How to Sell a House For Cash?
Do you want to sell a house for cash? Are you looking for a real estate investor to buy your home for cash?
Many homeowners in a challenging financial position will search online for how to find a buyer who’ll pay cash.
They will head to Google and enter “selling my house for cash,” hoping to find an appropriate buyer.
A cash offer, of course, is the fastest way for the sales process to happen.
Some might even search for one of those common signs on local telephone poles that say, “we buy houses for cash.” These telephone pole marketers buy houses for cash, so it makes sense.
If you want to move from one home to another fast, selling your house for cash can seem very attractive.
Investors are looking to buy homes, offering a quick and straightforward transaction.
Selling houses to investors has become increasingly popular, with around 20 percent of sales being cash only.
If you need to sell your home quickly, it is often the best option, with closing possible in just days.
However, selling your home to a real estate investor has pros and cons.
Companies, like We Buy Ugly Houses and others like them will offer you pennies on the dollar for what your home is worth.
So while you can get out from under your home quickly for the least amount of problems, is it worth it? Selling a house for cash to an investor means leaving a significant amount of money on the table.
What Does Sell a House As-Is For Cash Mean?
When selling a house for cash, it signifies that the property is being transferred to a client who does not need mortgage financing.
A cash buyer must show proof of funds in a bank or investment account. So if you sell a home to a cash buyer for $400,000, there should be evidence that they have $400,000 liquid.
A cash house buyer is rare compared to a traditional purchaser. The type of buyers that will purchase homes as-is for cash are individual investors and investor companies.
The investor will wire the total purchase price to the closing real estate attorney when selling your house as-is for cash.
Common Reasons to Sell a House Fast For Cash
There are several reasons for selling a house to a cash buyer. The most common causes include the following:
- Running into a difficult financial situation forcing a home sale
- Getting an immediate closing
- Stopping holding costs such as mortgage payments and property taxes
- Avoiding making repairs
- Avoid staging the home for sale
- Not having to pay a real estate commission
- Avoiding the contingencies in a typical buyer’s contract
- Peace of mind the transaction will not fall through
- Flexibility in with the sale
How Much Will I Get Selling My House As-Is For Cash?
A cash buyer will not pay you anywhere near market value. Selling for cash means you’ll get less than you should.
If you’re wondering how much, it could be as much as 30-50 percent less than the market value. Is the short time frame for closing on the house worth it?
Let’s take a look at who is buying houses for cash. When you’re done reading, you will know whether finding a cash buyer is worth it.
Who is Looking to Buy Your House As-Is for Cash?
Real Estate investors can come in and offer you a price for your house without involving a mortgage lender. There are three main types of potential buyers who purchase homes for cash.
These cash-for-house buyers can often close super quickly – a significant advantage over traditional home purchases. Buying houses for cash is a major part of their business model, so they know exactly what they’re doing.
Instant Buyers or iBuyers For Short
You may not have heard about iBuyers, but they will buy houses for cash. A relatively new business model, iBuyers uses house price data to offer competitive prices to home sellers. They are interested in buying homes for cash and selling them quickly and at higher volumes than other investors.
For this reason, they are one of the most likely house-buying companies you will encounter. There is a smaller percentage of these real estate transactions now, but the numbers for this cash sale are growing.
They have done a successful business by buying many houses for cash, so you can expect an efficient selling process if you choose them. They look for properties that can be flipped quickly without needing necessary repairs.
Sometimes they will conduct home inspections themselves if they feel the property is in excellent condition.
iBuyers offer less stress and hassle than a traditional sale. The home selling process will progress quickly, with closing being possible just days after you have accepted their offer.
iBuyers Offer More Money When You’re Selling a Home For Cash
The good news continues with them paying closer to the fair market value of your home. However, with this cash option, they charge a fee for their services, which can typically range from 7 to 10 percent. If the house needs some repairs, this can also be charged to the seller.
The iBuyer model differs entirely from the “We Buy Ugly Houses” business model. Companies like We Buy Ugly Houses look for homes in really tough shape that can be bought cheaply, fixed up, and ultimately flipped for a profit.
The fixer-upper house is their ideal property to purchase.
Instant buyers do not want to purchase distressed properties with structural issues, serious red flags, or other significant problems.
Like most investors, you will make less money by accepting their best offer than the higher price you’ll likely receive on the open market.
Property Flippers Are Cash Buyers
Property flippers are another type of investor who will buy houses for cash.
This type of investor is looking to buy homes that need significant work. Thus, house flippers are looking for a bargain.
This kind of house-buying company does not buy and hold their properties.
The lower they can spend on purchasing the home, the greater they stand to make when selling after renovating.
A property flipper is the complete opposite of an iBuyer.
The downside of selling to a property flipper is they will not be giving you anywhere close to what you would sell your home for using a local real estate agent.
You’ll probably have a quick and easy cash deal by selling your house for cash as-is to this type of investor. The downside is you will get a much lower price with these cash transactions.
Homeowners must weigh what is more vital – selling quickly or getting more money.
A house flipper is a cash home buyer whose chief goal is to make a quick profit.
Buy-to-Rent Investors
When you want to sell your house for cash, buy-to-rent investors are another option.
These investors are often individuals looking to buy homes for the long term. They want the passive income a rental property offers, converting the house if necessary to get the best return on their investment.
Another name for this kind of investor is “buy-and-hold.” The principles are a little different than an individual who rents their house.
Larger businesses are involved in these types of investments, with some owning tens of thousands of rental properties.
Selling to this sort of investor could offer a better price over house flippers, and they should be reasonably flexible on when the closing takes place.
You could be looking at a more traditional time frame for closing – a closing date of 45 days from the purchase contract. When selling your property, this investor will likely offer the best price.
Things to Consider When Selling Your House For Cash
If you are considering selling a house as-is for cash, there are some things you must remember to make the best choice for your situation.
If you know the benefits, risks, and options, you will be better equipped to make the right decision.
Here are the advantages and disadvantages of selling your house for cash to an investor.
Faster Sales With As-Is Cash Buyers
Those who buy houses for cash can close very quickly. Going to a cash buyer reduces the work you would generally need. This will speed up the transaction considerably.
The closing process can go through much faster without the necessary time to repair, wait for lenders, or make your home look its best for showings.
There will be little preparation and home staging. You will not need to interview multiple real estate agents, hoping you pick the best one.
Selling to a real estate investor eliminates needing professional photography or ensuring your listing description is exceptional.
You will not have to go through the aggravation of showing your home to multiple parties before the property sells.
There will be no open houses, which wastes time for sellers.
Avoid Having to Deal With Lenders
Property sales frequently get delayed or fall apart if the mortgage has a problem.
Selling a house for cash removes this danger, allowing you to get to closing much faster than a traditional home sale. There is no financing contingency for a home buyer to fall back on if something goes wrong.
While most buyers are pre-approved when submitting an offer, there is still a chance a problem could arise.
What if the buyer loses their job a week before the closing and can no longer move forward? What if an outstanding credit issue was missed that surfaces on the credit report just before closing?
When prospective buyers make cash purchases, there is no chance there will be mortgage mistakes that could cause the sale to go down the drain.
When Selling a House For Cash, You Avoid Contingencies
Contingency clauses in your sales contract can delay the sale considerably. They protect the purchaser, ensuring they can get out of the deal if things aren’t perfect.
While this is great for the buyer, it doesn’t help sellers much. Another way of looking at these clauses is the chances for a buyer to back out of the sale.
Selling to an investor cuts out the clauses, for the most part. However, they may have a clause based on the home inspection results.
Here are the most common contingencies you will likely avoid when selling your home for cash:
- The mortgage contingency is avoided, as it’s a cash sale with no buyer’s financing clause.
- Home inspection – more sales fall apart at the home inspection than at any other real estate transaction time.
- Home sale contingency – sometimes, a buyer will make the purchase of their home “contingent” on selling their own first—a terrible clause for a home seller.
- Lead paint contingency – if you sell a home built before 1978, a buyer could do a lead paint test. Removing lead paint from a home is very expensive.
- Well, water contingency – when you own a house not serviced by city water, the purchaser will likely do a water quality and quantity test.
- Radon contingency – one of the more common tests today from home buyers is checking for radon in the presence of the air.
- Mold contingency – when it comes to health, nobody wants to hear there is mold in a home. Checking for mold in homes has become commonplace.
One of the substantial advantages of selling as-is for cash is avoiding these contingencies in real estate contracts.
By selling to a real estate investor, you'll more than likely avoid the most common home sale contingencies.Click To TweetHow Long Does it Take to Sell Your House As-Is For Cash?
Since no mortgage lender is involved with a cash house buyer, the closing can take quickly.
You can expect the closing time to be as quick as a week. Most cash sales will take 10-14 days to allow for a title search to be conducted.
The title search will be done to ensure there are no encumbrances, such as property liens. The buyer may also want an understanding of any easements impacting the home.
Selling A House As-Is For Cash Works Best When You Need Repairs
If your home needs significant repairs, selling as-is could be an excellent choice. House flippers might be your best option, as they are looking for homes that need renovations anyway.
If you go to an iBuyer, you will typically have the cost of repairs deducted from the price they’ll pay you, and they may only be looking for homes with minor issues.
A house-flipping company will look for run-down properties at a discount to make a substantial profit. As mentioned, iBuyers will buy houses for cash in better condition with minor wear-and-tear issues at a more competitive price.
Selling a home “as is” can spare you from the time, aggravation, and money associated with expensive repairs.
How to Sell a House For Cash Without a Realtor?
When you want to sell a house by owner for cash, you’ll want to work with a reputable company. You can look at our review of well-known companies that buy houses for cash.
You should be in good hands with one of these cash house buyers. However, doing your due diligence before moving forward with any real estate investor is always wise.
Be on the Lookout for Scams With Cash Buyers
It would be best if you were on your guard whenever money is involved to avoid being targeted by scammers.
This is particularly the case with selling houses for cash offers.
It would be best to research any investor you hope to sell your home to. Many common real estate investment scams could bilk you out of money.
A reasonably common scam is charging a fee upfront and then not buying.
You must also monitor your credit history, as it is not unheard of for a second mortgage to be taken out on your property.
You risk losing the equity in your home if a deal goes awry, so extra attention needs to be given to the business you will be selling to.
Finding a cash house buyer is exciting, but not at the expense of getting ripped off. Ensure you carefully review the purchase contract, including all the fine print.
Having a real estate attorney give their final blessing before signing an investor’s contract will be an excellent idea.
The Downsides of Selling a House For Cash
While you have seen all the pros of selling your house for cash, what are the downsides?
The most significant disadvantage of selling to a real estate investor is all of the money you’ll give up.
Even though you won’t be paying a real estate commission, you’ll lose a TON of money going this route.
Selling homes for cash works well for them, but you might be disappointed if profits are your chief concern.
While the upside is avoiding many hassles and time in an ordinary sale, will it be worth it when you lose so much of your equity? Only you can answer that question.
It will be worth getting a comparative market analysis done by a real estate agent to see precisely what kind of profit you’ll be giving up. You will never get your asking price selling to an investor, but you might in a hot real estate market.
The sale price could be much higher than expected, especially if a bidding war exists.
Other Options Besides Selling a House For Cash
If you aren’t entirely sure that selling to a cash investor is right for you, you might consider some other possibilities. Of course, it depends on your reasons for finding cash buyers, but you may have more options than you imagine.
You could consider renting the home out. However, it will need to be in decent condition, and you will have to be ready to do repairs or hire a management company to deal with it for you. The rental should usually cover your mortgage payments, allowing you to keep the property.
Another option is a rent-to-own agreement. This is where you rent the home out with the opportunity to purchase at the end of the contract. This can give you more money than a standard rental agreement, with the tenant paying for the option to buy.
You could still sell your home through a real estate agent. If you can find an agent experienced in selling homes fast, you will get more for your home than a cash house buyer might offer.
However, it will still take longer than a cash purchase.
Be sure to understand the importance of hiring the best real estate agent. It can make a massive difference in the outcome. Avoid gimmicks like flat fee MLS where you get no service at all. There is much more involved in selling a home than using a listing service.
Steps in Selling a Home For Cash
- Collect an offer on your property.
- Have the contract reviewed by a real estate attorney before signing.
- Verify proof of funds – since it is a cash sale, you’ll want to know if the buyer has the money to close.
- Collect an earnest money deposit to put into escrow. Depending on where you’re located, the earnest money is usually 1-5 percent of the purchase price.
- Get a title company, specialized closing agent, or real estate attorney – again, depending on your location, you’ll need a title company or real estate attorney to protect your interests.
- Have a final walk-through – the buyer does a last look to ensure it’s in the same condition as when the offer was made. Have a closing checklist to ensure things go smoothly.
- Do the closing – the closing will be the last hurrah before ownership is transferred to the new owner via a new deed.
Final Thoughts on Selling Your House For Cash
Without a doubt, there are pros and cons to selling your home for cash. It makes a lot of sense to take the time to make sure the investor you choose has been vetted.
Consider doing a Google search to determine the reputation of the company. Look for reliable reviews before concluding.
Finding an investor who buys houses for cash could be worthwhile if getting top dollar is not your biggest concern. Hopefully, you have gained valuable information to help you sell.
About the author: Bill Gassett, a nationally recognized leader in his field, provided the above Real Estate information on selling a house for cash. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for 37+ years.
Are you thinking of selling your home? I am passionate about Real Estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
