Exploring the Financial Benefits of Selling a House for Cash

Staging homes can increase your chances of making a sale. The idea is to make your residence look homey-like any would-be buyer can see themselves living there. 

Other tricks to selling your house include making repairs and upgrades, painting the exterior, and decluttering.

Of course, this is how you can get people to want to buy your home. You still must worry about the act of selling itself. This is why we’ll discuss the benefits of selling a house for cash. 

You have other options like hiring an agent (or Realtor) and for Sale By Owner (FISBO), but selling for cash has advantages over other ways to sell a house. 

Below is an extensive guide to everything you need to know about cash house selling. We’ll go over what it is and the pros and cons of forgoing traditional home-selling methods. 

What Is a Cash Offer?

The cash-for-homes process isn’t overly complex. But there are still many working parts, the first of which we’ll examine is the cash offer. A cash offer is when the buyer offers you the listed price upfront.

For clarification’s sake, we’d like you to know that cash offers can happen even when working with real estate agents. They’re also not strictly cash but can be given through checks.

The primary difference between these offers and typical buying is that no mortgages or other money lenders are involved. This means there are fewer steps (which we’ll explain later) to bog down the sales process. 

Many buyers don’t care where the money comes from as long as the funds are verifiable. Cash buyers still need to show proof they can afford the home.

In the case of a home-buying organization, you may want to research its payment track record. Find reviews and testimonials online. Ask about the payment process if you know someone who’s used your would-be choice. 

How Common Are Cash Offers?

Cash sales accounted for almost 35% of sales in 2014. They fluctuated from there to no lower than 25% from then to 2023. 

One significant reason all cash offers have become more popular is that mortgage rates are too high for many to afford. But there are other reasons why someone might consider making a cash offer for a home: 

  • A buyer just sold their property and needs housing fast
  • The seller is using a cash home-buying company
  • Real estate investors want to invest in the property
  • The buyer wants a competitive edge in the real estate market
  • Wealthy buyers don’t want to deal with banks or other lender
  • The house needs repairs and renovations

Increased mortgage rates are another factor as to why cash offers have increased in popularity. Higher mortgage rates are part of the Federal Reserve’s measures to help combat inflation

There’s no specific time in which a cash offer must happen. You can revive one during the open house or while negotiating the sales price. 

Conversely, cash-for-home businesses will buy your property anytime and in any condition. It doesn’t matter if it’s mid-renovation or full of junk. 

Cash offers can change depending on market conditions. More expensive houses may receive more offers because it’s easier than a mortgage.

Financing might be less troublesome than cash offers for cheaper properties. 

What Are the Best Cash for Sale Candidates?

Selling or buying a house works differently for everyone. But some homes make better cash-for-sale candidates than others. Homes facing foreclosure are primary prospects of selling for cash. 

Foreclosure happens when a borrower can’t make their mortgage payments. The home becomes collateral, and when buyers can’t meet the loan terms, the lender begins the repossession process. 

People facing foreclosure must deal with difficult decisions like bankruptcy and eviction. Cash offers are a way out that keeps people from making tough choices and running their credit. 

People experiencing enormous life changes and upheavals often desire quick sales. Perhaps they’ve gotten new job offers or are divorced. Marriage and downsizing are other common reasons for moving.

Cash sales make the sales process fast and stress-free. There was mention of homes needing repairs and renovations. Electrical and plumbing work are especially pricy.

People purchasing through mortgages won’t want to buy homes needing extensive work. Selling for cash allows homeowners to offload damaged homes. It removes concerns about paying for barely livable property. 

What Are the Incentives to Buy With Cash?

There are hints throughout the article that suggest accepting cash offers comes with huge benefits. Home sellers may prefer cash offers because they’re quick, easy, and involve less hassle. 

We discussed reasons for purchasing a home with liquid funds. A dire need for housing was one reason. But what are the incentives for cash buyers; what advantages do people get from paying for property with cash? 

Buyers Can Negotiate From the High Ground

Most of the time, cash offers are worth more than purchases made through mortgages. This is particularly true in seller’s markets. A seller’s market is when the supply of houses is less than the demand. 

The opposite of a seller’s market is a buyer’s market, or when there are more buyers than houses. Going back to negotiating, buyers have a greater advantage than people seeking financing through banks or lenders.

Remember how we discussed the cash buying motivation of “taking advantage of the real estate market“? Buyers come out on top by making a better, more convenient bid than your competitors. 

Cash Buyers Have More Housing Choices

The cash offer allows homebuyers more flexible options than someone waiting for their mortgage approval. For example, did you know that some lenders accept cash offers? 

Many lenders sequester real-estate-owned or foreclosed properties in case they can profit from them.

Cash buyers have a better chance of purchasing these damaged properties. Many lenders don’t like to mortgage homes needing extensive repairs.

The idea is that these homes may fall into foreclosure due to the cost of fixing the property and making mortgage payments. Cash offers are likelier to win these homes over other bids. 

People using U.S. Department of Agriculture or Federal Housing Administration (FHA) loans are similarly restricted to residences they can buy. Here is an example of the constraints of the FHA loan:

  • There are region-based loan limits
    • This may make some housing locations unavailable
  • You can only purchase owner-occupied properties
    • Where the title owner uses the house as their primary residence
  • There are many types of condos you cannot buy

Buying a house with cash makes these obstacles largely irrelevant. Anyone with enough liquid funds can purchase a property if they have proof of funds. 

Cash Home Purchases Gain Equity Faster

Another incentive to buy with cash is to achieve home equity faster. Equity is the difference between what someone owns on a mortgage and the house’s worth. 

Here’s some math to clear up misunderstandings: say you have a mortgage worth $350,000, and you’ve already paid $100,000. That means you owe $250,000 left on the loan. 

The amount of equity you’ve put into your home is $100,000. This is how much you’ve paid toward your home’s mortgage or it’s “worth.”

The reason why all this matters is because cash offers remove the matter of paying towards equity. 

Equity changes with the real estate market. It may decrease if a property’s value lowers faster than a would-be homebuyer can make payments on their mortgage. 

A cash offer means all the equity is already in the residence. The changing market doesn’t matter when homebuyers aren’t stuck with a mortgage. 

What Are Cash Home Buying Companies? 

So far, we’ve talked about selling for cash between a home seller and a homebuyer. The home seller sets a price, and the buyer pays with liquid funds. 

We want you to understand the cash buying and selling process from both perspectives during traditional real estate sales. But now we’re moving on to the meat of this article, which is about cash home-buying companies. 

To be more specific, the first step will be to explain what a cash homebuying company is and its purchase process. 

Cash home-buying companies are not “traditional” home-selling businesses. Instead, they offer homeowners a price for their residence in exchange for the property.  

Cash Homebuyers vs. iBuyers: What Is the Difference?

You’ve probably heard of cash homebuyers and iBuyers before, but did you know there’s a distinction? Both exchange properties for cash, but their methodologies differ. 

Cash homebuyers are often people or small-scale companies that use their personal funds to buy houses. These businesses often have extensive knowledge of their local real estate markets. 

Their expertise helps more flexible negotiations with homeowners. Cash buyers are likelier to want old, damaged (or “as-is”) properties needing repairs. These rundown homes are called “fix and flips.” 

We’ve mentioned fix and flip homes before but haven’t explained them. These properties are when an investor takes a house in poor condition to restore and renovate it for new homeowners.

An iBuyer uses current market data to give homebuyers cash offers on their residences. The iBuying process is fast and streamlined thanks to it taking place online; cash homebuyers may have to make home visits. 

Like a cash-buying business, they may buy as-is houses, so the homeowner isn’t responsible for repair work. The two buyer weaknesses are their limited market presence and service fees. 

iBuyers don’t work in every market and are often region-specific. If you choose an iBuyer in Boulder, Colorado, they may not buy houses in Miami, Florida.

You may also have service fees and transaction costs with an iBuyer, which will reduce how much money you earn from the sale. 

What Is the Cash for Sale Process?

Every cash-for-sale business has a process in which they choose and buy houses. We’ll use the Jax Home Offer process to show how our company helps property owners offload their homes for quick cash. 

The first step is for you to tell us about your house. You do this through our online form, in which you give your address and email (or phone number). 

We then come to the property and inspect the yard and the house’s condition. We also check what repairs your home may need. Then, we compare the values of similar homes in the area. 

The inspection and value comparison will help us estimate the amount to offer you for the residence. We move on to the second step if we decide it’s fit to buy.

This involves arranging an appointment, in which we move to the third step-offering you a fair, no-obligation offer. Accepting the cash offer is the final step, and we can close in a week or less. 

The home-buying procedure isn’t one-for-one at every company. Some firms do video tours where you can record a walkthrough of your house. But generally, you:

  • Fill out an information form
  • The buyer views your home, in-person or through video
  • You receive an offer 
  • You accept the cash offer and close the sale

The Financial Benefits of Selling a House for Cash

We’ve discussed cash offers and why someone may want to accept one or pay with liquid assets. We’ve reviewed the incentives to consider paying with cash and how cash-for-home companies purchase properties. 

Now, we’ll focus on the financial benefits of selling for cash. The first perk of selling for cash is that cash sales are less risky.

There’s more risk for the buyer, but you still suffer consequences for the buyer’s financial setbacks. A common financial reason sales fall is because the buyer’s lender canceled their loan. 

One reason people lose their loans is if they change jobs mid-approval. If the borrower is lucky, they’ll only delay their loan processing instead of canceling the process altogether. 

Lenders may also cancel the mortgage if there are inspection issues. Lenders are cautious about giving money to borrowers for houses in poor condition.

Fixer-uppers are potential money pits. Would-be homeowners may fall behind on payments and the lender may decide to cut their losses rather than facilitate a sale. 

What Is a Contingency? 

A contingency is a contractual clause saying your home sale cannot happen unless the buyer sells their property first.

Let’s go over the sale and settlement contingency. This is when buyers haven’t received or accepted an offer on their current house. Sellers can still market their residences to others. 

Of course, this comes with a condition saying a buyer can revoke the contingency (often within 24 to 48 hours) if the seller accepts another offer.

If the contingency is not removed, the contract is canceled. The seller can accept the other offer, and the former buyer’s money reverts to their account. 

Settlement contingencies are when buyers have already marketed their homes, have a contract, and have closing dates. You technically haven’t sold your property until the closing date arrives. 

This is a protective measure for buyers if the sale cannot continue. The contingency contract is still valid if the buyer’s home closes by the given date. If not, the buyer can close the contract. 

Selling through Jax Home Offer eliminates concerns of a buyer’s finances falling through. You don’t have to worry about inspections ruining home sales or buyers backing out via contingency clauses. 

You Can Skip Home Appraisals

Another reason to consider selling for cash is to skip the appraisal process. A home appraisal is when a real estate appraiser establishes a property’s fair market value (FMV).

Before we continue with home appraisals, let’s discuss fair market value. FMV is how much a house will sell in an open market.

The open market is when you sell a house via real estate agents and listings-the conventional way of selling homes. So, the FMV is how much buyers and sellers agree a house is worth based on market trends.

Another way to find your home’s FMV is through comp analysis. Comp analysis is when you compare the prices of similar homes in the neighborhood.

We explain all this so you can understand why FMV matters regarding the appraisal procedure. It’s a bit of a rabbit hole, but we promise it’ll come together. 

Why FMV Matters for Home Appraisals

Firstly, people purchasing a home with mortgages must complete the appraisal process. It helps the lender reduce making risky investments by figuring out the FMV before giving the loan. 

Low fair market values often deter lenders, which makes buyers uninterested. Sellers lose out on potential buyers when the loan falls through. 

Selling for cash allows you to bypass the appraisal because there are no third parties invested in the deal. How home appraisals affect your sales is a financial aspect you can’t govern. 

A house’s fair market value changes with the market. If your home’s value drops too much, the buyer’s chosen bank may back out of the loan. You don’t have to worry about your FMV voiding the deal with a cash sale.

Cash for Sale Is Quicker

We mentioned that someone may consider cash-for-sale because it’s quicker. Many cash homebuying companies move faster than traditional real estate, which is handy in certain situations. 

Moving for a new job needs to happen fast. Sellers need new homes to help establish their new lives. Divorced sellers have similar requirements. They’re looking for new properties to begin their new life journey. 

Sometimes homeowners want to upsize or trade-in for smaller homes. But a slow market may hamper their attempts. Regardless of motive, they face a long wait if they sell through traditional means. 

Going the cash-for-sale route allows you to close within days. You make the sale, take your money, and move on. 

Cash Home Buyers Have Flexible Timelines

Selling to a cash home buyer is fast. But did you know these companies purchase flexibly? Traditional home sale timelines fluctuate, but you have little control over that. 

Cash-for-sale companies, though, can close at your discretion. You can close within days, but some allow months if required.

Some cash homebuyers may even allow you to stay in your home until you find your new residence. How long you’re allowed to prolong the close date depends on the business. 

Flexible close dates let you control when you’re paid and you can better plan your future expenses. For example, a longer close date may help save on hotel costs if you haven’t purchased your new house yet. 

You technically can move in before closing, but the current homeowner doesn’t have to allow this. 

You Save On Repair Costs

We’ve said that repairs can destroy the home sales process better than almost anything else. Buyers may not want to deal with an as-is home, and lenders don’t want to invest in fixer-uppers. 

An inspection can reveal damages you may not have known about before trying to sell. The costs can set you back by massive amounts of money. If you make the sale, it’s often for less than similar nearby homes.

Some cash home buyers differ on how damaged a home can be before they take it. However, you can often count on them to take the disrepaired property off your hands. 

Cash homebuyers will either help pay for repairs or fix the home entirely from their funds. 

You Save On Staging Costs

Staging your house makes it look good so potential buyers can imagine themselves living there. You don’t have to stage your home. But if you recall, we said it increases your chances of selling. 

It’s why many people go to the effort of dressing up their properties. But selling for cash means you don’t have to bother with staging. It doesn’t matter what your house looks like to cash homebuyers. 

They’ll take junky, dirty, and damaged properties as long as they think they can turn a profit. 

Cash Sales Eliminate Inspection Costs

A home inspection can cost you hundreds of dollars. That may not sound like much, but when you’re moving, every cent counts. Selling for cash removes inspection costs. 

Skipping the inspection is also a time saver. You don’t have to worry about the time it takes for the assessment. You’re not responsible for whatever problems the inspection uncovers either. 

You Can Skip Marketing With Cash Sales

Selling a house involves a lot of advertising. You have to hit buyer’s pain points, tell them about what you’re selling, and make it look as attractive as possible. 

Agents check what’s selling around the neighborhood and compare it to your home’s amenities. The logic is that if buyers shop in your neighborhood, there’s something specific they want in the area.

Agents tell buyers what makes your home unique (mention if you’ve got a pool or gym room, for example). Sellers must also mention why their home is the buyer’s best option.

You need good photos, too. It won’t matter how well you explain the house’s qualities if people can’t see them. Doing all of this well is more complicated than it appears. 

You can list your home by yourself, but if you don’t have the time or confidence to list your property, you should consider a listing agent -someone who helps you sell your home.

Unfortunately, hiring this person may cut into your sales profits. You can bargain as to whether you pay advertising fees (and if so, how much) but why risk having to pay at all?

Selling for cash completely removes this expense. A cash homebuyer judges your home based on what they can make from a resale. There is no advertising needed. 

Selling for Cash Lets You Skip Negotiations

Anyone who’s bought a car should be familiar with the manufacturer’s suggested retail price (MSRP) or “sticker price.” For those who don’t know what, it’s the amount the company (like Ford) recommends for the vehicle. 

You may have also heard that it’s a bad idea to pay sticker prices. The reasoning is that you can get the car for cheaper with some negotiation. You may have gotten your current car this way. 

Buying a house works the same way. You list a price dictated by the real estate market, but odds are the buyer is looking to save as much as possible. Purchasers are trying to see how low you’re willing to sell for. 

The negotiation process can become a long, drawn-out affair. It can take away time to be better spent preparing for your move and can generally delay the sale.

Part of why there’s so much time spent negotiating ties into mortgages. Buyers reasonably want to pay off their homes as fast as possible, so they try to buy homes at lower prices. 

A cash offer is tighter because you can either accept it or not. The money comes from the homebuyer’s pocket, so there’s less emphasis on lowering the price. 

Cash Home Selling Saves on Commission Fees

A commission fee is a percentage of the sales proceeds given to the sellers’ agent for their help. Commission fees are often 5% to 6%.

Let’s say you sold your home for $250,000. A 5% commission would mean that your agent earns $12,000. Some agents are willing to negotiate their prices. Regardless, that’s still money you don’t have. 

Many cash homebuyers won’t charge you a commission. Some charge lower than typical, and others (like iBuyers) charge typical commission prices.

Ask your chosen homebuyer about their fees. You can check their website or read reviews about how much other clients paid for the company’s service.

Cash Offers Can Help You in Difficult Times

We’ve discussed some challenging situations that can force people out of their homes. Divorce, foreclosure, and moving for work, but these circumstances often require more than a speedy relocation. 

It’s common for sellers facing these issues to need quick cash. Cash homebuyers offer one of the fastest ways to sell a house.

Closing a sale within a week is convenient for people who need money and a way out. Cash offers allow sellers to leave their tough situations behind with money to start fresh. 

What Are Other Benefits to Accept a Cash Offer?

The first non-monetary reason to accept a cash sale is that they close quickly. In July of 2021, it took 48 days for the average seller to close on their home.

Close dates fluctuate depending on the market, but it’s not unusual for a traditional home sale to take at least a month. Using a cash homebuyer (or choosing a traditional cash sale) expedites the process.

Typical property sales often take so long because you’re waiting on mortgage lenders and paperwork. 

Selling your home for cash can take as little as a week. You skip the steps where you’re stuck waiting for a slow outside party to finish the administrative portions of your sale. 

Cash for Sale Is Less Stressful

Selling a house is stressful. You have to make repairs and upgrades to ensure the house is safe and has amenities buyers will appreciate.

You don’t have to stage a house, but it does increase your chances of making a sale. Sellers must find real estate agents and list their homes to let others know they’re on the market. 

Perhaps the biggest stressor is worrying whether the buyer will back out. Selling for cash is such a streamlined way to sell. All it takes is: 

  • You and the buyer agreeing on the price
  • You accepting (or declining) the cash offer
  • You selling the house

Selling a House for Cash Reduces Paperwork

Our car-buying readers should also know that the process involves paperwork. Buying a house works the same way. 

Both buyers and sellers have their share of administrative duties to complete the sale. It doesn’t matter if you sell the house to someone with a mortgage loan or liquid funds. 

Any mistake can be a costly liability in the future. A lot is riding on you getting the paperwork right. A home-buying company can make this procedural step much easier by doing the job for you. 

Of course, not all home-buying companies offer this service. Research a few businesses so that you choose one that handles paperwork. You can check testimonials or call to ask about their process. 

Having Trouble With the Real Estate Market?

Real estate is hard for everyone right now, so it helps to know the best ways to sell a house. Selling for cash pays quickly, saves you money, and helps skip drawn-out price negotiations. 

Don’t wait! Reap the benefits of selling a house for cash with Jax Home Offer. We buy houses in Jacksonville, FL, and have taken old fixer-uppers off homeowners’ hands for 24 years. 

Jax Home Offer charges no commissions or fees and offers flexible closing dates. Contact us, and we’ll get back to you within 48 hours.

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