You have probably seen the dozens of billboards around your town advertising selling your home as-is for cash. These “we buy houses for cash” businesses promote the idea of selling your home through the service as an excellent way to have a hassle-free, quick sale.
But these ads lack the substance you need to know about how the process works and if it is lucrative.
To know whether you should consider selling your home to or through one of these cash buyers, you need a more in-depth look at what goes into the process.
What Are The Advantages to Selling Your Home to a We Buy Houses for Cash Buyer?
The greatest benefit to selling your home to a cash buyer is that since they don’t have to get the bank’s go-ahead, your home doesn’t need to pass a bank-required inspection. Therefore you can sell your home in its current condition, which is perfect if you don’t have the cash to repair the house to sell to a buyer with a mortgage or if you don’t want to spend the time bringing the property up to standard.
Understanding where a cash sale makes sense will help you determine if this is something you should be seriously considering.
A Complete Guide on How a We Buy Houses for Cash Business Works
Now that you know the benefit of selling your property to a cash buyer, this complete guide on how the process works will assist you with ascertaining whether this is the best move forward for your circumstances.
Phase 1: Getting an Offer
Unlike a traditional property sale, you know you will receive an offer from a corporate cash buyer. You usually call them to come to your home, when they’ll give you an offer. But how exactly does the offer process work?
After making the initial inquiry, you can expect them to come to your home in one to two business days. Some buyers may arrive the next day or in a few hours, depending on the size of the operation.
You’ll then get an offer either on the spot after they’ve done a quick walk-through of your home and property or in the next day or two.
The offer you get will be the most jaw-dropping aspect of this process. Many believe “we buy cash for houses” buyers make offers between 30 to 40 percent lower than the home’s market value. In actuality, that figure is usually between 50 to 60 percent lower than the market value, especially considering the property market.
Unlike with a traditional buyer, there’s no room for negotiation. Their original offer is usually their “best and final” offer.
After giving you the offer, they will usually give you a time frame regarding when the offer will expire. With “we buy cash for houses” buyers, an offer can expire in 24 hours but may last for seven days.
Phase 2: Accepting The Offer to Closing
If you decide to accept the offer, the next thing on your mind will be the closing process. It’s hassle-free, right? In most instances, yes. However, there are some challenges you may need to navigate along the way.
These cash buyers can be unscrupulous, creating the most unscrupulous contracts that give the seller — you — little chance for recourse if they’re unhappy with the process. These contracts also make it extremely difficult to back out of the deal after signing, even if you find a better offer. Therefore, it’s critical that you read through and understand the terminology used within the contract before signing. Because, once you put pen to paper, there’s no turning back.
Closing Time Frame
The closing process will be the most painless part of the process. There are no last-minute inspections or anxiety about whether the buyer will get their mortgage loan approved. For those reasons, the closing process is extremely straightforward.
However, the time frame to close on the deal can differ considerably.
Closing on a property can take one week or one month, depending on the buyer the “We Buy Houses for Cash” companies represent (more on that below). But in many instances, the closing period will be identical to a mortgaged buyer, taking two weeks to a month.
Who Are You Selling to When You Sell to a “We Buy Houses for Cash” Business?
Who you sell your home to when you sell to a “we buy houses for cash” buyer will determine the type of experience you have. Although most follow the same practices to acquire homes, the degree to which the price will change or the time frame will differ will boil down to the buyer you’re selling to.
Investors can often be the most level-headed of all the “we buy houses for cash” buyers. They aren’t necessarily wanting high margins, allowing them to offer more money for your home. They will likely get the home to a livable condition through repairs and then rent it out, allowing the market growth to help them recoup their money.
However, you rarely sell to an investor when you approach a “we buy houses for cash” business. Investors don’t have the time to put into finding and acquiring profitable homes. Instead, they will rely on property wholesalers or use flat fee MLS listing services to find an investment-worthy property.
House flippers are looking for below-market value homes to flip for a profit of between 10 percent and 20 percent. They usually work within a specific town or radius and have smaller operations. While they give far below market-value offers, they give you time to consider the offer. They are also only likely to make an offer on your home if it meets other prerequisites before buying your property.
Wholesalers, also known as paper flippers, never even own the property. These cash buyers make an offer on your home. Then after you accept the offer, they distribute your home to investors and house-flippers. They then assign the property to an interested buyer at closing.
These sorts of buyers are the most unscrupulous. They demand deep discounts only to make a substantial profit without putting in any effort.
The tell-tale sign you’re working with a wholesaler is the short time you have to consider their offer and the long closing period, usually taking between two weeks and a month. During that month, they will be trying to find another buyer to assign your home to.
Should You Consider Selling Your House As-Is?
If you do not have the financial means or the time to repair and renovate your home, selling your house as is still a viable option. But it becomes more viable when you determine how and where you choose to sell.
You can still get market-related prices for your home if you are savvy about the buyers you approach.
Firstly, avoid selling to wholesalers.
Secondly, consider listing through a flat fee MLS listing service like Houzeo or FSBO.com.
Many interested cash buyers use these websites to find as-is homes at a reasonably discounted rate.
Then, especially with a site like Houzeo, you have time to consider the offer, make a counteroffer, and accept the offer online.
You’ll also find that you’ll get numerous offers on your home if you price it according to its current condition.
Selling your home as-is to a “we buy houses for cash” buyer only makes sense when you’re in a pickle. In every other circumstance, it makes sense to list your as-is home through a flat fee MLS service. These MLS services help you get exposure to buyers while improving your chances of getting a reasonable offer on your house.