No matter if you are a first-time buyer or if you have some experience, selling a home can be complicated, especially when the banks are involved. If you’ve informed yourself on the property closing process, you are probably thinking how it would be nice if you could just sell your house for cash.
Dealing with banks is one of the more stressful parts of selling a house. After all the emotions of letting your home go and the trouble you went through during listing, probably the last thing you need is to wait for the bank to approve your money – and risk your buyer being denied the loan. Luckily for you – there is an option to sell your house for cash and to avoid all that hassle. And yes, the process can be completed despite the current recession and COVID-19 pandemic. In fact, it is even safer than the traditional home sale.
Cash buyers are typically real estate investors, also known as direct buyers. Direct buyers will inspect your house and give you an all-cash offer on your property. This means you can have a quick sale of your house and get the profit immediately.
Should You Sell Your House for Cash?
Just like any other selling method, selling house for cash has its good and bad sides. Here are the pros and cons of accepting a direct buyer’s all-cash offer.
It’s faster than a traditional sale
When working with a real estate agent, the selling process can take months. It isn’t rare that the house doesn’t sell at all! Even if you’ve set the appropriate price, you may end up losing more on the holding costs then you will profit. According to Realtor.com, it takes around 65 days on average to sell your house the traditional way! And that’s not the end of your troubles. After the sale is completed, you may end up waiting another month or two for the escrow to release the funds from the bank! If you need your money fast, you should sell your house for cash, as this deal can sometimes be closed for as fast as 7 days!
No need to repair anything
Most cash buyers will buy property as-is. In other words, you will get cash without investing anything into the sale process. This doesn’t mean that you aren’t legally obliged to disclose any issues your property may have, but the chances that the direct buyer will opt not to purchase your house because of them are slim. If your house is in needs of major repairs and you don’t have the finances or the time to invest in repairing it – sell your house for cash!
Most traditional buyers will demand various contingencies to complete the sale. This typically includes a home inspection contingency, a mortgage contingency and an appraisal contingency. On some occasions, you may even be demanded a home sale contingency! All of this will only further delay the completion of a house sale. Direct buyers, on the other hand, won’t require any contingencies and you will be able to sell your house for cash right away.
Listing with an agent comes with a standard 6% commission fee (this may vary a bit). This will lower your profit for several thousands of dollars, if not more. Direct buyers, on the other hand, don’t have commissions, and the price you are offered is the price you will get in the end.
A below market offer
Direct buyers plan to profit on your house. In other words, they will either rent or resell it for a profit. This means that you will be offered a below market price. If your house is in a great condition and you are looking to earn as much as you can, then maybe you shouldn’t go down this route.
However, it is worth noting that the offer the direct buyers give you is the pure amount of money you will get. Even though the traditional sale of the property sounds more profitable, it comes with various additional expenses that you, perhaps, have forgotten to calculate in. This is especially true for rundown properties or properties that you want to sell fast, as they most likely can’t be sold at the average market price, anyways.
How Does It Look to Sell Your House for Cash?
The process of selling your house for cash is actually way simpler than listing your property on MLS. Not only that, but with it you can avoid all those annoying and unnecessary open houses, that aren’t even considered safe anymore.
Here’s how this process goes.
1. Contact the Direct Buyer to Get the All-Cash Offer
When trying to sell your house for cash, first thing you should do is to contact a reliable direct buyer such as Sparks Property Investors LLC. A direct buyer will take a look at your property and if they are interested they will give you an all-cash offer. Most direct buyers won’t even arrange an inspection, as they also buy properties as-is. Of course, due to the social distancing propositions, the entire viewing can be arranged online, to ensure everyone’s safety.
2. Go under the Contract
If you agree with the cash proposal, the next thing you should do is complete a Purchase and Sale Agreement contract. This contract serves as the legal proof of the deal.
3. Hire Escrow and Title Companies
Whenever you are working with cash, you want to ensure the money is real. This is why the transaction should always go through some escrow company. The choice of the company may be on you or on the buyer, depending on the state or your own agreement. At the same time, the escrow company will manage all closing documents, fund transfer and the legal paperwork. Also, a title company should be hired, to ensure the ownership of the home is properly transferred on the closing day. Sometimes, one company is enough to complete both tasks.
4. Review and Sign all the Documents
Final step is signing the paperwork. When you sell your house for cash to a direct buyer, you’ll have way less documents to worry about, but there are still some. The exact documents depend on the state, but typically you’ll be looking at:
- Closing instructions
- HUD-1 settlement statement
- Certificate of title
- Title deed
- Mechanical liens
- Statement of closing costs
- Statement of information
- Loan payoff statement – if you still have mortgage on the property
- Bill of sale – In case you and the buyer have agreed on sale of other items together with the sale of the property.
Keep in mind that you should always have a lawyer present when signing these documents. Also, as a measure of COVID-19 precautions, most if not all of these documents can be signed online.
Not everyone thinks that it is a good choice to sell your house for cash. And for some people, this really isn’t the best idea. For others, however, selling to a direct buyer can be the best solution they could ever get. When you sell your house for cash, you will not only be paid instantly, but you will be able to close the sale quickly, not to invest a dime in repairs, and you will know exactly how much you will profit. This can truly be a lifesaver during this terribly stressful and long process.