You’ve probably seen the WE’LL BUY YOUR HOME – ANY CONDITION or WE BUY HOUSES FOR CASH signs around your neighborhood. If you want to sell your house fast, selling to a ‘we buy houses for cash’ company could be a good idea. Here, we’ll dive deeper into this type of cash transaction to help you decide if this kind of residential property sale is right for you and your property.
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How Does It Work?
It begins by knowing how to find cash buyers. Besides looking for signs in your neighborhood, you can also check newspapers or sites like Craigslist for cash buyer ads. You will then make a phone call to the ‘we buy houses for cash’ company and provide some details about your property and what it offers. The ‘we buy houses for cash’ buyer will research your neighborhood, the property value, and the value of other comparable homes in the area. Afterward, the buyer might come over to look at the home. You will either get an offer on the spot or within 1-2 days. If you agree to the price, the sale could be closed within a few weeks.
Types of “We Buy Houses for Cash” Buyers
‘We buy houses for cash’ companies fall into three categories:
- Buy and hold real estate investors – These are real estate investors who buy houses and convert them into rental properties. Their aim is to generate rental income while waiting for the home to appreciate in value. With buy and hold investors, you will probably get a better offer than if you were selling to a house flipper.
- House flippers – Flippers are investors that buy a home for sale in poor condition at a low price. They then fix it up and sell it to earn a high return on investment.
- iBuyers – iBuyers such as Zillow Offers, OfferPad, and OpenDoor buy a large number of properties and then resell them for a slight profit. They determine the value of your home using automated valuation models (AVMs). iBuyers make the best cash offers, up to 98% of fair market value. However, they charge the property seller a service fee of 6-15% which covers costs such as taxes, HOA fees, utilities, and repairs.
Related: Selling a House in Poor Condition? 3 Tips to Follow
Is Selling Your House for Cash a Good Idea?
Yes, selling your house for cash could be a good idea due to the following reasons:
- You can sell quickly – The main advantage of selling your house for cash is that the sale happens very quickly. There are several reasons why you might want to sell your house fast. It could be due to divorce, unexpected legal or medical bills, job relocation, losing a job, retiring, or avoiding foreclosure. In such cases, selling to a ‘we buy houses for cash’ company would be a good idea. You don’t have to host endless open houses or wait for a home inspection. In addition, there is no waiting for lenders to approve buyers’ mortgages. Within a few weeks of contacting the ‘we buy houses for cash’ company, you will have the cash in your pocket.
- You keep all the proceeds from the sale – Selling your house for cash means that you don’t have to hire a real estate agent. In addition, there are no closing costs involved as in traditional home selling. Selling directly to a cash buyer allows you to avoid all these fees and keep the total amount paid.
- No repairs needed – You don’t have to worry about repairs, renovations, and deep cleaning before selling. A ‘we buy houses for cash’ company will purchase your property as-is – and do all the repairs and renovations themselves. If you don’t have the money or time to fix up your property before the sale, selling a house for cash is the best option.
However, selling to a ‘we buy houses for cash’ buyer has several disadvantages:
- Low price – The greatest downside of selling for cash is that you might have to settle for a very low price. Usually, the company will only pay 50-75% of the property’s actual value. You are basically paying for the convenience of an easy home sale.
- No representation – Selling your house fast means that you don’t have a real estate agent representing you. If you don’t have experience buying or selling houses, it could be very easy for the wrong ‘we buy houses for cash’ company to take advantage of you.
Are Companies That Buy Houses for Cash Legit?
While many ‘we buy houses for cash’ and iBuying companies are legit, there are several real estate scams out there. This is why you need to do some research before making that phone call.
When you see a ‘we buy houses for cash’ sign, check if the sign has the name of a company. If all you can see is a phone number, it is probably one of the ‘we buy houses for cash’ scams. Quite often, such numbers are routed through services such as Google Voice, thus making them untraceable. If the sign has a company name, check online for their ‘we buy houses for cash’ reviews and testimonials. You might also want to visit the state or county law enforcement sites and search for lawsuits connected to the company.
Related: How to Detect Fraud While Selling a House
If you decide to work with a company and then accept their cash offer, ask for a proof of funds statement or letter. This could be an original bank statement, an open line of credit, an online banking statement, or a certified financial statement.
If you are a first-time home seller, it would be advisable to work with a real estate attorney when signing the contract. The attorney will comb through the fine print, ask questions, and ensure that everything is in order.
Conclusion
Selling to cash buyers can be a good idea. Just do your research and understand all of the implications.
If you don’t want to sell your house fast to cash buyers, you can always explore other options. For instance, you could approach an experienced real estate agent in your area and inform them that you want to sell your house quickly. The agent will help you set a good list price and strive to make the sale happen within your timeframe. Alternatively, you could get your home listed for free on the Mashvisor Property Marketplace. This off market listing website will help you reach thousands of serious real estate investors who are ready to buy.