With home prices stagnating in 2019, many owners are wondering what 2020 and beyond might bring. Worries around potential recessions are driving people to put their houses on the market in hopes of seizing their best chance to earn big profits.
As those sellers start down the path towards prepping their houses, hiring agents and making necessary repairs, the thought of casting that effort aside and just selling to a cash buyer always comes up.
Cash buyers are people that make offers on homes without the help of a lender. These people are almost always investors but can be non-investment buyers that are cash-rich and are hoping to move a deal along.
There are a lot of possible advantages of selling your house to a cash buyer. Here are 7 of them:
1. Quicker Closings
Cash deals close much quicker. That's because when a buyer is offering you cash for your house, they're not relying on bank financing to uphold their end of the transaction.
We'll talk more about the complications that banks can cause when selling your house in a moment but for now, just know that the amount of paperwork that you'll save by selling to a non-mortgaged borrower will make your sale go through in days rather than months.
2. Fewer Contingencies
If you've never tried to sell your house before, you'll find that buyers that submit contingency offers are going to become an annoyance.
Know that putting contingencies on offers isn't bad etiquette on behalf of your buyer. After all, they are making the biggest purchase of their life and want to make sure that everything goes well.
Still, when you're juggling contingencies wholesalers are hitting you with, banks are mandating with and buyers are throwing your way, it can be tough to know how close you are to selling your home.
To be clear, wholesalers and cash buyers are two terms that are often confused but couldn't be more different. You can get your wholesaler vs cash buyer questions answered online to clear things up if this is a point of confusion for you.
3. Home Repairs May Not Be Required
As we mentioned in this post's intro, the most common cash buyer that you'll run into is an investor. In most cases, these people will be willing to buy your house as-is.
What does that mean for you? It means that those sockets you were going to replace, that busted pipe you were going to swap out and those countertops you were going to redo can all be left alone!
Investors will, of course, deduct the cost of necessary repairs from their offer. When you add up what you would have paid to do the work yourself and the value of your time though, selling your house as-is for a lower offer could prove to be a good deal.
4. No Banks
The vast majority of home buyers need bank financing in order to complete a purchase. Look no further than the 9.4 trillion dollars that Americans collectively owe in mortgage debt to fully appreciate that fact.
While banks are great in that they make more buyers eligible to purchase your home, they're also a nuisance because they can blow up a deal at any moment.
Banks will require that your house pass certain inspections. They'll want to make sure that the price of your house falls within their acceptable range. Banks will also insist that every aspect of your buyer's loan application be filled out flawlessly.
One financial reporting error and they could pull your buyer's funding.
With cash buyers, banks aren't around to dash your hopes of selling your house at the last second.
5. You May Get to Avoid Agent Fees
Non-investor cash buyers will likely be represented by an agent. That means that you'll have to pay their agent fees if you accept their offer. Investors, on the other hand, don't have agents.
That means that you could instantly retain 5% to 6% of your home's profits on a deal.
6. No Marketing Headaches
When you hire a real estate agent to sell your house, you might assume that marketing expenses will come out of their commission. While that's generally true, we've seen homeowners get rouge invoices from agents for expenses that they incurred while marketing their home.
Even if you choose to side-step that surprise by doing a "for sale by owner" transaction, putting your listing up on websites like Zillow or taking out digital ads can quickly eat away at your profits (and challenge your technical expertise).
If you opt to sell to a cash investor instead, you could engage them directly via their website rather than marketing to the public. Many investors will make an offer on your home at your request within 24-hours.
7. Cash Buyers Take the Stress out of Selling Homes
Your sanity is worth something. If you spend every waking moment of your day wanting to part ways with your house so you can turn the page on your life, it's not worth continuing to suffer as you wait for the perfect offer.
A cash buying investor can get money in your hands and you on your way almost instantly. For many people, that stress-busting convenience carries serious value.
Our Final Thoughts on Selling to a Cash Buyer
No matter the circumstances, a cash buyer is preferable to equal offers that are backed by lenders. The catch is that cash buyers will typically ask for price concessions. It's your job to weigh those asks versus the convenience that you're being offered.
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