Is it Smart to Sell Your House for Cash?
You may be tempted to take a cash offer on your house from a real estate investor. The question is if it is a smart thing to do. The answer may not be so simple. It’s a very smart and effective solution for some homeowners. Others may not want to go down this path. Let’s take a look at the advantages and disadvantages of selling your house for cash.
Advantages of a Cash Home Sale
Probably the biggest benefit of selling your house for cash is the expediency of the process. Cash home sales offer much fewer complexities than a traditional sale that involves a mortgage loan for the buyer. In a cash deal, the buyer is paying cash for the property. There is no extended escrow period or special contingencies that can often complicate or delay the sale. At PropertyLark, we’ve been able to close cash transactions in as few as seven business days for sellers who really needed to get out from under their houses. In general, a cash deal will take weeks rather than the average 30-60 days of a standard closing period.
In addition to expediency, there is also a convenience factor that comes with a more direct and simplified selling process. You don’t have to worry about making repairs to the home or staging the property for sale. Most cash real estate investors will take the property in as-is condition. You won’t have a parade of buyers and inspectors going through your home. The buyer may require some inspection(s), but nothing nearly as intrusive as the traditional home selling process. Some homeowners opt for a cash sale because they prefer the privacy and just want to avoid dealing with all these usual hassles.
A cash home sale will also provide some cash-saving advantages. Depending on the buyer, you won’t be paying much—if anything—out of your own pocket before, during or after the sale. We mentioned that you don’t have to make repairs. You also won’t have to hire a real estate agent and pay their commissions. The closing fees will be minimal and generally covered by the buyer as part of the contractual agreement. Not all cash-home-buying companies are the same and individual investors may offer different deals. Always read the fine print of any cash offer contract to understand any and all financial obligations for which you are responsible.
If you are in a tough financial situation like pre-foreclosure or tax default, a cash sale could be your best solution. Sell your property while you still can and avoid losing your home entirely. Cash home sales are also common for people with unwanted investment property, unwanted homes that they recently inherited, those making a sudden job relocations or couples going through a divorce and needing to sell the home as part of the settlement.
Disadvantages of a Cash Home Sale
There is really only one significant disadvantage if you sell your house for cash. You won’t get as high of a selling price as you typically would with a traditional home sale. It’s a big trade-off you should expect to make if entertaining any cash offers. An all-cash buyer is offering less because the process is faster and simpler, and they are taking certain home selling expenses off your plate. In some cases, they may be helping you out of a bad homeownership situation. They will pay you what they feel is a fair market value all things considered. Unless you have multiple cash buyers making you offers, you won’t find yourself in a bidding war. There’s minimal competition and you have to determine if the offer is fair enough.
You do not have to accept any cash offer and you are always welcome to make a counteroffer at your own risk. When contemplating a cash sale, you will want to do all the math. Even with a lower selling price, you may be saving valuable time and money to make it worthwhile. Again, you won’t be paying agent fees, repair expenses and certain closing costs (depending on the buyer). You will also be getting out of your house faster, which means you’ll cut down on ongoing homeownership expenses. The average traditional sale takes 3-6 months. In other words, that equates to 3-6 more months of mortgage, property tax, HOA, utilities, maintenance and insurance payments you will still be making until the transaction officially closes.
In general, a cash sale is best for someone in a tough financial bind or in a situation where they want or need to sell their house as quickly as possible. If you have the time and the money to go through a traditional selling process, that will most likely net you the highest returns.
As a home seller, it’s smart to explore all your options and figure out what solution(s) will be best for you and your family. A cash sale may make the most sense. It may not. It will be different for every homeowner.
If you would like to receive a no-obligation fair cash offer from PropertyLark, simply fill out the contact form to the right. We can also help you explore other home selling and seller financing options if a cash deal isn’t right for you. Let our team help you make the right home selling decisions.