering to buy your house without having to go through a bank. This cuts out the 4-6 weeks of them having to get financing approved. It also means that their financing is not falling through, which is frequent when listing your house with a Realtor.
Cash home buyers, and companies that buy houses for cash, have the money in their bank account. Once they make an offer, you accept, and they do their due diligence on the house, they can close in as little as 2 weeks.
Why Is Selling My House For Cash Different?
Getting a cash offer for your house sounds great, but what’s the catch? What’s different from getting a normal offer with from a buyer with a bank loan?
Cash House Buyers Don’t Need Appraisals
When a buyer gets a bank loan, the bank will require them to have an appraisal done on the property. The property HAS to appraise for the value that you are trying to sell the house for.
This is so that the mortgage company reduces their risks. If they have to foreclose, they want to make sure that they can sell the house and recoup any money they have in the property.
When you get a cash offer on your house, the cash buyer does not have to have an appraisal done on the property. Generally, a cash buyer is an experienced landlord or house flipper (or just someone with too much money), and they know how much the house is worth. They don’t need an appraisal done to figure that out.
This doesn’t mean that there is not a single cash buyer that gets an appraisal done on the property that they are buying. Some cash buyers like having checks and balances to reduce risks. These cash home buying companies will have an appraisal done at their own expense.
Selling A House For Cash Is Less Risky
When a buyer’s bank is underwriting a mortgage, this takes WEEKS. It’s one of the longest processes in the home buying process. In fact, it can take 30 – 60 days just to have a mortgage underwritten.
When you are selling to someone who is getting bank financing, this means that they are going to have to go throguh the underwriting process.
So, you go under contract with them and the underwriting process begins. But what if they can’t get approved for the loan on your house at the end of that 60 days? This means that you just tied up your house for two months and now you have to start over.
When you sell your house to a cash buyer, there is no underwriting process. They simply wire the funds to the closing attorneys or they bring a cashiers check to the closing table. It’s that easy. You don’t have to worry about tying up your house for months just to have financing fall through at the last minute.
Cash Home Buyers Bring Stronger Offers
From the perspective of a seller, when you are considering a cash offer on your house, there’s a couple of things to note. Cash offers are stronger offers. Okay, but why?
Cash home buyers don’t have to go through the approval process with a bank. They don’t have to go through two months of underwriting. They don’t have to prove to anyone that the house is worth what they are paying for it.
This means that you can close on your house faster and you don’t have to worry about the financing falling apart, which means that there is less risk to you as the seller.
Cash offers are more reliable.
All Cash Offers Need Proof of Funds
There’s a lot of shady people in real estate. Before you accept a cash offer, it’s important to have proof of funds provided. Proof of funds is letters from the bank ‘proving’ that the cash buyer has the money in their accounts to close on the house.
This way, someone is not tying up your house and stringing you along just to back out of the deal at the last minute. And more importantly, if you have multiple offers, don’t tell the other buyers that the deal is off and that you’re accepting another offer until you have proof of funds form the cash buyer.
Selling Your House For Cash Has Lower Costs
When buying a home for cash, the costs to purchase the house are a lot lower when compared to a buyer who uses financing. Some of the fees that bank loans come with are closing fees, credit checks, origination fees, processing fees, appraisals, etc.
But, as the seller, why do you care? This means that a cash buyer can make a more competitive offer on your house.
Cash House Buyers Can Make Offers On ANY House
USDA Loans and FHA Loans will not allow people to purchase certain kinds of homes. Homes that need repairs to make them safe, secure, and livable will not be approved for these bank loans.
Cash buyers are not limited to the properties that they can purchase. They can literally buy a house that needs to be torn down. (For example, we recently bought a house that was burned down.)
You Don’t Pay Realtor Fees
Most cash buyers can buy a house without the representation of a buyer’s realtor. At Breyer Home Buyers, we don’t use a Realtor to represent us when buying properties. This means more savings for you when you sell your house to a cash buyer.
You don’t have to pay 6% in Realtor fees. If you are selling a $200,000 house to a cash buyer and neither of you are using a Realtor, then you are going to save $12,000 in Realtor fees that you no longer have to pay.
How Is Selling My House For Cash The Same A Traditional Sale?
Cash Home Buyers Have Inspections Done
Cash home buyers still might have an inspection done on your house when they are buying it. At the bare minimum, most of them will have their contractor walk the property to quote the renovations on the house to make sure that the numbers work.
They still have inspections done to make sure that they are not buying a house with termite issues, bad foundations, mold, etc. This can save them tens, or hundreds, of thousands of dollars. Inspections are normal for cash buyers, just as with any other buyers.
The difference is that a company that buys houses for cash will not use an inspection to renegotiate like a traditional buyer will. They use the inspection to protect themselves. If they try to renegotiate based on an inspection, remind them that they are buying the house in as-is conditions.
Cash Home Buyers Pay For Closing Costs
When you accept a cash offer for your home, this won’t make much of a difference to you. Cash buyers will incur the same closing costs that traditional buyers will pay. Just like with traditional buyers, cash buyers will buy your home and pay for the closing costs.