If you’re like most home sellers, you probably worry about the time and effort required to prepare for a sale, from staging to cleaning to completing repairs and upgrades. Perhaps you’re not sure if you’ll find a good real estate agent to work with or you aren’t sure if you want to use an agent at all. Maybe you’re feeling anxious about the possibility of the sale taking too long or experiencing stress over the costs associated with selling a home.
Fortunately, there’s an easier way. Accepting a cash offer on a house provides a number of advantages over a traditional sale, like speed, cost savings, and lower stress.
But why is an all-cash offer better? Read on to discover the benefits of selling a house for cash.
What Is a Cash Offer on a House?
Let’s start with the basics: What, exactly is a cash offer on a house? How is this type of offer different from a conventional home sale?
When you hear the term ”cash offer” you might imagine a potential buyer showing up to the bargaining table with a briefcase full of cash, neatly bundled with rubber bands, and stacked into thick piles. While this scenario might make for a great scene in a movie, in reality, cash sales aren’t this dramatic.
A cash offer is simply a sale in which the buyer offers to the seller the entire cost of the house without using financing, such as a mortgage loan. When a buyer already has enough funds to purchase your home outright, you can both avoid several (long, costly) steps.
From the perspective of the home seller, it doesn’t matter if the money comes from a mortgage loan or a buyer’s own bank account. For the seller, the end result is the same: a buyer purchased your home and paid for it.
The real difference lies in avoiding the many contingencies that pose risks for both the seller and the buyer. And that’s why many home buyers and sellers alike prefer cash sales. They’re quicker, they’re easier, and they involve fewer hoops to jump through.
For instance, homebuyers who offer cash don’t have to worry about making their way through the financing gauntlet (the most common reason a contingent offer fails). That’s a huge relief for home sellers too.
Another difference between cash offers and conventional home sales is that there is no requirement to obtain an appraisal. Because the homebuyer doesn’t have to be approved for a mortgage loan, there’s no need for an appraisal to reassure a mortgage lender as to value.
It is true that, at their core, that all home sales lead to an exchange of money in one form or another. But cash offers remove many of the obstacles that the conventional home sale process places between sellers, buyers, and their shared end goal. That’s why cash offers are growing more common.
How Common Are Cash Offers?
Are you under the impression cash sales don’t happen very often? You’re not alone in this misconception. You might be surprised to learn that, according to research, cash sales account for between 22 to 24 percent of single-family and condo sales across the United States in the last two years.
In some parts of the country, such as cities in Florida, Georgia, and North Carolina, these numbers are even higher, sometimes the percentage of cash sales ranges from 32 to 40 percent overall.
Certain scenarios tend to be common components of cash offers. These include:
- A potential buyer has recently sold their home and needs to invest sales proceeds in another property.
- A real estate investor or an investment company wants to invest in properties in your area.
- A home seller has contacted a cash buying company in an attempt to sell the property.
- A home buyer wants to stand out or gain an advantage in a highly competitive market.
- A property needs serious repairs or renovation.
- A home is a good candidate for a fix and flip.
Remember, a cash offer can take place at any time, in any scenario, and in any transaction. It is important for all home sellers to understand how they work before they make decisions about their home sale.
What Kind of Homes Are More Likely to Be “Cash Only”?
Of course every home seller’s situation is unique. But there are certain scenarios where a cash-only deal just makes sense. Here are a few of the most common types that may be “cash only.”
Homes at Risk of Foreclosure
Homeowners who are facing foreclosure find themselves between a rock and a hard place. Their financial circumstances mean they can’t make payments on their home and their options feel limited. They’re also facing tough decisions, such as short sales, bankruptcy, or eviction, that could potentially ruin their credit and make life harder for years to come. A cash sale offers a quick way out. Accepting a cash offer means saving your credit score, avoiding eviction, and moving quickly to the next stage of life.
Homeowners Who’ve Experienced Life Changes
When homeowners undergo major life changes, such as marriage, divorce, retirement, a new job, or an illness or death in the family, they often need to move quickly. They might need to move closer to a sick relative. They may have to undergo a divorce and homeownership is a matter of contention. Maybe they retired and need to downsize, and can’t wait around for a conventional sale to go through. Perhaps someone has gotten a new job in a small town, and they need to move right away. All of these life changes may lead to the need to sell quickly and without stress. A cash sale can offer a speedy solution.
Homes in Need of Repair
Sometimes, the cost of keeping a home well maintained is simply too much for homeowners to handle. Whether it’s a cracking foundation, a roof that needs replacing, leaky pipes, or a faulty electrical system, home repairs can run into the tens of thousands of dollars. Conventional sales make it almost impossible to sell a house that needs major repairs. Many lenders refuse to issue loans for a property that’s damaged. Fortunately, cash buyers don’t have to follow these rules. That’s why so many homeowners sell their “fixer uppers” to cash buyers. That way sellers don’t have to sink time and money into repairs, and they can enjoy a fast closing with less stress.
Advantages of accepting a Cash Offer
Cash sales differ from traditional home sales in several ways. Let’s look at the advantages.
1. Fast Closing
Cash sales take less time to close, from start to finish.
Again, the mortgage lending process is usually to blame. Most sales require a mortgage to be underwritten. The lengthy process can take anywhere from 30 to 60 days, and a lot can happen during that time. If the buyer’s financial situation changes between pre-approval and loan finalization, the mortgage lender may refuse to offer a loan and the deal may crash and burn. In fact, financial difficulties are the major culprit when it comes to contingent offers falling through.
In contrast, a cash sale isn’t contingent on mortgage underwriting. That means home sellers both reduce the risk of a deal falling through and save time on the sale process.
2. Less Risky
Cash offers tend to be stronger than offers using traditional financing. When presented with multiple options, it just makes sense for sellers to pick the buyer that presents the least risk. Usually that’s the cash buyers. Often, homesellers choose a cash offer over an offer that will be financed with a mortgage even if the cash offer is lower. The seller knows that the deal will close faster, and that means they’ll get paid sooner. When you take financing out of the picture, there’s less risk of the deal falling through.
3. Reduce Stress
Selling a house the traditional way is stressful. You have to clean, stage, take care of repairs, and upgrade. You must find an effective agent, deal with the appraisal and inspection, and keep your home spotless through showings and open houses. And let’s not forget the million and one other things to worry about….will the buyer back out or lose financing? How long will it take to sell?
While there are many reasons you may want (or need) to sell quickly, maybe you simply don’t want to draw out the process. Either way, a quicker home sale reduces some of the stress typically associated with selling a home.
4. Solve a Difficult Problem
Do you need to split the equity in your home in a divorce? Do you have to relocate for work sooner than expected? Maybe a fast home sale would avert foreclosure, or allow you to liquidate cash to pay down debt.
Whatever the reason, accepting a cash offer on your house can help you out of a sticky situation.
5. Save on Repairs
In a traditional home sale the inspection brings attention to necessary repairs. In most cases, the home seller must either pay to fix the problems or lower the home’s asking price accordingly.
In a cash sale you simply sell as-is. You’ll save money on repairs and upgrades….especially given that most of these don’t ever result in a full return on investment.
6. Skip the Marketing and Showings
Finding potential buyers is a lot of work and showing your home in the best light is both time consuming and expensive. Your realtor may require you to do some staging, prepare for pictures or videos of your home, and vacate the house for open houses or showings. It’s all a hassle, and one that can be avoided with a cash offer ahead of time.
7. Stop Feeding the Money Pit
Has your house turned into a money pit? Are you tired of sinking your hard-earned paycheck into repair after repair? Many homeowners feel this way, especially those with older houses. The good news is that you can stop wasting money by accepting a cash offer.
8. Move Quickly
Do you need to move for your job? Are you getting divorced? Are you simply ready to go? Why wait around for your home to sell? Just sell your home for cash, move out, and move on with your life.
9. Pass on the Inspection
Let’s face it: The inspection process is not fun. Discovering all the things “wrong” with your home can be incredibly stressful. A cash sale lets you avoid the inconvenience. Cash buyers expect your home to have flaws, allowing you to skip expensive repairs that can slow or derail a traditional sale.
10. Eliminate the Risk of a Failed Sale
Speaking of derailed sales, did you know financial issues are the main causes of home sales falling through? A cash buyer, like Heart Acquisitions, eliminates that risk. Not only can you avoid inspection contingencies (notorious for letting buyers back out of sales) there’s no risk of financing falling through because Heart Acquisitions uses its own funds to buy homes.
11. Avoid the Negotiating Table
Do you enjoy haggling over prices? Find it fun to go back and forth over nit picky details? Many people find negotiating stressful and unpleasant. Good news: A cash offer lets you avoid the negotiations completely. Instead, you’ll receive a firm offer. You can accept on the spot and be done.
12. Say No to Piles of Paperwork
Paperwork is yet another not-so-fun home selling activity. The sheer amount of forms to read, initial, and sign can feel overwhelming, and a small mistake can cost you. However, a reputable cash buyer will handle the closing and paperwork process for you.
13. Save on Commission Fees
Did You know the average real estate agent takes up to 6 percent of your home’s sale price? Selling your house for cash means you can skip the realtor and save the money. Just be sure to check for hidden fees, as some home cash buyers may spring them on you. Fortunately, Heart Acquisitions never charges fees, so more money stays in your pocket.
Where Do You Find a Cash Buyer?
Now that you’ve explored the benefits of accepting a cash offer on a house, you’re probably wondering where exactly to find a cash buyer. Here are a few types of cash buyers:
- Real estate investors who buy homes, improve them, then sell them (also known as “fix and flip”)
- Homeowners who’ve recently sold their house and are using their sales proceeds to buy a new home (these buyers will most likely still require an appraisal/inspection).
- Retirees who are using their savings to buy a home rather than pay mortgage financing interest and fees (also will still require an appraisal/inspection).
- Well-off buyers who can afford to pay cash (might also require an appraisal/inspection)
- Companies like Heart Acquisitions that buy your home for cash directly with no need for repairs, appraisal, or inspections.
If you’re considering selling your home, a cash offer can provide a solution. As we’ve seen, cash sales offer benefits from faster closings to lower costs and less stress.
