In hot markets, cash offers can boost buyers’ bargaining power. Some offer matching services that connect sellers with investors vetted for their funds and a track record of closed deals.
However, some companies that buy homes for cash, for example—often offer less than a home’s fair market value. Also, while cash offers remove contingencies that would otherwise delay or derail a sale, closing costs still apply.
Price
A bidder who cannot obtain a mortgage loan makes a cash offer for your house. Many sellers consider these offers more attractive than traditional ones because they eliminate the potential risk of financing problems.
Cash buyers may also waive the requirement for a professional appraisal. This saves time in the closing process and can reduce your costs. However, you should still have your house professionally inspected to ensure that it’s not being over-priced.
When considering cash, looking to look at the entire package is essential. For example, some buyers will include a home warranty in their purchase contract as an incentive to you. Evaluate the benefits and costs of this coverage, and consult with your Lang Estates agent to determine if it is worth the extra cost. Also, consider if the buyer is willing to cover survey expenses. This can add up quickly.
Closing costs
The closing costs associated with a traditional home purchase depend on the buyer’s loan type and the property’s location. A real estate professional can explain the typical fees in your locale and help you evaluate their impact on your net proceeds.
In addition to lender fees, a cash offer may carry lower or no escrow fees, depending on the circumstances. Evaluate these fees and compare them to other offers you’ve received according to local norms.
Finally, consider the buyers’ willingness to cover survey expenses if applicable. Evaluate this fee and compare it to other offers that do not include survey coverage. Seek expert advice if necessary. Lastly, a cash offer on house from a company means you won’t need to worry about a financing contingency, which could derail the sale process if the buyer cannot qualify for a mortgage loan. You can save a ton of time and trouble by doing this.
Contingencies
A cash offer means a faster closing process and less risk for the seller. Typically, a sale with fewer contingencies is more appealing to sellers because they don’t have to worry about the mortgage financing not going through or the home inspection not meeting standards.
Contingencies are a common element of real estate sales contracts that give buyers the ability to back out of a contract if certain conditions don’t get met. Examples include the home sale contingency that allows a buyer to exit the deal if they can’t sell their current home and the financing contingency that gives buyers 30 to 60 days to secure a loan.
However, contingencies tie up much of the buyer’s capital and could limit their ability to invest in other assets. A savvy real estate agent can advise sellers on the most effective contingencies to use in an offer. They suggest removing the home inspection contingency and offering to conduct a home inspection for information purposes only.
Fees
Unlike traditional buyers who obtain mortgage financing, all-cash offers eliminate the need for the buyer to submit an application and wait for a lender’s approval. This can significantly speed up the process, making an offer more appealing to a seller.
Many “we buy houses” companies will make you an offer on your home in a matter of days, but be sure to evaluate the terms carefully. They may charge high service fees and pay less than fair market value for your property.
Cash buyers can also request fewer contingencies, resulting in a smoother closing process. However, consulting a real estate professional for guidance is essential when evaluating these offers. For example, if a cash buyer requests that the seller cover survey expenses, you should weigh this request against the cost of obtaining insurance yourself.
You should also evaluate any requests for repairs and renovations to your home, if applicable. These costs can add up quickly, putting you at risk of losing money on the transaction.
