If you are like most home sellers, just the thought of putting all the time and effort that are typically needed to sell your house can give you anxiety. From staging and cleaning to spending a lot of money on major upgrades and making sure that your property is attractive for the market, selling a house can be anything but hassle-free when choosing traditional routes. In this article, we will talk about some of the biggest benefits of accepting a cash offer on your house.
What does accepting a cash offer on my house mean?
A cash offer in real estate refers to an offer submitted by a potential buyer that doesn’t require any financing from a third-party lender (ex. banks). In other words, it means that the buyer will make an all-cash offer with their own money without taking a mortgage from a financial institution. According to The Wall Street Journal, cash sales account for more than 28% of the home sales in the US.
When a potential buyer already has all the necessary funds to purchase your property right away, you can both avoid a few long (and often costly steps). Cash sales tend to be faster, more convenient, and significantly less stressful than selling through a real estate agency.
However, many people are still not aware of the benefits of accepting a cash offer on your house. So, without further ado, let’s dive right into them:
1. Fast closing of the deal
One of the most important benefits of accepting a cash offer on your house is the speed in which the deal can be closed. Considering the full process from start to finish, a cash deal usually takes significantly less time to close than traditional sales.
The exact time will depend on the cash buyer, but the average period is about 14 days. However, with companies such as Ultra Home Buyers, you could be closing the deal in as little as 10 days, and up to 60 days if you prefer a longer time period.
Some factors that impact how fast a cash deal can close include:
- The number of living individuals on the title – if more people are involved, it may take more time to negotiate and reach an agreement between all parties.
- Additional liens on the home – if there are additional liens on the home apart from the regular mortgage, this may have a negative impact on the speed of the deal as well.
- Lack of honesty with the buyer – in many occasions, not being upfront with the buyer about things such as additional liens, property taxes, or undisclosed owners of the house can significantly slow down the process.
- Longer option periods – if the option period is longer, this gives more time for the buyer to back up from the sale without any legal or financial repercussions.
- A deceased person being on title – this is another factor that can negatively impact the speed of the cash deal. If there is someone deceased on the title, it may require additional verifications and extra documentation which may slow down the process.
However, even when considering these factors, accepting a cash offer on your house is still a lot faster than selling it with a real estate agency (or on your own). According to the National Association of REALTORSⓇ, the average time on the market is 18 days, but this doesn’t mean that the deal actually gets closed in that time period.
It may take up to 70 days or more to close the deal and complete the whole selling process from start to finish. For further reference, selling the house on your own (FSBO – For Sale by Owner), especially if you don’t know what you are doing, may take even double that time.
2. Reduce stress
One of the biggest benefits of accepting a cash offer on your house is that there is significantly less stress, and this is achieved in a variety of ways. On one hand, selling your property to a cash homebuyer means that they will buy your house as-is. This means that they will buy it in any condition – you will not have to worry about making it marketable by spending time and money on repairs, major upgrades and staging.
Another way in which selling your property to a cash homebuyer reduces stress is because the process is a lot more simple and straightforward. You will not have to deal with listings, house visits, stressful negotiations with multiple potential buyers, conversations with banks or financial institutions regarding your mortgage, and all that jazz.
Because you skip a lot of extra steps that are typically associated with traditional real estate selling, you will cut on a lot of the stress and anxiety as well.
3. Cut the costs
One of the most underestimated benefits of accepting a cash offer on your house is that you can actually save money. When people think about cash buying, they mostly think about a lower deal than they would get compared to a traditional real estate agent.
However, in reality, you can save on thousands of dollars with a cash deal. When considering things such as:
- Commission fees for the real estate agency
- Appraisal fees
- Processing fees
- Document fees
- Closing costs
- Transfer and recordation taxes
- Lender required repairs
You can often discover that the net price achieved with a cash deal is close to the one that you can get with a real estate agency, or sometimes even higher. Unfortunately, a lot of people don’t counter in all of these fees and taxes when comparing both options, concluding that they can always get a better deal with a real estate agency.
When in reality, it’s not always the case.
4. Get out of a difficult situation
Speaking of the benefits of accepting a cash offer on your house, another important advantage for homeowners is that this option allows them to get out of a difficult situation faster and easier.
For example, if you are dealing with a messy divorce and you need to split the equity in your home, selling the property for cash is a fast and clean way to achieve that. In other challenging situations, a fast home sale can help you avoid foreclosure, bankruptcy, or simply liquidate cash to pay down debt.
Whatever the reason, accepting a cash offer on your home can help you get out of a sticky situation as soon as possible, and move forward with your life.
5. Avoid the hassle of appraisals
The appraisal of your home can also be a stressful event for many homeowners. As we mentioned earlier, it often requires certain preparation, home staging to increase marketability, and repairs in order to get the best deal from potential buyers. Once everything is ready, homeowners then have to pay appraisal fees, which only add up to the already existing stress and hassle.
Appraisals are an important part of getting a mortgage on your home. The mortgage lenders request them with the purpose of reducing financial risk (for example, if the home buyer forecloses in the future).
With a cash sale, however, since no third-party lender is involved, appraisal is not necessary. The cash buyer will make a fair offer based on their own evaluation of the property on the market, without requesting an actual appraisal. For homeowners looking to sell their house, this removes a huge obstacle from the process.
6. Skip the showings
Next on our list of benefits of accepting a cash offer on your house is the hassle that you will be able to cut when you skip on showings. Whether you are selling with a real estate agency or on your own, finding potential buyers requires a lot of work and can be very time-consuming (and let’s not forget – expensive!)
And of course, we are not only talking about the time dedicated to the showing itself. Trying to constantly keep your home in walk-through-ready condition at all times, especially if you have a full-time job or have to take care of your kids, can be a very challenging task.
However, selling your home to a cash buyer means that you can skip on the showings altogether. When going this route, you will not have to market or show your property to hundreds of potential buyers, and worrying constantly if the house is in the perfect condition for the market.
The process is simple and straightforward – you get in touch with a home buyer, they give you an offer, and you decide whether to reject it or move forward with it. No listings, no showings, no stress.
7. Save on commission fees
Undoubtedly, one of the best benefits of accepting a cash offer on your house is the amount of money that you can save when cutting on commission fees. On average, real estate commission fees fall within the 5-6% range on the home’s sales price.
If your home is selling for $500,000, this can mean paying up to $30,000 only on commission fees! And, as we mentioned earlier, we are not even including the closing costs or lender required repairs in this equation. In this case, selling your property to a cash buyer means that you will skip the realtor fees and save some money.
8. Reduce the risk
If you are selling your house to a regular buyer through a real estate agency, there is a higher risk that the sale doesn’t go through. The lender can deny the financing for many reasons:
- The credit score of the buyer is too low
- They have a very high Debt-To-Income Ratio (DTI)
- They have recently changed their employment status
- The Loan-To-Value Ratio (LTV) Is Too High
- The lender is noticing an unusual bank activity
- Or the buyer has a history of missed mortgage payments
In this case, even if the sale doesn’t go through and the homeowner has the option to continue with another buyer, the lost time can’t be recovered. And time is an especially important factor if the seller wants to close the deal as fast as possible, for example if they are facing a difficult financial situation.
On another hand, cash offers tend to be stronger when compared to traditional financing offers. Cash buyers already have the funding needed to complete the purchase, thus reducing the risk from traditional lenders. For this seller, this means that when the deal closes faster, he gets paid sooner.
These are some of the main benefits of accepting a cash offer on your house. If you have any questions, or you are ready to sell your home for cash, don’t hesitate to contact us!