What are the advantages of selling a house to a cash buyer?


Pamela Harris

Selling a house isn’t a fast process. You need to have people look around your house, then wait for them to make firm offers, and even then there’s a long wait for your potential buyer to get their loan approved before the sale can go through.

But I want to sell my house fast, we hear you cry. Well, with a cash buyer that’s exactly what you can do. Depending on circumstances, you may be able to cut out all the viewings, waiting for offers, and approval of loans.

Instead, you get a cash offer, you accept it, and the paperwork can start right away.

Selling your home for cash makes for a much quicker home selling experience. Sometimes all cash purchases can be done within 5-7 days assuming there is not a mortgage on the home.

 Cash home buyers don’t need a mortgage as they already have the money needed to purchase your home, which means they can forego the mortgage application and approval process.

Or they have private money investors that lend them the money to buy, rehab and then sell or rent the house. Or they could have a line of credit with a local or regional bank. The point is that they do not need a traditional bank in order to finance the sale. So if you want to sell your home for cash , cash home buyers would be who you may want to go with.

Downsides of Paying All Cash

That’s not to say there are no disadvantages to paying all cash, even if you can afford it comfortably. To start with, shelling out that much cash will significantly reduce your liquid assets, leaving you with less available for other needs or even for home repairs.

A home is also an investment, and it’s possible that your investment dollars could perform better elsewhere. If mortgage interest rates remain low, then you may be able to make up the interest expense plus more with some aggressive investing in stocks or other securities.

Finally, if you pay cash, you’re sacrificing the potential of a significant tax deduction for home mortgage interest. However, the 2017 Tax Cuts and Job Acts, which nearly doubled the standard deduction, has nullified this benefit for many homeowners. Unless your loan is fairly large, you may not even need to itemize your deductions.

Homes in Need of Repair

Sometimes, the cost of keeping a home well-maintained is simply too much for homeowners to handle. Whether it’s a cracking foundation, a roof that needs replacing, leaky pipes, or a faulty electrical system, home repairs can run into the tens of thousands of dollars.

But conventional sales make it almost impossible to sell a house that needs major repairs. Many lenders refuse to issue loans for a property that’s damaged. Fortunately, cash buyers don’t have to follow these rules.

That’s why so many homeowners sell their “fixer-uppers” to cash buyers. That way, sellers don’t have to sink time and money into repairs, and they can enjoy a fast closing with less stress.

Less Risky

Cash offers tend to be stronger than offers using traditional financing. When presented with multiple options, it just makes sense for sellers to pick the buyer that presents the least risk. Usually, that’s the cash buyer. Often, home sellers choose a cash offer over an offer that will be financed with a mortgage, even is the cash offer is lower.

The seller knows that the deal with close faster, and that means they’ll get paid sooner. When you take the financing out of the picture, there’s less risk of the deal falling through.

No Fix-Up – If you’re in a hurry, or don’t have cash-on-hand, the idea of doing all the things – little and big – needed to maximize your home’s value may not be practical. Cash sales are “as is.” You still need to disclose any known defects or issues – but it will be up to the next guy to fix them. If you know your home needs major repairs, and are not in a position to do them, an all-cash offer may be the way to go.

No Contingencies – a traditional home sale is likely to come with contingencies. Virtually all will have a home inspection contingency, and most buyers will also want a mortgage contingency and perhaps an appraisal contingency. If it’s a buyer’s market, they may even demand a home sale contingency (the sale of your property doesn’t go through until their current property sells). All of these are opportunities to delay or completely derail the sale of your home. 

Leave a comment