Have you heard of cash offers? Here’s why they might be a better choice for your house sale compared to traditional financed offers!
Are you preparing to sell your house? Chances are you may get one or more cash offers while waiting to list your house on the MLS. In fact, according to the National Association of Realtors, 23% of homebuyers in March 2021 have financed their purchases with cash. But, is this good for the home seller? The answer to this depends both on the offer and the house you’re selling.
To make it short: If you’re selling an unattractive house, or if you want to make a fast sale, then cash offers might be amazing for you. However, if you want to earn as much as possible, then a traditional sale is a better choice.
Who Gives Cash Offers?
Many people think that cash offers are a scam. Others imagine a person coming with a bag full of cash stacked into thick piles. This isn’t how it works, even though it might look great as a scene in a movie. Also, most direct buyers aren’t scams – although, of course, there are fraudsters out there, and you need to know how to make a difference.
A cash offer is a sale in which a buyer – usually a real estate investor – will pay you the entire price for the home at once, without using a mortgage loan or any other financing. This helps you sell your house much faster since you can skip several lengthy – and costly – steps. Skipping these steps is the biggest difference, in fact, and this is why many people opt for a cash sale of their house. Cash buyers are much safer than regular ones, as sellers don’t have to worry about buyers making a mistake that might ruin their chances of getting a mortgage. Also, as the appraisal isn’t mandatory, this is another risk you can cross out from your list.
So, in short, both traditional and cash sales include a money exchange. However, cash sales have much fewer steps and they remove many obstacles, so you can close the sale much faster.
Why Are Cash Offers Good for Sellers?
There are many benefits to cash offers compared to traditional sales. Here are a few reasons why sellers might prefer it:
The Deal Won’t Fall Through
One of the biggest fears of all home sellers is that the deal will fall through. However, when you’ve got a reliable home buyer with verified proof of funds, you can be certain the sale will go according to plan. This is a relief, especially when you learn that NAR showed that around 22% of traditional home sales were delayed.
Faster Home Selling Process
Traditional home buyers need to get approved for a mortgage. Then comes the underwriting process, which usually lasts 45 to 60 days. However, cash offers can help you close the sale in as little as a week.
Cash buyers rarely request an appraisal, a home inspection, or any other contingencies. This means fewer expenses for you, and, once again, a faster sale.
Most cash buyers take it upon themselves to get the escrow and the title company, and they’ll have an experienced attorney who will ensure that the paperwork is complete and correct. As there is no lender involved, there is much less documentation to review and sign.
Cash sales are usually stress-free, as there is no need for appraisal and the buyer will deal with all the finesses such as paperwork and attorneys. The property secures the loan, so there is no need for the home value to be confirmed. This is especially useful when the properties are rising in prices, as sometimes appraisals cannot keep up with the trends, so more sales will fall through. However, with a cash offer, the home’s value is how much the buyer is willing to pay.
Factors to Consider
Before you make a final decision, there are a few things you need to consider. Here are the questions you need to ask yourself before you agree on a cash offer:
What’s Better for My Timeline?
If you’re in a hurry to close the sale, then cash offers are surely better, as they’ll ensure a faster sale. However, if you still don’t have a place to move to, then a traditional sale might be better, as it will give you more time to buy a new house while waiting for this one to sell.
Will I Lose Money?
Overall, cash offers are 12% lower than traditional ones. Of course, this doesn’t include all the things you need to pay during a traditional sale, which includes agent commissions, taxes, attorney fees, and title deeds. Still, if you’re someone that wants to secure a high profit, a cash offer might not be the best for you.