There are many reasons why someone might be interested in selling their home to a cash home buyer, from short timelines to wanting to avoid the hassle of staging and showing a home. We will evaluate the pros and cons of selling to cash home buyers.
For a full guide to cash home buyers check out: What Is a Cash Home Buyer?
Pro: Sell on your timeline
A huge benefit to selling to a cash buyer is the ability to select your exact closing date. A seller may need to sell and close quickly, in as little as 7 days, or pick a specific date in the future that is convenient for their move. When listing on the open market, closing is subject to the amount of time the property takes to sell, issues that arise during escrow, and the timing requirements of the buyer. You as the seller have much more control over your timeline with selling to a cash buyer.
Pro: Pay no real estate agent commissions
Many cash buyers, like Haven Homebuyers, offer sellers a price with no real estate agent fees or commissions and pay for the seller’s closing costs. This is an important consideration when evaluating a cash buyer vs. listing a home with a real estate agent. When listing a home with an agent, the seller will pay as much as 6% commission. On top of that, they will pay traditional closing costs that can amount to an additional 1% to 2% of the sales price. These costs include title insurance, escrow and closing fees, recording fees, signing fees and many others.
The cash offer may be lower than what an agent would list the home for on the open market, but it’s important to consider all the fees and commissions when making a decision.
Pro: Avoid showings and open houses
With a cash buyer, the home need not be listed on websites and the MLS. The buyer has already been found, so there is no need to market the property. Showings and open houses can be a huge inconvenience, especially if a seller has pets, children or clutter in the house.
Cash Buyers only need a quick walkthrough to provide an offer. In some cases, they may even accept pictures.
Pro: Make no repairs or renovations
When selling on the open market, traditional buyers will normally require an inspection. Based on the results of the inspection, they may ask for repairs to be made or the price to be reduced to account for the repairs. Additionally, a seller may have deferred maintenance that could prevent the property from attracting a good offer, so costly repairs may need to be completed prior to listing. Cash buyers will buy homes in any condition and take on all the repair costs.
Pro: Eliminate the risk of buyer cancellations
A traditional buyer will need to get a mortgage in most cases. The whole transaction relies on a loan approval. If the buyer is denied due to the appraisal, their income verification or credit report, then the seller is back to square one. There are other reasons a buyer may cancel too. They may be unhappy with the results of the inspection and feel that the property is in poor condition or they may simply change their mind. Most purchase agreements have contingency periods that allow for the buyer to cancel for any reason.
Pro: Leave behind unwanted personal items and trash
When selling through a traditional listing, it is expected that the property will be left vacant, empty of all personal property and trash and in clean, broom swept condition. The buyer will schedule a final walkthrough to verify the condition of the property prior to closing. Many sellers that have been in their homes for a number of years have accumulated a lot of stuff. The process of sorting out what they want and what they don’t want can be a difficult process. It can also be costly to dispose of large amounts of trash or unwanted items. Most cash buyers will allow the seller to leave behind anything that they don’t want to take.
Con: You may net less money than you would on the open market
Listing on the market and advertising it on the MLS and other websites exposes your home to the maximum number of buyers. This will typically be the best way to find the buyer that will pay the highest price for your home and may even create a situation where buyers are bidding against each other.
However, to net the biggest profit, you will need to make the house look in its most presentable form to appeal to a broader range of buyers. This often includes a lot of effort in cleaning, repairing and staging the home. Selling on the open market also is subject to seasonal variations, with days on the market and purchase price varying widely based on the time of year.
With many things in life, there are risks and trade-offs. Listing on the open market takes time, exposes the sale to changes in the market, makes the property subject to inspections and appraisals and presents all the challenges that come along with a buyer. Inspection reports, needed repairs, mortgage approvals and buyers emotions all play a role.
Con: Without real estate agent representation, you’re on your own in a sense
While sellers always have the right to have real estate agent representation, when dealing with cash buyers, it is typical that they won’t. One of the main benefits of working with a cash buyer is the savings related to no agent commissions paid. The role of a real estate agent representing a seller is to advertise the property, communicate with buyers, negotiate offers and act as a fiduciary. Since many of these actions don’t occur when selling to a cash buyer, there isn’t much of a need for a real estate agent, but some sellers may feel more comfortable working with a professional on their side to review documents and provide advice.
Con: Risk of unethical buyers
When selling to a cash buyer, the process begins with an offer, and some unethical buyers may try and change terms before closing. The offer is put in writing and both parties sign a purchase agreement. Like other real estate transactions, escrow is opened with an independent third party and there is a period of time between signing and closing. During this time there are contingencies for inspections and other items. An unscrupulous cash buyer may use this time and a seller’s vulnerability to attempt to renegotiate by lowering the price or asking for repairs to be made.
You can mitigate this by using a reputable company like Haven Homebuyers and selling your home the easy way.