When To Sell Your House For Cash

I’m sure by now, as a homeowner, you’ve either received a text, call, some piece of mail, have driven by a sign, or come across some form of advertisement of someone offering cash for your home. I’m also sure that you have heard of some of these so-called “cash buyers” reputations of 1.) offering some terribly low offer, 2.) not following through with the purchase or 3.) getting the property under contract at a price you agree to and then must sell or assign the contract to some other cash buyer, which ends up not much different than listing your property on the MLS.

Typically, when you see these solicitations, they’re from real estate wholesalers. Wholesalers aren’t the ones buying your property – they are marketers. They get the property under contract and then assign said contract to a cash buyer. There are some wholesalers out there that are great and add value. And then there are all the others. But enough of that as I do have a full writeup of what to ask to avoid yourself from signing a contract with a unreliable wholesaler.

Let’s discuss why you might want to consider selling to a cash buyer who truly is a cash buyer.

The most synonymous sale (that I can think of) to selling your house for cash is going to a car dealership and trading your car in when buying a new one. Can you go list the car on the market yourself and get a higher price? Yes, but what about the hassle? Most people stick with the trade-in. Sure, in real estate, you can sell your house on the market with a realtor. But that comes at a cost – usually around 6% of the sale price of your home. Ouch. However, I’ll be the first to say there are a lot of cases when selling with a realtor makes the most sense. If your property is in great condition, you don’t mind the hassle of showings, negotiations, inspections, appraisals (and the list goes on…), then you will probably get the highest price for your home as opposed to any other alternative if you have the right realtor. But let’s break it down a bit further.

Even with a realtor, you aren’t guaranteed to sell at the price they suggest you list at. If it isn’t priced right, it can sit on the market for months (even years!). And by that time, since it has been sitting so long, buyers just assume there is something wrong with it and don’t bother setting up a showing.

Let’s assume that they did price it correctly and the market is hot. You get showings, interest is drummed up, then what? Offers! That’s the exciting part. Your realtor proudly presents you with each offer as it comes in. You weed through everything, maybe have a little back and forth with some of the buyers, then sign that contract. Unfortunately, that is just the beginning.

When you’re selling your property on the market, you’re typically getting buyers that don’t have a ton of knowledge about property condition, how everything works in a property, and they’re typically purchasing using a bank loan. This in and of itself creates several possible issues you’ll have to navigate from when you have the contract signed to when you close. Two common issues are inspections and appraisals.

Inspections: Most buyers will get inspections to understand what is wrong and what might soon go wrong with the property. Understandable. It’s a big investment, right? The issue is the contract you signed likely has an inspection contingency, and if they find something they didn’t know about or expect, they can try to renegotiate the price and/or terms or back out of the deal altogether… with their deposit. So you’re back to square one. You can either let the property fall out of contract and go back to the other buyers (and must disclose any new findings by the inspection not originally known to you), drop the price, or come out of pocket to fix the issue yourself. And if you’ve ever had an inspection performed on a property, you’ll know that it is the inspector’s job to find all possible issues, large or small. An uneducated buyer can get very nervous when reading through the inspection report. They might drop out for common, minor issues that frightened them a little too much.

Appraisals: When you’re working with a buyer using a bank (which is most cases), you’ll have to hope that the appraisal comes back at or above the contract price. Any buyer using a traditional bank will have a financing contingency in their contract. If the property appraises below the contract price, the bank will only loan based on the appraised value. The buyer might not have the cash to make up the difference and/or feel like they’re getting a bad deal and back out. This might happen after weeks of it being under contract, and while you’re not able to sell to anyone else. Again, you’ll have to start the process over.

There are countless issues that can arise when selling your home on the market and one blog post won’t be enough to cover it. However, it is important to know that unless you have unlimited time, want to deal with the constant back and forth arising from negotiations, and don’t mind the hassle of all the foot traffic through your home during the showing process, you may want to consider the alternative.

What’s the alternative, you ask? Sell directly to a cash buyer, of course (or a good wholesaler that works with a few, reliable cash buyers)!

When selling direct to a cash buyer, you’re likely selling to an experienced property owner that buys property regularly and is very familiar with the process. They usually have a lot of capital at their disposal and know what to look for in a property. You can be confident that the price you agree to in the contract is the price they will pay. And most of the time, although some of these cash buyers do build themselves a bad reputation, their intentions are good. They typically want to provide clean, affordable housing and clean up neighborhoods by renovating properties that might need a little help for families to enjoy in the future.

But what’s in it for you?

• Speed – Whether you want fast or slow, cash buyers can consistently work with sellers. If you need to sell fast, they can pay cash and close within a couple of weeks. If you need time, you can extend the close date of the contract outward to a date you’re most comfortable with.
• Ease – If you want a simple transaction without all the showings and back and forth negotiation, selling to a cash buyer will work best for you.
• Terms – Cash buyers are happy to work with you. If they are getting the price they want, they will be flexible with the terms you want. Do you want to leave a bunch of belongings behind? No problem. Do you want to lease the property back so that you can sell and get cash now but not have to worry about new housing until later? It can be worked in. The sky is the limit with terms – all you have to do is ask.
• No Out-of-Pocket Renovation Costs – Now more than ever, it is difficult for homeowners to renovate their properties. Most good contractors put you on months-long waitlists, and their pricing has skyrocketed. Not only labor pricing but materials as well! Today’s buyers know this, and they don’t want to buy a property that they have to put a bunch of money into as soon as they close. Cash buyers specialize in this and have contractors on their team. They like adding value to properties and will take it off your hands as-is!

To wrap this up, there are circumstances where I suggest sellers list on the market, and there are other circumstances where I would suggest considering a cash buyer. It really depends on you, the seller, and what your needs are. Do you need speed or are you comfortable allowing it on the market for months? Do you need terms or are you okay with a cut and dry sale on the market? Do you want ease or are you okay with jumping through the hoops that are listing your property on the market? The decision is yours to make!