You hear the ads on radio and T.V. pitching that they will buy your home for the best cash offer in the industry.
You even get postcards and letters in the mail advertising the same thing.
Many of us get phone calls at all times of the day asking us to sell our home for a cash offer.
Some of it can be aggravating.
The good news, there are many choices. The bad news, it’s not going to stop anytime soon.
Today I’m going to explore some of the pros and cons of selling your home to a cash buyer like us at Our Cash for Your Home.com
I am listing these to give you a better idea of what can happen, whether good things or not so good things, when you consider selling your home.
The pros will be listed first, and then the list of cons to give you the reality of these transactions with all of the good, and followed by what you might not want to happen, or you need to avoid.
Let’s begin:
Pros
Quick Sale:
Cash transactions will typically close faster than traditional sales, providing quicker access to your funds from closing.
Certainty of Closure:
Cash sales are less likely to fall through due to financing issues, and this can lead to more certainty for you, the seller.
Simplified Process:
Many cash sales often involve less complex paperwork and fewer contingencies that would hold up a traditional sale, which can streamline the process of closing.
No Appraisal Contingency:
A true cash sale should not need to have an appraisal done. This can happen if the buyer is using outside funding to buy the home from a lender, as the lender may order an appraisal.
It should not slow the closing down if the buyer is timely ordering the appraisal.
Fewer Fees:
Cash sales many times involve fewer fees, such as appraisal and loan origination fees. This also helps eliminate the risk of the sales falling through based on appraisal results.
As-Is Sale:
Cash buyers are many times more willing to purchase property in its present condition, which saves sellers the cost of needed repairs.
Privacy:
These types of sales can be much more private than traditional sales, as they often involve fewer parties to the transaction. There is also less public disclosure of the transaction details.
Avoiding Contingencies:
A cash buyer is less likely to include a list of contingencies related to the sale, which reduces the unexpected complications to the sale.
Loan Approval Delays:
The absence of a loan approval process means a faster closing timeline, which avoids potential delays.
Flexible Closing Dates:
A cash buyer is in control of when the money gets to the closing, and they can be very flexible with closing on the seller’s timeline. They don’t control the closing, but they can get the funds to the title company quicker than traditional lenders.
Reduced Stress:
We all have some form of stress from time to time, although when selling a house at a future date can lead to anxiety and stress of moving or even closing, a cash sale can speed things up which will reduce the time we perceive certain stress.
Reduce Stress, Give Us a Call:
Low Risk of Default:
Cash buyers are less likely to default as they have committed the funds to purchase with the purchase agreement, where traditional loans can default for many reasons.
Greater Negotiation Power:
Sellers can have much better negotiating freedom if there are competing offers coming to them.
Market Fluctuations:
Cash sales are less susceptible to market changes as they are not tied to financing being available.
Mortgage Contingencies:
As previously, the absence of a contingency for a mortgage means that the sale is not dependent on a loan approval process.
Flexible Terms:
You can negotiate better terms or prices, and your flexibility combined with the buyers offers can allow you to agree on favorable pricing.
Lower Sale Price:
Cash sellers may be open to a lower price from a buyer if their need is to accept this price for a quick and hassle-free closing.
Home Inspections:
Cash buyers are usually going to make an offer to you if they look at the property, and many will have already visually inspected it when they see it. Most know what improvements they need to make to either rent or retail sell.
They can be less demanding of inspection criteria, which will simplify the process for quicker closings.
Distressed Properties:
If a home is not up to retail sale condition, cash buyers will make more sense to a seller with their offer as they know they will need to spend money to bring it up to retail condition. This eliminates the need for a seller to spend it by accepting a lower price and not improving the property.
And Now the Cons of Cash buyers:
These conditions may or may not all work against the sale of your home to a cash buyer, but I do want you to be aware that they could be present.
Potentially Lower Sale Price:
As above, cash buyers usually will present an offer that a traditional buyer would make, the goal is to get a discount due to the convenience of a cash and quick transaction.
Limited Buyers:
If you primarily seek a cash buyer, you are restricting your sale to a smaller number of available buyers. This also may be the limit of overall interest in your property.
Unscrupulous Buyers:
Due Diligence here. There are too many that give the good ones a bad reputation. Make sure you are comfortable with the individual or company you are working with.
If you think there is something you are missing, find it out.
Lack of Financing:
Without an actual commitment to closing the sale a seller may be left with unforeseen issues if the buyer suddenly cannot make the funds available.
You can place criteria in the purchase agreement that could bind them to the sale, although it could be lengthy and involve legal help.
Pressure:
The rapid pace of a cash closing may put undue pressure on a seller to make decisions without sufficient consideration.
Reduced Negotiation Leverage:
If you have a set price, a cash sale may not work if buyers are unwilling to pay it. Once you sign an acceptance to a purchase agreement you have less negotiation room, or none at all once you have signed.
Preparations:
You may not have the time you need to for clearing out belongings or being ready to relocate. You may end up with limited time to finish what needs to be done.
Undervaluing Your Property:
If you are being pressured into making a quick decision you could make the mistake of selling too far below market value conditions. Do not be put into the position of making a hasty decision if you can avoid it. Give yourself time to make the correct decision.
Unfavorable Terms:
Before you sign any agreements, make sure you understand what is being offered, as many times the speed of closing can come quicker than you thought. If you need legal advice, seek it before signing.
Sellers can be taken advantage of in some situations like this.
Legal Protections:
Although there are too many to list in this article, with limited diligence and paperwork to a cash sale, you may not be afforded the same legal protections as the traditional seller would have as those closings do take longer to conduct the due diligence.
Price Negotiations:
Buyers may have what is commonly called buyers remorse after they make an offer. Beware of this if you have signed an agreement. Some buyers will try to back out of a sale if they can’t negotiate after their initial offer.
While unseen problems may come up, which could lead to new negotiations, and then it would be prudent to enlist legal help.
Market Conditions:
Hastily accepting a cash offer may cause sellers to overlook favorable market conditions which could lead to an overall higher sale price.
There is also the potential of not having more new financing options if you plan on purchasing another home.
If you sold for cash and at a lower price, this could be looked at from a traditional lender standpoint, that you may not qualify for a new mortgage.
Check for this potentially happening to you with a financial advisor if you need to.
Don’t Wait For the Market to Change, Call Today!