The Pros and Cons of a Cash Home Sale

Cash home sale - house on top of money

If you are in a position where you are ready to sell your home, then it is important to consider all of your home selling options. Will you be better off with a traditional home sale through a real estate agent? Or, will a cash home sale to a real estate investor benefit you more? There may be other creative seller financing options you can consider.

Which option is best for you will largely depend on your financial situation, how you acquired the property, how much you still owe on your mortgage (if anything) and how quickly you need to move out.

Most everyone by know has a basic understanding of the traditional real estate sales process. You get your house ready to sell. You hire a Realtor® to market and represent you in negotiations. You review purchase offers and make a selling agreement with a buyer. Finally, you go through the closing (escrow) process where all the final inspections/appraisals, paperwork, buyer loan approval and other steps need to be completed before the transaction is official and the title deed is transferred to the new owner.

Today, we want to focus on a cash home sale as an option worth considering. We will discuss the pros and cons of this solution, so you can better decide what might be best in your particular selling situation.


The Pros of a Cash Home Sale

No Repairs

In most cases, it is worth spending the time and money to make repairs and clean up the house (new paint, flooring, etc.) to improve “curb appeal” and increase the marketability of the property. Cash home sales are usually completed with the house in as-is condition. Most investors are looking for something they can fix up and then either flip or rent out for profit.

Easier Process

Cash home sales naturally have much fewer complexities. You are not worrying about the buyer’s funding falling through during the final mortgage underwriting process. You don’t have to be as concerned with appraisals, home inspections and selling contingencies that can derail the transaction. The cash is on the table and is ready to be transferred to you as soon as the sale is complete.

Quicker Sale

Cash home sales and other creative seller financing options can usually be completed within weeks, rather than the average of 3-6 months it takes to go through the staging, marketing, offer review and closing processes of a traditional real estate transaction through an agent.

Situational Advantages

Depending on your financial situation and homeownership standing, a cash home sale may benefit you more. Homeowners in a state of financial distress (pre-foreclosure, tax default, behind on mortgage payments, etc.) can get often out from under their debt and move on to a better housing situation. Even if you are way upside-down on your loan, a cash deal may still at least minimize the financial impact and avoid any further knocks on your credit score.

Other personal situations call for a fast and less-complicated sale. Examples include a divorce where the home needs to be sold and split between the two parties, a job relocation that requires a quick move, an unwanted inherited property that you don’t have the time or money to deal with, and other situations where you don’t have the time or interest in going through the regular process.

Financial Savings

Some cash home sellers actually come out better than if they went through a traditional sale and got a higher selling price. Why? You really have to look at all the expenses involved. First, there are the repairs and upgrades you may need to make before the house is ready for the open market. Then, you have real estate agent and brokerage commissions (up to 6% of the final sale price, as the seller also pays the buyer’s agent/broker fees). You have various closing costs and inspection fees, as well. Lastly, you have your ongoing homeownership expenses that will still have to be paid until the transaction is finalized months from now. We’re talking about mortgage payments, home insurance premiums, property taxes, HOA dues (if applicable), utilities and general upkeep costs. These can add up over the 3-6 months it usually takes to sell your house!


The Cons of a Cash Home Sale

Less Time to Consider Offers

Cash home sales usually happen quickly and most real estate investors won’t leave a cash offer on the table for too long. They are looking to buy properties like yours, and they want to get deals done efficiently. This is good if you are in a hurry to move, but if you want to dilly dally and wait for a bunch of offers, it may backfire if the best offer is pulled before you can accept it.

Lower Sales Price

In general, the final selling price of the property will be lower in a cash transaction compared to an open market sale where the house is marketed and multiple offers can be reviewed. If you are in a position where you have the time and money to go through a traditional sale, it may net you more in the end. Just consider all the costs involved (as mentioned above) and determine which plan will give you a better financial outcome. It never hurts to get a cash offer so you know that price, and then get a market comp appraisal from an agent (before you sign any listing contracts) to see your potential selling range that way. Then, do the math and see which method is likely to end up with more cash in your pocket.

Stigma

A lot of people associate a negative stigma with a cash home sale or fast, easy deal with a real estate investor. They feel like they took the easy way out. Sometimes the easy way is the best way, though. There should be no stigma or regret if a cash transaction makes more sense for your particular situation. Make the sale that benefits you most!

If you would like to get a fair, no-obligation cash offer from PropertyLark, fill out the contact form on any page of our website. Tell us a little about your property and we’ll make you a fair offer. If a cash sale isn’t the best for you, we will help you explore other home selling options, including creative seller financing options and a traditional sale through our licensed real estate team. We’ll give you more options so you can make the right selling decisions.