Selling a home requires a lot of work and a stressful ordeal, from the time and effort put in to prepare your house, to the endless amount of cleaning, repairs, and upgrades- it's a worrying phase for most home sellers.
Once your house is tidied, you still have to search and find an excellent real estate agent, or you may decide not to use an agent at all.
There are also worries about how long it will take to reach a sale, as well as the additional costs linked with selling your house and the ever-hanging doom of a sale falling through at the last minute.
The problems listed above are just a small list of the reasons why a seller would look for alternative solutions to a sale on the housing market.
But fortunately, there's an option that can help alleviate some of your stresses. There are several benefits of accepting a cash offer on the house, such as saving time and cutting expenditures.
If you're still wary of accepting a cash offer and only feel comfortable with traditional sales, continue reading through this article, and we'll explore exactly what a cash offer is, as well as the main benefits of accepting a cash offer on a house.
What is a Cash Offer?
A cash house buyer or a cash offer is a sale where a buyer offers the seller the total cost of the house outright without using a source of financing such as a loan or mortgage. Having the funds in full can speed up the overall sale process significantly.
You'll be able to eliminate hurdles like estate agencies or viewings and cut out the chances of delays and complications that surround conventional property sales.
🔑Key Fact: Usually, a cash buyer will be a house-buying agency or company that works alongside property developers who plan to purchase the property with the intention of renovation.
Homebuyers who propose a cash offer will not have to stress about getting through the finance sectors, like applying for mortgages or loans, and this is one of the top reasons that a home offer fails- and a seller's biggest nightmare.
🧠Remember: Genuine cash buyers will already have instant access to the funds required to buy your home, but whether your cash offer comes from a company or an individual, you must request proof that the finances are readily available to cover the cost.
While it's true that all home sales will result in an exchange of money between the buyer and seller, cash offers help to remove a whole load of obstacles that arise from traditional home sales, and cash sales are becoming increasingly more popular.
What Situations are Cash Offers Most Common
Every seller's reason for selling their home is uniquely different. However, there are some situations where a seller will reap the benefits of accepting a cash offer on a house, and it's usually the best possible option. Here are some reasons where cash only offers are welcomed:
Homes Close to Foreclosure
Homeowners at risk of facing foreclosure will find themselves trying to solve their problems.
Due to financial circumstances, this means the homeowner can no longer afford to make payments on their homes, such as mortgages or loans, and will feel as though they are running out of options to regain some form of stability.
While there are other options they can take, such as evictions, short sales, or bankruptcy, these can have a detrimental impact on the owner's credit score, making it hard for them to seek loans in years to come.
However, a simple cash sale provides an easy way out without harming your credit score. Accepting a cash offer on a property at risk of foreclosure allows the homeowner to avoid eviction, avoid a lowered credit score, and will enable them to move on to the next stage of their life.
💡Delve Deeper: Properties who have federal tax liens often look to sell their house to cash buyers.
The amount of money an individual spends to keep their home to a good standard or well-maintained can sometimes prove to be a lot to handle for some homeowners.
Whether your roof needs replacing or your foundation is cracking, repairing your home can cost you tens of thousands of dollars.
Traditional sales can make it difficult to sell houses that need major repairs, for example, houses with infestations such as mold.
💡Key Insight: Lending companies or mortgage companies often refuse to issue loans for properties that are damaged or in need of major repairs.
Cash buyers do not have to face these issues and can sell their houses as-is or, more commonly known as fixer-uppers, to people willing to pay upfront. This means sellers don't have to stress finding the cash to fix repairs and enjoy a speedy closing.
Changes to Life
Suppose homeowners experience key changes to their life, such as retirement, new jobs, personal illnesses, deaths in their family, or marriage or divorce. In that case, they may find themselves wanting to buy a new house or change the area they live in quickly.
For example, if you've retired and realized your house is too big and want to downsize, or if a family member has fallen sick, you may need to move closer to that ill relative.
Or, if you are undergoing a divorce, you may need to find somewhere else to live due to contention, and these are all significant life changes.
Such changes may require you to sell your house immediately without any extra stress, just a simple solution to a problem that can be solved quickly.
Our Top Twelve Benefits of Accepting a Cash Offer on a House
As mentioned, cash sales vary from conventional home sales in numerous ways. Here we will have a lop at the top 15 benefits of accepting a cash offer on a house.
1. Faster Closing Process
The closing process is relatively long, and understanding what is required from a seller and buyer is just one aspect that can speed up the process. Furthermore, another element that speeds up your closing is processing a cash sale. Cash sales cut down the time taken to finalize the sale from start to end. Usually, applying and having your mortgage loan accepted is the part that takes up a lot of time.
For sales to be authenticated, a mortgage needs to be underwritten. The process to underwrite a loan can take between 30 to 60 days, which gives a wide window for anything to change.
For instance, your financial status could change dramatically. If there are noticeable changes between pre-approval and loan finalization, the mortgage lender could terminate the loan, causing the deal to fall through.
🔄Roundup: As cash sales are not reliant on mortgage underwriting, sellers can cut the chances of a deal falling through at the last minute.
2. No Appraisal
An appraisal is usually used to figure out the home's value. It aims to cut down the financial risk imposed on a mortgage lender and allows the lender to determine whether the house value is worth the loan amount.
Once the appraisal is completed and the value comes in low, mortgage lenders could decide to back out of finances the sale on the home and therefore is another reason why home sales fail.
Unlike traditional sales, appraisals are unnecessary with cash offers as a mortgage lender is not involved in the process and helps to eliminate another hurdle.
3. Skip Marketing
If you sell your house to an all-cash buyer, you don't have to worry about marketing your home, and there are many organizations such as real estate companies to intelligent real estate individuals that will help you along the way.
As the seller usually scouts around to find an all-cash buyer, this will cut out listing your house with a real estate company, advertising, and keeping up with back and forth messages on a real estate site.
✅Tip: Just because you are not marketing your house, don't think you won't get a fair price for your home.
4. Skip Showings/Viewings
Staging your house to show its best features can take hours to perfect and contributes to the stress of selling your home. Again, just like marketing, cash sales alleviate the stress of taking multiple pictures of your home.
Cash-buyers are less likely to want to attend a viewing; usually, this is because they intend to buy the house to renovate it. They would much rather have a small personal showing to view the basic elements of the house.
5. Less Stress
There are so many stages that increase your stress levels when selling a house. Whether it be cleaning, repairing, upgrading, or finding an agent, sorting inspections and appraisals, as well as keeping your home in immaculate conditions for viewings, there's definitely a lot to handle.
Cash sales speed up the process immensely, so it will reduce some of the stresses that crop up when selling your house.
6. Fewer Risks
Essentially, a seller is looking for a deal to close quickly and be paid as soon as possible. That's why a cash offer cuts down on any risks of a deal falling through.
If a seller is presented with a buyer who has the money to pay upfront and a buyer who needs to seek financing- naturally, the seller will pick the buyer that proposes fewer risks.
👀Insight: Home sellers will usually go with a cash offer over a financed buyer- even if the cash offer is lower than the original asking price.
7. Lowers Cost Spent on Repairs
With conventional sales, an inspection usually takes place, and this is where attention to any damages that need to be repaired are highlighted.
At this point, the seller will be expected to pay out to fix any problems brought to their attention. The seller can also lower the asking price to reflect the repair work in some cases.
Cash sales allow you to sell your house as-is, so you will not be subjected to inspections meaning the money will be saved on any upgrades and repairs.
8. Eliminate Difficult Problems
If you are facing divorce and need to relocate, or maybe your house is at risk of foreclosure, accepting a cash sale on your house will allow you to quickly get out of a difficult situation.
These situations can cause a lot of stress, but with a cash sale, you won't have to wait for mortgages or loans to be accepted; you can sell your house, receive the cash and move on to your next step in life.
9. Minimal Paperwork
Flicking through endless paperwork can be confusing and hard to understand.
Reading, initialing, and signing all that paperwork can be overwhelming, and ensuring you understand everything detailed in the paperwork entirely is essential, and a small mistake can create huge problems.
A cash buyer who is reputable and can prove they have the funds will sort out paperwork and closing information for you.
📋Don't Forget: You should always check reputable cash buyer's reviews or references, as well as proof of funds, before you move forward with a cash sale.
10. Commission Fees
Selling your house to a cash buyer will allow you to keep more money in your pocket as you will not have to pay out a realtor or real estate agent.
However, be sure to watch out for any hidden fees that a cash buyer may sneakily request.
✨Extra Fact: Real estate agents fees usually take around 6% of your home's final sale price.
11. No Negotiation Meeting
Having to sit down a negotiate and going back and forth with a buyer can be an unpleasant and draining process of traditional house sales.
Cash offers allow you to avoid the negotiation process altogether. You'll receive a fixed offer that you can accept immediately and begin to tie up your sale.
12. No Property Chains
A property chain is when a successful sale for your property relies on the success of another sale from the individual's property. Hence, the funds are available, and you, as the seller, become a link within the chain.
This situation can cause severe complications, especially if the chain grows bigger. It can increase the chance of problems that may cause long delays in the processor can cause potential sales to fall through.
As a person's financial status or personal situation regarding another house in the chain can cause delays, cash offers allow you to curve the chance of being added to a lengthy property chain.
Summary: Benefits of Accepting a Cash Offer on a House
As explored in this article, sellers generally prefer to deal with an all-cash buyer for a wide range of reasons.
One of the most significant reasons that sets cash offers apart from traditional sales is processing the sale quickly while minimizing a load of uncertainties.
Applying and having a mortgage loan accepted is one of the lengthiest parts of wrapping up a home sale using traditional methods.
A loan must be underwritten before any sale can be authenticated. To give a rough idea, this can take anywhere between 30 to 60 days leaving time for an individual's financial status to change.
Suppose a mortgage lender has found that a person's financial status has dramatically changed. In that case, they can terminate the loan and cause the sale to fall through- which is why cash-offers are better as the payment can be made without consulting a mediator.
Essentially, cash-offers provide sellers with a speedy process and have instant access to their funds.
It helps to lower your stress levels by canceling out the need for viewings and showings while cutting out fees that would need to be paid to real estate agents- if using the conventional methods.
Just be cautious when accepting an offer and follow these steps:
Cash-buyers are usually from a house-buying agency or company that works alongside property developers who plan to purchase the property with the intention of renovation.
Make sure to always check a cash buyer's reviews or references- even if they are noted as a reputable buyer.
Genuine cash buyers will already have instant access to the funds required to buy your home. So, it's vital that your request proof of finances before finalizing any deal, regardless of if the offer comes from a company or an individual.
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