Don’t you have time to deal with the contingencies of a financed home? Or are you in a hurry to sell the house to settle the inheritance dispute?
Cash home buyers can be attractive to you because they offer the potential for a quick and easy sale. The average cash offer percentage in the real estate market is going down after 2013, but in cities like Philadelphia, the cash home buyer percentage is increasing.
You can get a pool of buyers if you opt for a cash offer, and there are high chances of getting a good and quicker offer.
The positive and negative impact of cash offers depends on the circumstances of the buyer and seller.
We will discuss in detail why you might consider selling your property to a cash buyer.
Who Prefers to Buy Home with Cash?
A cash home buyer can be either of the two types. One does not need a mortgage to finance their property, and the other does not qualify for the mortgage due to prices or terms.
Cash home buyers typically purchase properties with the intention of either holding them as rental properties, flipping them for a profit, or using them as their own residences.
Cash home buyers can be individuals, such as real estate investors, wealthy individuals, or retirees with savings to invest.
In the real estate market, the average percentage of cash buyers is higher than mortgaging the house.
Cash home buyers often target distressed properties, such as homes in need of repairs, foreclosures, or homes that have been on the market for an extended period.
Why should you consider the cash home buyer?
Cash home buyers are the best for those who have planned for a new business but are waiting for financing. The cash offer takes just 2 to 3 weeks to close the deal. On the other hand, mortgaging the property takes months to close. So a cash offer is way faster, easier, and quicker.
In the case of a cash offer, the buyer does not need to go through the process of obtaining a mortgage which saves you from the hectic procedure and saves a lot of time. Selling a home to a cash buyer can be simpler and less stressful.
No appraisal Contingency
With a cash buyer, there is also no need for an appraisal, which can sometimes hold up the sale or even result in a lower offer from the buyer.
In a mortgage, the lender requires an appraisal to ensure that the property they are lending on is worthy. If this is not so, then the lender asks the buyer to fill the appraisal gap. By self-financing or cash offer, the property value remains whatever the buyer wants to pay.
According to the NAR report, the appraisal is the reason for 12% of all canceled deals.
More Competitive and Higher Offer
The only reason a property owner sells their property is money. The cash buyer may be willing to pay you more money than the asking price.
Research suggests 5 to 10 buyers remain available for every property to make an offer. The increased demand means more competition. If you luckily find a high-end buyer, you will get even higher cash directly on hand.
Cash buyers often can make a higher offer because they are not subject to the restrictions of a mortgage lender.
A cash offer for a home can potentially reduce paperwork because it eliminates the need for a mortgage loan, which typically requires extensive documentation and verification of income, employment, credit history, and other financial information.
In addition, there may be less paperwork for the appraisal and inspection of the property since the buyer does not need an appraisal for fulfilling loan conditions.
Overall, a cash offer for a home can streamline the buying process and reduce the amount of paperwork. As there are fewer parties involved and fewer financial details to verify, so there is no need for extensive documentation.
However, there will still be some paperwork involved in the transaction, such as the purchase agreement and title transfer documents; these are typically standard documents. These documents are required regardless of whether the offer is made in cash or financed with a mortgage.
No commission fee
A cash offer for a home can potentially result in no commission being charged to the seller if the buyer and seller agree to a “for sale by owner” (FSBO) transaction. In this case, the seller is responsible for marketing the property and negotiating the sale directly with the buyer without the assistance of a real estate agent or broker.
If a cash home buyer approaches the seller directly, there is no buyer’s agent involved, so the commission can potentially be eliminated altogether.
The Bottom Line
Some cash home buyers are fraudulent. As there is no involvement of a third party, it is easier to deceive the seller, so make sure they are reputable and have the funds to complete the transaction as promised. It is also a good idea to consult with a real estate agent or attorney to ensure the sale is supervised and all legal requirements are met.