If you’re planning on selling your house, you have likely heard of a cash offer. Is this legit, or are cash buyers just another one on the list of scams?
Listing with an agent is not for everyone, but it is the most popular method for home selling. However, this traditional option includes many expenses, such as commissions, repair fees, staging, and similar. People usually go with real estate agents as this is the method they’ve heard about the most, but they don’t know that agents are no magicians. Even with their help, some homes will be listed for weeks, even months. Some might not even sell, at all.
If you have a house with lowered chances to sell – such as property facing foreclosure, joint house that you want to sell after divorce, or rundown house in need of repairs – a cash offer might be the best choice. Cash buyers, also known as direct buyers, provide many advantages when you have a distressed property you need to sell urgently. We’ll talk a bit deeper about what is a cash offer, why it is a good choice and who can benefit from it.
What Is a Cash Offer?
First things first, we need to define what a cash offer is, and how does it differentiate from a regular house.
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 make a difference.
A cash offer is a sale in which a buyer 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. Not to mention that cash buyers are much safer than regular ones, as sellers don’t have to worry about buyer making a mistake that might ruin their chances to get a mortgage. Also, as appraisal isn’t mandatory, this is another risk you can cross out from your list.
So, in short, both traditional and cash sale include a money exchange. However, cash sales have much fewer steps and they remove many obstacles, so you can close the sale much faster.
Are Cash Offers Common?
As not many people have all the relevant information about cash offers, most think that they are a rarity. However, ATTOM Data Solutions conducted a research that showed that up to 24% condo and single-family homes were sold as cash sales. In some parts of the USA, these percentages are much higher. While there are some occasions during which cash offer is much more likely to happen, all sorts of homes are sold using this method. Of course, some factors, such as condition of the market, interest rates, and fluctuating price points influence this percentage.
What Kind of Homes Are More Likely to Be Sold Via Cash Offers?
As we’ve mentioned, any property can be sold to a cash buyer. However, some houses are more likely to be sold in this way. This is usually before a traditional sale is not a good option, or an option at all, for these kinds of properties.
The most common situation when people agree upon a cash offer is when a home is facing foreclosure. These properties need to be sold fast, so the seller’s options are very much limited. If the house isn’t sold on time, homeowners are facing eviction and a huge negative impact on their credit score. A cash sale is a good option as it will enable a fast sale of your house.
If you’ve experienced some life change that might request you to move out or to sell your home, such as divorce, retirement, a new job, or death of a family member, you might need to move out quickly. Waiting for the right buyer is not an option, especially if you’re selling in winter or in buyer’s market.
Also, if your house is facing some code violations or is in urgent need of many repairs, you likely won’t be able to sell it on MLS. Traditional buyers are looking for a house they can move in immediately, and houses that need a lot of investing money in are not attractive. No one wants to buy a house they can’t move in during the following few months. Direct buyers purchase properties as-is, since they don’t plan on using your property for themselves. This is why they don’t mind investing a bit more to make your house beautiful once again.
And, finally, cash offers are great for homesellers who don’t have enough cash to complete the sale process. Selling a house isn’t cheap, as you have to spend a lot of money on commissions, various fees, and closing costs. With cash buyers, such as Sparks Property Investors LLC, these expenses are non-existent.