Is it Smart to Sell My House for Cash?
No matter what the real estate market conditions, there may be a chance you get at least one cash offer on your house when you are selling. So, what exactly does it mean when a buyer is offering an all-cash deal? Who are cash buyers? And, of course, is it the best solution for you as a home seller? Today, we will answer these questions and others to help you decide if it is smart to sell your house for cash.
Naturally, the true answer to this main question will be different for every home seller. Cash transactions may be the ideal solution for some homeowners, while not as appealing to others.
How is a Cash Offer Different?
A majority of home purchases (approximately 75-80%) are financed through mortgage loans. The buyer is borrowing money from a lender to pay for their home purchase. These are large loans, so not every prospective buyer will qualify for a loan. Sometimes, there are complications during the closing process and a buyer’s funding might fall through. As a seller, there is always some level of risk when selling to a buyer who is financing through a mortgage loan. You’ll want to make sure they are at least pre-approved for their loan. That’s a good sign, but even then isn’t always enough when the time comes for their loan to be underwritten, approved and funded by the bank.
A cash offer means the buyer is planning to pay all cash for the transaction. Many cash buyers are real estate investors who have their own funding sources and aren’t dependent on mortgage loans. Meanwhile, some cash buyers are just people who happen to have the cash available to them, whether it’s equity from a previous home sale, a personal gift/loan from family or just their own wealth. Some buyers don’t need a mortgage loan to fund the purchase of a home.
Advantages of a Cash Home Sale
The primary advantages of selling your house for cash are pretty easy to understand. First, the process is much simpler. Closing can happen faster because you are not waiting on the buyer’s mortgage loan to be approved and funded. Second, there are no real risks of the funding falling through. As long as the cash buyer is reputable and can financially back up their purchase offer, you can feel confident that the deal will be completed without any major complications.
Disadvantages of a Cash Home Sale
Any disadvantages may depend on the actual buyer making the offer. Most cash buyers tend to fall in two categories (usually on either end of the offer spectrum). Real estate investors are looking for properties that will make them money, either by fixing it up and flipping it in a future sale or holding onto it and earning income through rentals and appreciation. Most real estate investors aren’t going to offer you the high end of market value. At the same time, they are usually buying houses in as-is condition, so that means you don’t have to make repairs or prepare the property for sale by cleaning, staging, marketing, hiring a real estate agent, etc. You get cash for your house and the deal can be done quickly. This is why homeowners who are in financial distress or need to sell and move as soon as possible (divorce, job relocation, unwanted inherited property, etc.) will often opt to sell to a cash real estate investor.
Then, there are the wealthy cash buyers who don’t need a mortgage and may be willing to pay more to get a house they really want. If one of these cash buyers comes to you with a great offer, you will be a happy home seller. There aren’t many downsides to this scenario unless they have unusual contingencies or demands that may complicate the transaction. Just know these kinds of cash offers are very rare and will usually only come if you have fully prepared the property for sale. This means investing more time and money before listing to make repairs/upgrades, stage the home, hire a real estate agent, market the property and wait for the best possible offers. Even though the cash deal can get done quickly, it may take awhile before you get to that point where you and the buyer have agreed upon a deal.
Should I Sell My House for Cash?
Ultimately, it depends on your specific financial situation, your property and whether or not you get any cash offers. Real estate investors will buy about anything in any condition while other cash buyers are naturally going to be a lot pickier about what they purchase. If you need to sell as soon as possible, then it makes sense to get cash offers from investors. You won’t have to pay any money out-of-pocket and you won’t have to wait long for the deal to get done. If you aren’t in a rush and want to hold out for the best possible offers, then by all means go through the traditional selling process. Hire a Realtor® and do what it takes to attract the best offers from any buyers—cash or mortgage-funded.
If you would like to receive a fair cash offer for your house, contact PropertyLark. We are a cash home buyer and we can make the sale fast, easy and safe for you. To get started, please fill out the contact form on any page of our website and we’ll get a no-obligation cash offer to you within 24 hours.