Have you noticed those “We Buy Houses for Cash” signs on the side of the road? They offer to buy your house as-is for cash and close in days.
So how does it all work?
First, let’s go through the common types of all-cash buyers who may be interested in purchasing your home.
Types of All-Cash Home Buyers
1. House Flippers
Investors who buy homes with the intention of remodeling them and re-selling them for a profit are known as “house flippers.” These buyers are often interested in homes that are typically in need of repairs and updates to make them more functional for buyers in today’s market.
2. Buy-and-Hold Investors
Buy-and-hold investors generally purchase homes with the intention to turn them into rental properties.
Individual buy-and-hold investors are often motivated to use these properties as streams of passive income.
Institutional buy-and-hold investors, however, usually acquire multiple properties per year. As a result, these buyers are often able to offer more incentivizing terms to close the deal, such as higher cash offers, flexible closing dates, and the ability to leave unwanted personal belongings behind.
Which Sellers Benefit the Most from All-Cash Home Buyers?
- Sellers going through (or about to go through) foreclosure
- Inherited homes
- Sellers who need to relocate due to jobs
- Sellers who need to relocate due to family emergencies
- Homes that have been on the market for a long time
- Sellers who are divorcing
- Sellers in bankruptcy
- Abandoned homes
- Damaged homes due to age, natural disasters, or tenants
4 Things You Should Know about Selling Your House for Cash
1. Financing is Often Not Involved
One of the most time-consuming parts of selling a house is waiting on banks to approve and process loans. All-cash purchases, on the other hand, are able to close quickly because they don’t involve lenders at all.
2. No Contingency Clauses
Contingencies are very common in housing contracts. Contingencies clauses serve to protect buyers and allow them to “back out” of a sale if certain conditions are not met, such as:
- Sale must be completed within a certain amount of time, such as 2 weeks or 3 months
- The house must pass inspections without needing any major repairs
- Mortgage loan must be approved by the buyer’s lender
3. Minimal Prep Work for Sellers
All-cash home buyers often are ready to purchase the house as-is. This means you don’t need to spend the extra time or money to hire contractors to fix up your damaged house. You also don’t need to worry about staging the house since cash home buyers often aren’t interested in the cosmetics of the house, but rather the overall structure.
You also don’t need to go through the hassle of hiring a real estate agent, prepping the house for showing or for a photographer to take pictures for the listing.
While some of the top benefits of selling your house for cash to a company are the minimal time and effort you required by you, it is important that you do some homework before choosing a company to sell to.
While many legitimate cash offer companies exist, it’s important to also keep in mind that, unfortunately, scammers do exist and may try to take advantage of your desire to sell your house quickly. Therefore, it’s critical that you research the company you’re about to sell to first.
How to Research All-Cash Home Buyers
- Ask the company for references and follow up on those references.
- Review the company website – Does it look legitimate?
- Check out online reviews of the company
- Beware of companies which charge you an upfront fee
- See if the company has a listing on the Better Business Bureau’s website
- Ask for proof of funds from the buyer
- Beware of foreign investors who you’re unable to meet or speak with
Selling your home to an all-cash buyer is a great option for many homeowners, especially those who don’t have the time or the ability to fix up and list the home themselves.
If you’re interested in learning more about how to sell your home for cash, contact the specialists at Homestead Road today!