At first, selling your house for cash sounds easy and appealing. It might surprise you to learn that 41,000 homes in the US were sold for cash in 2019. If you sell your house ‘as-is’, that means you do not need to stage or show your house, or factor in costly repairs, which saves you time and money. And if you need to sell quickly due to financial hardship or relocation, a simple cash sale never sounded so good! All-cash offers are convenient because you do not have to wade through appraisals, inspections, or buyers who need lender financing.
However, it’s not always so simple. You can expect to receive lower offers on your home if it’s not move-in ready. If you desire convenience and cash in your wallet over the full value of your home, it might make sense. Another potential barrier is that you will have a smaller pool of buyers—buy-and-hold investors, wealthy individuals (not investors), iBuyers, or “instant buyers” like Zillow, or house flippers. If you work with a real estate agent you will have a professional who can help you determine the right listing price based on a comparative market analysis (CMA) and receive greater exposure to those interested in paying with cash.
In this article, we’ll discuss the pros and cons of selling your house for cash to help you make your decision today!
What Is an All-Cash Offer?
An all-cash offer is where buyers are willing to pay for your home outright without using lender financing. Keep in mind that real estate investors are not licensed real estate agents and that not every cash offer is legitimate.
All-cash offers generally close faster than financed ones because there is no lender to work with, and there is less risk for the seller. The buyer can make an offer on any home. He or she still pays certain fees such as escrow costs and taxes, but they do not have the burden of paying mortgage interest on the purchase.
Signs an all-cash offer can make sense for you:
- You require relocation for a new job.
- Your home is in foreclosure.
- You face financial distress such as bankruptcy, job loss, death of a spouse, or a divorce.
- Your home requires extensive repairs and you lack the funds or a desire to fix them.
If you aren’t in a rush to sell your house because you have the time and money to make necessary repairs and want top dollar for your home, then you may want to work with a real estate agent.
Benefits of Selling Your House for Cash
While there are many benefits to cash sales, here are the common ones:
You Can Make a Quick Sale
- iBuyers can make you an offer within hours or days, and you will receive the money quickly.
- If you work with an agent and a wealthy individual (e.g. someone who recently sold his or her home and plans to use the proceeds to buy your house), it’s simple to verify the person’s finances.
- Auctions close within hours of a sale, and you will know the value of your house based on the bids.
You Won’t Have to Work With an Agent
Selling your house for cash can alleviate the need for a real estate agent. You can also avoid paying a commission fee (unless the buyer has an agent) and you will not need to worry about your house sitting on the market for months. If you go it alone, remember to conduct a Comparative Market Analysis (CMA) to get an idea of what your house is worth. If you have made upgrades or repairs make sure to include that data in your research.
No Need to Stage or Market Your Property
It’s less hassle on your end, but keep in mind that if you sell your house at auction that investors will usually view the exterior and/or interior of your home a day or two ahead of the auction.
No Need to Negotiate
The buyer makes an offer you either accept or reject, no negotiations necessary. As long as you have a firm idea of your target price range, selling for cash can remove a lot of the pressure of a traditional home sale.
Risks of Selling Your House for Cash
You May Fall Victim to a Scam
Ever heard of the “We Buy Houses” scam? It’s unfortunate, but scams are quite common in real estate, and thieves use email communication and bad checks to get you to part with your money. Forbes has some great advice to help you remain vigilant during one of the most stressful financial decisions in your lifetime. If you suspect criminal activity in your communications with interested parties purporting to buy your home, visit the Federal Trade Commission (FTC)’s website and report the fraud.
You May Receive Less Than the Full Value of Your Home
It might be disappointing or demoralizing to receive low-ball offers on your home, but remember that people paying in cash want to turn a profit. You don’t have to accept the first company or investor who responds to you. Always do your due diligence. Research how much it costs to make repairs and any upgrades, and subtract that amount from your home’s CMA.
The Bottom Line
Remember that you get the final say in how you sell your house. While all-cash offers seem like the easy choice, they’re more complex than they appear and you would be wise to vet your buyers before signing any contracts. Stay up-to-date on the latest scams and don’t send sensitive information via email without verifying the person on the other side with a phone call. Weigh your options and decide, is an all-cash sale the best fit for your current situation?