Considering a cash offer on your home? Should you accept less money on the sale of your house with a cash offer? Here’s what to know.
Cash offers can be very appealing if you’re trying to sell your house quickly. If you’re approached by an “off-market” buyer, you’ll avoid staging and showing your house, paying real estate commission fees, and even making repairs. Even if a buyer submits a cash offer after you’ve listed your home, the closing process is quicker without the need for mortgage lender approval.
That makes cash offers a popular option. According to the National Association of Realtors, cash offers account for 16% of residential home purchases. But cash offers also come with some drawbacks. You’ll almost always get a lower price for your home if you accept a cash offer, and you’ll need to watch out for “we buy houses” scams.
There are a few questions you should ask yourself before accepting a cash offer for your house.
Do I need to move quickly?
Marketing your home for sale can be time consuming and stressful, and some sellers simply don’t have the time to show their house to potential buyers and wait for the highest bid. When a buyer is applying for a mortgage more time is required for home inspection. Once you get an offer on a house, it takes an average of 47 days for a sale to close with traditional financing.
If a buyer’s financing falls through, you’ll have to restart the process of listing and showing your house. But with a cash purchase, it may be possible to close in as little as a week or two weeks. If you’ve accepted a job offer in another state or otherwise need to relocate in a hurry, finding a cash buyer could be the ideal solution for you. You’ll still need cash buyers to provide proof of funds to make sure the deal will not fall through.
If time is no object, on the other hand, you’ll probably get more money if you wait for a traditional offer on a house. Kelly Baca, Broker Associate for Coldwell Banker, said that cash offers tend to be lower in her experience, and reminded sellers that whether or not a buyer gets a loan, the money is cash for the seller at closing.
Some cash buyers will also be willing to extend the period before closing. At Sundae, sellers can take up to 60 days to close.
Read More: Selling When an Offer Falls Through
Am I strapped for cash?
You might be selling your home to downsize because you need money. If your savings account isn’t stocked, the costs of getting your home ready to sell can be an impossible burden. Here are some of the expenses you can expect to incur:
- Real estate agent fees, which can run up to 6% of your home’s sale price
- Major repairs, which can cost thousands
- Closing costs, which typically run between 1% and 3% of the sale price for sellers
- Home staging costs (A median of $400 was spent on home staging in 2019, but larger homes that spend more time on the market can cost thousands to stage)
When you sell your home off-market, you can avoid most of these fees. And if you need cash quickly, you can get a $10,000 cash advance from Sundae following your inspection.
Related: How Much Does it Cost to Sell a House?
Should I accept less money on the sale of my house with a cash offer?
Your home may be your greatest investment, and it probably means a lot to you and your family. So you’ll want to get the best price possible in a house sale. An individual who buys houses with enough cash to forego financing will likely make a lower offer because most people think cash offers carry more weight, Baca said. And someone who wants to buy the house as a fix-and-flip property is going to want to make the most profit possible from his cash offer.
If you work with an iBuyer, expect to pay hefty fees as well. Research shows that sellers sometimes end up paying fees totaling 13% to 15% of their home’s sale price. When assessing whether to take a cash offer from an iBuyer, do the math to determine if the money you’ll save on repairs and real estate commissions will offset those fees.
If you want to save time it’s better to sell to cash buyers. Not all cash buyers are profit hounds, however. At Sundae, our mission is to get sellers the best outcome when selling a house. This means offering a fair price, no matter the condition of their home. And you don’t have to worry about hidden fees, because Sundae is different from an iBuyer. You get a personalized offer on a house, and if you accept it, that’s the price you’ll get for your home when closing the deal.
Read More: How Sundae Calculates Your Offer
Should I take a cash offer?
If you answered “yes” to all three questions, you should definitely consider taking a cash offer for your house. Just make sure to go into the process with knowledge of a fair offer price. Don’t accept less than you’re comfortable with, even if you’re desperate to get the sale over with. You don’t want to find out that you could have sold the house to a new cash buyer for more cash.
If you want a fair offer without the headache, arrange a visit with one of Sundae’s Market Experts. They’ll provide you with a reliable offer, and you’ll be under no obligation to accept. With Sundae, you just might strike a balance between a quick and convenient selling process and a fair selling price.