What are the Pro’s and Con’s Of Using a Cash Buyer
If you’re ready to sell your home and have enough equity in your home for it to make sense, you’re probably wondering if it is a good idea. If you're set on selling your house in this real estate market this article will help you answer some critical questions. It's important that you take time to analyze the pros and cons of using a cash buyer when selling your property.
SELLING YOUR HOUSE FOR CASH PROS AND CONS
With cash home buyers available nationwide you can easily choose a cash deal for your home without any hassle. To determine if selling your home without a realtor is the right decision, you must know everything related to selling the house for cash and the pros and cons associated with the decision.
What are The Benefits of Accepting a Cash Offer on the House?
- Fast dealing - traditional house selling can take months, if not longer whereas accepting cash offers directly from a home buyer closes the process within days.
- No contingencies - a conventional home sale comes with multiple contingencies, including mortgage contingency and appraisal contingency. This entire process can delay or derail the home sale. On the other hand, accepting a cash-offer on your home has no contingencies.
- No fix-ups - If your home needs some major repairs and you don’t have enough cash to fix them, accepting an all-cash offer is definitely the right thing to do.
WHAT IS AN ALL CASH HOME PURCHASE
An all-cash offer is a cash bid. It refers to the process of purchasing property without any financing or mortgage loans. Once you agree to the purchase price you’ll oftentimes receive cash in a matter of days.
Why is an all Cash Offer Better?
The offers are typically more appealing to sellers as they don’t involve any buyer financing fall-through risks and cash offers allow for extremely quick closing times.
Do Cash Buyers Have an Advantage?
You can gain many cash buyer advantages on cash sales. It saves a great deal of money that may include processing fees, credit checks, appraisal fees, and originating loan fees not to mention costly realtor fees and commissions.
Plus, cash sales can significantly reduce closing costs for sellers and buyers. Cash buyers can close the deal quickly as there is no underwriting process. Also, cash buyers don’t have to wait on tenterhooks for home appraisals.
Why do sellers like cash buyers?
Many sellers go with an all-cash purchase offer over other options like traditional or FHA financing. This is because cash offers with proof of funds have to face fewer stumbling blocks. If buyers have enough buying cash, potential problems like these cannot derail a home sale.
How Quickly CAN A CASH BUYER CLOSE
Once you find a reputable cash home buyer everything goes rather quickly. Because there is no involvement from banks, mortgage lenders, and real estate agents, the closing time for purchasing is significantly shortened.
Once you sign the contract, you can close the cash sale deal within two weeks or less. This period allows for enough time to escrow companies for liens clearance, finish paperwork, and provide insurance.
What are the Disadvantages of Cash Buyer for Your House?
There are situations where using a cash buyer can be disadvantageous for the seller. These include, but are not limited too:
- Low Purchasing Offers - cash buyers often want to deal with low purchasing offers. The purpose of them buying a home is oftentimes to renovate and remodel the undervalued properties with the end goal of reselling the properties. That is why cash buyers look to pay a price as low as possible to allow for the repairs which could be rather pricey.
- Deduct Improvements and Repairs from Price - Because cash buyers don’t require you to make any renovation or costly repairs; the end selling price may be reduced to allow for the required remodeling.
WHY IS IT BAD TO BUY A HOUSE WITH CASH?
For the cash-buyer there are many risks associated with using this strategy to acquire real estate. They need to do their thorough due diligence to make sure there are no hidden issues with the home so that it can become a profitable purchase.
The cash buyer is leveraging a lot more risk than the seller.
For the seller, even with the promises of quick all-cash transactions and shortened closing times and costs, there is no guarantee of the home sale until you sign the deal and receive the money.
The Logistics of Using a Cash Buyer to Sell Your House
The logistics may include the timing of the purchase, negotiation with the cash buyer, your belongings and possessions, and/or moving dates.
DO YOU NEED TITLE INSURANCE IF YOU PAY CASH?
You’ll always need title insurance on the home even if you pay cash for purchasing. The party responsible for paying for this is usually negotiated within the sale process.
Who buys title insurance buyers or sellers?
The cash buyer will oftentimes be the person responsible for purchasing the title insurance. So as the homeowner selling to a cash buyer this is another advantage that comes with the process.
DO BUYER AND SELLER SPLIT CLOSING COSTS?
In a traditional home sale the closing cost is usually split up between a seller and buyer. However, cash buyers will almost always pay for closing costs and sellers will have to cover municipal fees and local taxes associated with the sale.
DO CASH BUYERS NEED AN APPRAISAL?
As a cash buyer doesn’t work with lenders, they don’t need legal appraisal.
DO BANKS PREFER CASH BUYERS?
Many banks prefer working with cash buyers as they close the deal quickly and don’t mind investing in properties in need of repair. So yes, banks do prefer working with cash buyers in that regard.
WHY IS A CASH OFFER BETTER FOR A SELLER?
Cash buyers offer an array of advantages. For most people with distressed housing cash buyers are always the most logical route to complete the sale of their home.
It closes very quickly and there is no waiting for buyers to get the financing approved.