A successful home sale traditionally entails a lengthy process. Prior to closing the deal and getting the payment, your property has to be inspected and appraised, then the buyer’s mortgage loan has to be approved by a financial institution like a bank or credit union. The odds are against your favor if you’re in a rush.
Here enters cash offer for homes. As its name implies, there’s no external financing getting in your way. No need for dealing with multiple parties and complicated procedures. In a few weeks, you’re able to receive the pay from a private individual, house flipper, or a real estate investor looking to add something to their portfolio. For a deeper look into the benefits of this method, keep reading.
Save on Repairs
Usually, home sellers may need to do some repairs and upgrades to make the property fit for staging. No homebuyer would want to live in a home fraught with issues like water damage, exposed wiring, malfunctioning HVAC systems, etc. Fixing these problems is essential for a higher appraisal, but it can easily get expensive.
Good thing cash buyers, particularly cash homebuyer companies, don’t care about your house’s current condition. They’ll purchase your home as-is, saving you from the burden of beautifying your home. It’s an investment strategy wherein they’ll do the necessary repairs themselves then sell the property for a much higher price or lease it out.
But make sure to only deal with reputable and experienced cash home buyers to avoid getting scammed. They accept various property types, including distressed houses. Most importantly, they won’t lowball you with their offers.
Faster Closing
If you’re going to take the conventional route, you’ll have to wait for months before it’s a done deal. You need to make time for inspections and paperwork processing. The lender may also request repairs to ensure the property is able to maintain its value. Mortgage approval alone can take a month. Expect the closing date to be far off from when you’ve finalized your decision to sell your home.
But when you choose a cash offer for your home, you don’t have to wait that long. The buyer only needs to show proof that they can pay the full amount, usually through a bank statement. Closing documents are also not as complicated as in mortgage financing. Paperwork usually just focuses on property title transfer, and that’s about it.
Faster closing also means fewer chances for the buyer to change their mind. Sometimes, they may get intimidated or overwhelmed by the lengthy process that they’d end up dropping the deal. Furthermore, because the timeline is significantly cut down, both parties can move forward more quickly. Whatever post-sale plans you’ve got, you can start working on them, most likely much earlier than you initially thought.
Lower Closing Fees
Although a cash offer doesn’t fully eliminate closing costs (you’ve still got to pay transfer taxes, escrow fees, etc.), it can significantly lower these expenses and, thus, increase your net profit.
First, you’re less likely to offer concessions for the issues revealed during the inspection. These incentives are usually a negotiating tool in a traditional home sale. But with the cash offer having a stronger position, you can avoid shouldering such costs. Also, you’re not held captive by appraiser-required adjustments. There won’t be a need to fulfill such requests just to please the other party. By accepting a cash offer, the final asking price can be as close as possible to your home’s market value.
Apart from lower closing fees, you also get to enjoy less holding expenses. This means you’ll spend less time paying utilities, taxes, mortgage, and insurance for the old property.
Safety From Market Fluctuations
Fluctuations in the real estate market are to be expected. So, there’s always a chance that your asking price may not be able to hold its ground for long. On the buyer’s part, rising costs could impact their financial capability. Their mortgage application may even fall victim to more stringent standards due to these industry variations, endangering its approval.
A cash sale is pretty quick, as mentioned earlier. You can lock in your asking price immediately, leaving no room for obstacles like market downturns to ruin the process. See, there’s actually a chance for your home’s appraised value to drop, which can force the lender to not provide the full loan amount or, worse, approve the buyer’s loan application. Now, since a cash offer lowers financing risks, you won’t worry about the buyer having a hard time securing the necessary funds.
Final Thoughts
Accepting a cash offer for your home promises a smoother, less stressful transaction versus the traditional home selling process. It has a faster timeline and offers cost saving opportunities, allowing you to earn rightfully from a property you’re letting go of, right when you need it.