There are numerous reasons why you may be thinking about selling your home, whether it’s because you’re moving to a new city, downsizing to a condo, or wanting to tap into your home’s equity. But if you’re looking to sell your property quickly, you may want to consider selling for cash.
The appeal is there – you can sell your home fast for cash and move into your next home sometimes in a matter of just a couple of weeks.
But is selling your house for money any different than the typical home selling process? And will someone buy your home with a cash offer? We’ve got the answers to help you decide whether to sell your house for cash or stick with a formal proposal.
What is a cash offer?
A cash offer is when a potential buyer bids with all-cash, meaning there’s no mortgage or other financing involving a mortgage lender. These offers can be more appealing to sellers since there isn’t a risk of a buyer’s mortgage loan falling through.
In addition, all-cash offers tend to have quicker closing dates since there’s no waiting for the mortgage underwriting process to finish.
The number of cash offers you may receive can depend on the local housing market, your home’s condition, or if you seek out a cash offer online. Depending on the homebuyer type bidding with cash, their request may come in lower than a buyer with a mortgage.
However, just because the offer may be less than other bids, there can be plenty of reasons why you want to sell your house for cash.
Who buys houses for cash?
Several types of homebuyers may bid with a cash offer on your home. Here are some of the typical cash home buyers you’ll see:
Buyers looking to stand out
Potential homebuyers may bid with a cash offer to stand out amongst the competition. That can be more common in a seller’s market, where more buyers than homes are available, and bidding wars are more likely.
Cash for homes companies
Often you’ll see signs placed around neighborhoods from companies advertising that they’ll buy your house for cash. Typically, companies that buy houses target homeowners that need to sell their homes quickly for financial reasons.
However, if you decide to sell your house to a company that buys homes for cash, note that you may only receive 50-70% of your home’s worth.
House flippers
If your home is more of a fixer-upper, you may receive a cash offer from house flippers. They’ll buy your home as-is, fix it up, and typically re-sell it for a more significant profit. But, like cash for homes companies, house flippers may offer less than what your home is worth.
In addition, many house flippers follow the 70% rule, meaning that they may not provide you with more than 70% of your home’s after-repair value (ARV).
iBuyers
Short for an instant buyer, an iBuyer is a real estate company that buys your home directly. If you plan to sell your house to an iBuyer, you’ll likely need to request an offer now from the company.
Once you’ve received and accepted their offer, you can typically close between 10-90 days.
An iBuyer’s cash offer on your house is generally based on a home valuation tool. These tools estimate your home’s value based on the information you provide and recently sold properties in the area.
However, it is essential to note that buyers often charge convenience fees for selling your home fast, so your final payout may be less than the initial offer amount.
Investors
Real estate investors looking to turn your house into an investment or rental property may bid with cash.
However, if you sell your home for money to a foreign investor, you may not be able to close that quickly. Likewise, it may take extra time for a non-US citizen to buy a house and complete the closing process for various reasons.
What reasons should you consider before selling for cash?
For any home seller, the reasons you’re listing your home for sale depending on your needs. And choosing the right way to sell is critical to have the most accessible home sale possible. Here are a few reasons why selling for cash may be the best option.
It’s the best offer
Whether that’s because it’s the right price, a quick closing, or certain contingencies waived, a cash offer may be the best one.
You have an investment or rental property
If you’re struggling to find a new tenant to occupy your buy or rental property and need to sell your home fast.
You have inherited a home
If you’ve recently inherited a house from a loved one and you don’t have the resources to maintain the home or turn it into a rental property.
You need to access your home’s equity now
Depending on where you are in your life, it may be necessary to access your home’s equity fast.
You’re moving and need money for your downpayment
If you’re buying a new home or relocating quickly, you may need to access your current home’s equity to make a downpayment. Having this available cash can make it easier to buy your next place rather than taking out a second mortgage or bridge loan for a downpayment.
What are the benefits of accepting a cash offer on the house?
Compared to a traditional sale, there are a few differences to consider when you sell your house for cash. Some of these differences may help you decide if selling for cash is the right option.
Fewer contingencies
There are likely fewer contingencies with a cash offer. Specifically, buyers won’t need a mortgage contingency, but they may still ask for other home buying contingencies.
Less risk
When you sell your house to a cash buyer, there’s less risk of a buyer’s financing falling through.
No appraisals
Home appraisals are almost always needed before approving a mortgage loan. However, since there is no mortgage with a cash offer on the house, a review is not always requested.
Shorter closing process
Since there isn’t a mortgage application and underwriting process to wait for, you may be able to close in as little as two weeks. However, you still need the buyer’s proof of funds and time to complete the closing process to vary this timeline.
Are there drawbacks to accepting a cash offer on the house?
There may be drawbacks depending on the cash offer’s terms and what you’re looking to gain from selling your home.
Sometimes a cash offer may be lower than what you expect, whether that’s from an iBuyer, investor, or traditional homebuyer.
But if you’re looking for a quick sale, this may not be too much of a negative. However, as with any home sale, there’s a risk of fraud. If a buyer or company is offering cash, do your research to verify the buyer is accurate or that the company exists.
Another point to consider is that the cash offer isn’t finalized until you’ve signed the contract. Beware that some buyers may ask for additional money for repairs or request that you make updates to the home before they buy.
However, this can also happen with a traditional offer, where a potential buyer may ask for repairs after a home inspection is complete.
Key takeaways: Should I sell my house for cash?
When the time comes to sell your home, consider both your current situation and what you hope to gain from selling for cash.
If you sell your home for the money, you can expect less of a risk that the buyer’s financing falls through, a quicker closing process, and you may avoid some contingencies and an appraisal.
Remember that a cash offer could be less than you expect, but it also might be what’s best for you.
It’s your turn to be a homeowner in New Jersey
If you are interested in acquiring your new home or selling the one you have, do not hesitate to contact our EXP Realty consultants. We guarantee quality attention and the best homes in the area, with personalized marketing strategies to achieve the most significant benefit.
You will not regret working with us because we seek your best interests. Our clients certify them.