Accepting a cash offer has many perks over working with loans. For once, a seller is getting a quickly closed deal, no RE commissions and fees and doesn’t have to cover the costs of repairs. But before making a final decision, any seller needs a guide to know what to expect from a fast cash companies.
Step-By-Step Overview of a Selling Process:
- Wait for an offer or select a cash company.
There are many real estate investing companies on the market, so a seller has something to choose from. When choosing a company, a person should carefully check its background and the deals they closed. Companies like FastSale.house take pride in the amount of the successful deals and have a great track record. They also will buy a house as is, avoiding the hassle.
- Estimate a price of a house.
When a seller is done with choosing a company, they have to check how the market is doing as well as other trends in their neighborhood. A popular practice some companies and banks use is the comparing method when they have to take 3-4 houses in the same neighborhood and evaluate them.
- Arrange with a company and discuss a price.
Those companies usually have a long list of extra services and a seller has to make sure those are free. They also have to discuss a final price of a house and get ready for bargains. It’s likely that a company won’t offer a full price and will try to cut it to 75% or 80% of the original number called by a seller.
- Arrange things like appraisals and commissions.
Some EP companies actually want to have a commission run different checks and demand an appraisal. It’s not a bad sign, many great and fair companies like HomeVestor run a few checks to set a more precise price.
- Sign a paper and get the money.
When everything is done and arranged, a seller can get their money really fast. Some companies close in a week; others can promise to hand in money on the 2nd or the 3rd day.
When the market isn’t stable
When the economy doesn’t do well, you want a sense of security. Even though now the banks are giving mortgage loans again, no one knows how the market is going to run in a couple years from now. If you’ve arranged to sell for a certain amount, no market fluctuations will matter.
When you have to move out quickly
Folks facing relocation benefit from selling for cash for a number of reasons. At first, they are getting a closed deal really fast, without waiting for appraisals, doing renovation, etc. They don’t have to wait for a bank to approve a loan and are not risking getting a cold feet customer.
When your house needs serious repairs
Doing renovations could be quite costly and time-consuming. Cash companies and RE will buy from you even without inspections and appraisals (in some cases). This also speeds up the process, so you will be done in a week, instead of spending 2 months selling.
When you’re facing a foreclosure
When you’re out of job, have a serious medical condition or even a job transfer, making payments doesn’t seem reasonable. This is why selling your house before the foreclosure process is over is your chance.
When you can’t sell for a long time
Whether the market is not doing well, there is something wrong with your neighborhood, you have to make some renovations for your home to face the loan standards, if you can’t sell, cash is king. Those companies will get your house below the market’s value only to make the renovations needed and then will sell it for more, keeping the margin.
When you’re getting a divorce
Divorcing process is long and tiring, especially if you have to deal with relocation and selling your property. This is why, if you don’t want to stay in the house, worried about the loan contingency, cash is a better option.
Cases for Sticking to FHA Loan Buyers
When seller just finished renovations
Chances are, a seller already finished or did the majority of the renovation jobs, so it doesn’t make sense to go with a cash offer. Usually, those ask for discounts, so a seller gets less. This way, the costs of the renovation lie solely on a seller’s shoulders.
When cash-offers give a seller a price far below the market value.
Usually, cash companies pay 65 cents to a dollar, and then do renovations and sell for more. If a seller gets an unreasonable offer, it’s better to wait for a higher financed buyer.
When the market is healthy and the buyers are strong.
If the banks are generous with loans and a seller’s house qualifies for one, it would be better to wait for a strong buyer. In the end, a seller always gets cash and waiting 4-7 weeks is worth getting a full price on a house.
When a buyer possesses a pre qualification letter.
Experienced buyers start negotiations with a pre qualification letter and while it’s not a 100% guarantee that a bank will give a loan, it’s still something. It basically means that a buyer’s credit rating, earnings and debt-to-income ratio were checked and approved by a bank.
A Few Things to Watch Out For
A seller has to choose reputable companies that have been on the market for a long time. Otherwise, the chances of getting scammed are much higher. Usually, the most common things a seller has to avoid is dealing with rendered checks and refunds. Also, when choosing a company, a buyer usually sends a commission or arrives to check the state of the property. If a seller gets an email from suspicious companies or a payment they make is not reported, those things could signalize about illegal activity that has to be reported to the police.
If a seller is attentive and knows what to watch out, selling for cash is fully safe. It’s always a good decision to check a company before arranging anything and discussing different terms. Agencies like Finally Sold don’t have a fraud history and offer reasonable prices.