SELL TO A CASH BUYER
One of the most hectic parts about selling a house is getting a buyer and getting one fast. Unfortunately, getting a potential buyer does not make the process easier but instead ushers you to the actual selling process, which is the closing bit. You see, the closing process is never an inclusive buyer-seller affair. It involves a lot of paperwork and parties such as the buyer’s agent, buyer’s attorney, Escrow Company, banks, and title deed transfer company, among others. Dealing with all these parties can make the process lengthy and tedious, especially for you, the seller.
However, dealing with a cash buyer is more straightforward since it involves fewer parties and most of the paperwork is handled by the hired escrow company. Again, the entire process takes limited time which means you won’t be stuck in the market forever.
WHAT DOES SELLING TO A CASH BUYER MEAN?
Literally speaking, one may expect the buyer to show up with a stash of money in exchange for the property. But no, this is not the case. A cash buyer is an individual with ready money and does not need to involve a lender or mortgage to finance the property purchase. The cash offer should facilitate the house purchase, and once the seller agrees and the contracts signed, the buyer should transfer the amount to the seller’s account.
Most cash buyers are either real estate investors or individual buyers who intend to buy a personal house without the help of a third party.
What are the closing timelines for a cash offer?
Since there is no need for external financiers, the closing process is quite simple and significantly reduces the closing time. As soon as the Escrow and title company complete their part and the paperwork is done, the closing is as good as done. The whole process takes at least two weeks.
Why sell to a cash buyer?
Selling to a cash buyer comes with several advantages you may not want to miss out on when selling your home. Here they are:
- Sell fast.
One of the main reasons people prefer selling their homes to cash buyers is the ability to make a fast, easy and convenient sale. The reliability of banks and other money lending institutions to finance the buy is the main reason other selling options take long or even worse, fall through. Conversely, cash buyers have liquid cash for the purchase and can, therefore, close the sale within a couple of weeks.
- Sell your home as-is.
Making repairs and renovations or upgrading your home in preparation to sell it can be expensive and time-consuming. However, this is not a requirement when selling your house for cash. Since most cash buyers are investment companies, they prefer buying homes in their current state, remodeling them, and selling them later at a profit. So, unless a house has a major problem, most cash buyers will simply pay the agreed amount to close the deal.
- Low chances of the sale falling through.
When the buyer depends on a loan approval to purchase the house, the sale will automatically fall through should the bank deny them the loan. It can be very frustrating, especially when you had already received an offer. With cash buyers, this is a rare occurrence since they already have the money upfront thus you will complete the whole process in a short period.
- Cheaper and more convenient.
When selling your house using the traditional method, the process requires a lot from you from the very beginning. Such includes hiring a real estate agent, staging your house before listing, making repairs, and holding open houses. It gets worse when you keep receiving visitors now and then for a house showing as this not only disturbs your peace but also inconveniences your plans and schedules. Selling to a cash buyer on the contrary eliminates all this since once you have a preliminary meeting at the property with the buyer, the next likely thing is concluding on the cash offer. No agent, no commissions to pay, no further visits; just fast and simple.
- Save you from foreclosure.
Sometimes life happens and paying your mortgage becomes impossible. This situation puts you at risk of foreclosure, which is not interesting at all. To get out of the mess fast and better still fix your financial situation, you can consider selling your house to a cash buyer who will not only buy your house as it is but will do it quickly.
- Great way to do away with unwanted properties.
One can find themselves with a property one no longer want to keep for one reason or the other. For instance, if you are relocating or you just inherited a property that you don’t want to keep, selling the property would be a good way of getting rid of it. While the standard way of selling can work, it may take you longer than you need and a cash buyer might be your best option. After all, why spend more of your precious time and resources marketing and renovating while you can sell your house in its current state fast and hassle-free?
Circumstances under which you should consider a cash buyer.
- You are in urgent need of cash. You are in a financial crisis and your house is your savior, for that matter. A cash offer for your house may be your best option. Quick and convenient.
- Time is not on your side. When one is time-constrained, every minute counts. At such a time, waiting for your house to get a buyer with traditional methods may seem like forever. A cash buyer on the other hand will close the deal in a matter of weeks.
- You want a sure deal. If you don’t want your home sale to fall through a cash buyer is worth considering.
- You are not ready for house showings. Yes, not everyone can handle the many visits from strangers in the name of house shows. If you are one such person consider selling to a cash buyer.
- Prep work is just too much for you. The preparations that come with selling a house can be daunting, especially if you are doing it for the first time. With a cash buyer, much of the process has been eliminated, which leaves you with very little to do.
STEPS TO FOLLOW WHEN SELLING TO A CASH BUYER.
You have already decided that this is the perfect option for you to sell your property, but you are not sure of how to go about it. Relax, for here is a clear and easy-to-follow blueprint of the whole process when selling to a cash buyer.
- Know your home worth.
Before jumping into the market, it is important to find out the current value of your property. This will act as a guide in pricing your property as well as determining which offer to accept and which not to. There are various ways you can use to know the value of your home which include:
- Involve an appraiser. Upon touring your property, the appraiser will compile a report about the state of your house accompanied by photos. Further details such as your neighborhood, available amenities, the value of similar properties, etc will also be used to determine the most accurate value of your property.
- Get a Comparable Market Analysis (CMA) from real estate agents. This is a general estimated value of your house which is based on properties similar to yours that have been sold in your neighborhood in the recent past.
- Do the valuation by yourself. If you have the market knowledge you can do a similar property comparison yourself. To do this, you will need to find details of recent property sales in your neighborhood, more so those with similar features as yours. Local analytics about your area will also come in handy in determining the value of your house.
- Find a cash buyer and request cash offers.
But how do you find a cash buyer? Well, let’s first explore ways in which you can find one.
- Request a list from a real estate agent. Agents encounter various clients daily and some normally have a list of ready buyers and investors that they can share with you.
- Ibuyers. You can find one online by searching on sites such as Offerpad, Opendoor, among others.
- Use Listsource database.
- Search for legit home-buying companies in your area.
- Attend foreclosure auctions.
Once you have identified a cash buyer contact them and set a property visit date. You will most likely receive a cash offer during the visit.
- Review the offers.
Before accepting any offer take time to go through them and see if you agree with their terms. Understand the motive of the buyer. Is the offer realistic, or is it too low or too good to be true? How fast is the seller willing to close the deal? Is the buyer requesting an inspection?
- Sign the contract.
Once you have found a suitable buyer, accept the offer and go under contract by signing the sale and purchase agreement with the buyer.
- Get proof of funds.
You need assurance that the buyer is capable of facilitating the cash payment for the house. To do so, you can ask the seller to pay the “earnest money” which is normally 2% of the agreed sale price. In addition, request for investments or bank statements. You can do this by yourself, or you can seek the assistance of a real estate agent.
- Engage an escrow company.
For a smooth and safe transfer of funds and land deeds, you need to hire an escrow company (some can take care of both processes), and a title company. It is a vital step for both the buyer and the seller.
In most cases, the title company works on the following: ensuring the property lines are correctly drawn, and addressing property liens (outstanding debts). If any, issuance of title insurance, and finally ensuring that the property transfer takes place.
On the other hand, an escrow company handles: the management of all closing documents, safe-keeping, and transfer of funds, as well as ensuring the sale’s legal paperwork is fully recorded.
- Inspection process.
While this is not a requirement for most cash buyers, especially investors, some buyers still request an inspection to act as protection.
- Close the sale.
With everything else done, it is now time to read through and sign documents to seal the deal. Unfortunately, property sale, in whichever way, comes with a lot of documents to sign which are all essential for the closing process. Read them carefully before signing. Below is a list of the documents:
- Closing instructions from your escrow company. A detailed outline of the company’s responsibility in the entire process.
- Mechanic liens. This is signed to indicate the absence of any unpaid debts in the sale process.
- Statement of information. It verifies your identity.
- HUD-1 settlement statement. It’s a document entailing every cost in the sale process. Keep it safe for tax matters. Certificate of title. Signing this indicates that you have the legal rights to sell the property.
- Bill of sale. It contains details of any other item included in the sale, such as furniture, etc.
- Title deed.
- Loan payoff statement. In case the property has a mortgage, this document indicates the indebted amount by the time of sale.
- Statement of closing costs. You sign this document to certify that you were informed of the closing cost early enough and agreed to them.
While there are various ways of selling properties, selling to a cash buyer is not only fast but also straightforward and takes just a fraction of the time traditional methods take. However, just like any other method, selling to a cash buyer also has drawbacks, such as high chances of selling below market price, etc. Also, caution is of key importance to avoid falling into the hands of scammers and brokers pretending to be cash buyers.