If you are exploring the property market, chances are you are going to come across the term ‘cash buyer’. To those not familiar with the term, it probably sounds like someone that will show up to your doorstep with cash to buy your house. Nice try, but that’s not what it means.
Cash buyers refer to individuals or companies that have money to purchase a property outright. They don’t need to take a loan or mortgage to purchase a property as they have money on hand. Some real estate agents claim they have a cash buyer ready to buy a property. But in truth, the buyer needs to sell another property to buy yours. That’s not a cash buyer.
The main advantage of dealing with cash buyers is quicker sales, especially to people that want to sell their home fast for one reason or the other. There are also fewer hurdles with cash buyers which significantly increase the chances of selling the property.
There are some things you need to consider when choosing cash buyers. And they are explained below:
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The value of your home
One of the first things to do if you want to sell your home to cash house buyers is to find out the value of your home. This is to ensure you accept a fair offer for your home. To have some idea of how much your property is worth, look at the selling prices for recent comparable homes in your area. A local real estate agent can visit your home for evaluations. You can also use online property websites or government property databases.
Prospective cash buyers will also find out the value of your home. So, it’s important you also do your due diligence to ensure what they are offering you is fair. Remember that repairs and special requests such as extended move out periods will affect the evaluation of your home. In the end, the offers you receive can be anywhere between 75 – 95% of your home’s market value.
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Timing matters
Are you in a hurry to sell your home? Because if that is the case, then cash buyers are an option you should explore. It could be that you want to relocate quickly or need money for some financial troubles.
Selling your home through traditional means can take months. Selling to cash buyers, on the other hand, can take days or a week or two.
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Are you selling your home As Is or not
When you sell a property as is, it means you are not repairing or improving the property before you buy it. Also, you won’t be covering any repair costs for the buyer. Typically, buyers make offers based on the value of a home. And if the house requires a repair of say $3000, they might ask you to remove that price from the appraisal value. But if you are selling as is, you are essentially telling the buyer that any repairs are not going to happen.
Selling as is makes sense if you are not willing or don’t have funds to improve the house. But don’t worry, several cash buyers buy fixer-uppers for a living. So, you’ll still be able to sell the property but at a lower rate. The cash buyer will inspect your home and make an offer based on their evaluation.
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Find a reputable buyer
Scams can happen when selling a property to cash buyers. So before you sign anything or make any dealings with any cash buyer, do some research about the cash buyer. Reputable cash buyer companies have websites and reviews. You can check their reviews on different platforms. Also, make sure it’s an accredited Better Business Bureau (BBB) member.
You should also ask for official proof of funds from the buyer’s bank. That way, you are confirming that the buyer has enough funds to buy your property. Also, a bank deposit shows the buyer is committed to the sale and will transfer them to you if everything works out.
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Consult an agent where needed
If you aren’t confident enough dealing with cash buyers, especially if it’s your first time, consult a local real estate agent. For one, the agent will most likely know the cash buyer players in your area, guide you, and help avoid getting lowballed. Involving a real estate agent brings a sense of security as they can help you verify if a buyer is legitimate or not while also ensuring you get a good offer.
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You will not lose money
It’s true that you may receive lower offers from cash buyers compared to what you’ll get via the traditional route. But the advantage of selling your home as quickly as within a week or two offsets that. Selling a property through a traditional buyer can take months. During this time, you’ll still have to pay the mortgage and other necessary fees. And when you finally sell the house, there are other costs such as agent fees, closing fees, and so on. All of these don’t happen with a cash buyer and when you consider all these, you’ll realize you aren’t losing money.
Reference:
Johnson, Leigh Redd, and Holly R. Rudolph. “Cash buyer beware!.” Journal of Corporate Accounting & Finance 21.1 (2009): 33-39.
