It’s a dog-eat-dog world out there right now on the housing market. Houses are flying off the shelf, and if you’ve been trying to snag one yourself, you might have lost out to a home thanks to a cash buyer.
Cash buyers have been at the top of the totem pole for a while when it comes to winning bidding wars, but why are sellers so eager to find cash buyers even though they’ll get the sum in cash, whether it comes from you or the bank? There are a few reasons that a seller may choose a cash offer over a traditional mortgage one. Let’s take a look at some of the perks of selling your home for cash.
Confidence the Sale Will Go Through
With cash offers, sellers have much more confidence that nothing will affect the sale between offer and closing date. We’ll take a closer look shortly at the reasons this may be. Basically, a seller can expect a faster closing with fewer steps along the way where a buyer may back out. This makes a cash offer much more attractive than a traditional offer.
No Hold Ups At the Bank
When buyers make an offer with a conventional mortgage, they will have to go back to the bank to ensure the institution approves. Many contingencies must be met before their bank approves the final offer. This typically includes an appraisal. Not only does this increase the risk of the offer falling through, but it takes much more time to get to closing day.
Appraisals Aren’t Necessary
As we mentioned, banks require appraisals before the final mortgage approval. During the appraisal process, the appraiser must view the house and evaluate what the home is truly worth. They do this by checking the home size and features and comparing them to similar properties that have recently been sold in the area.
A typical appraisal can take up to ten days, which clearly slows down the time frame to get to closing. If the appraisal comes back much lower than the sales price, this can cause a major problem for sellers. The buyer could potentially back out of the offer or try to negotiate for a lower price. The bank also won’t likely approve a loan for higher than the appraised value.
Some Don’t Want an Inspection
Cash buyers often look to buy homes either sight unseen or without an inspection. The inspection process evaluates the actual condition of the home. This means they will make sure everything is in working order, no major repairs are necessary and look for evidence of significant damage. Often, cash buyers are investors with plans to fix up the house and don’t care what condition it is in.
House is in Foreclosure
Sellers who are facing the foreclosure process are looking to sell their home as quickly as possible before their house goes to auction. If they can sell their home in time, the foreclosure can be avoided altogether. Cash buyers are best for sellers in a hurry due to foreclosure because the closing time is much quicker, and fewer contingencies can get in the way.
Offers on Damaged or Ugly Homes
Cash buyers are also often willing to accept damaged or ugly homes that other traditional buyers typically shy away from. When attempting to sell a difficult home, options are often limited. Sellers would have to put lots of money and time into repairing the house in order to appeal to buyers. If they don’t have the time or money to do that, they can sell to cash home buyers. These buyers often don’t require an inspection as they agree to take the damaged home as-is.
Not only do cash buyers often save sellers time in the home buying process, but some cash buyers may even save them money as well. Companies that offer cash for homes will often cover attorney fees and title fees. Not to mention that no one has to pay for an appraisal or inspection. These transactions are often done without a real estate agent, so commission fees are waived as well.
Cash Offers Are Typically Quicker and Easier
The overall trend here is that with a cash buyer, sellers can get to closing day a lot quicker and with fewer road bumps along the way when compared with traditional offers. So whether the seller just wants to avoid hold-ups with the bank or is trying to get rid of a less than desirable home, they will often go with a cash buyer to expedite the process.