In many markets, property values have taken off to levels not seen in well over a decade. It may be a great time to explore selling your home. Depending on the condition of your property, the buyer may be a cash buyer. While this is a typical practice, there are many nuances and slight differences when working with a cash buyer instead of a traditionally financed one.
In this article, Destination Home Solutions explores the steps to consider when selling your home for cash, as well as some factors to keep in mind when accepting a cash offer. There are many benefits of selling a house for cash, and Destination Home Solutions is here to help!
The Process of Selling a House for Cash
Selling a house for cash might be a rare circumstance, but you shouldn’t be overwhelmed by the process. Here are the steps for successfully selling a house for cash.
Step 1: Qualify Cash Buyers
The first step in selling your home for cash is finding the RIGHT buyer. Most cash buyers are quick and responsive and are happy to submit a cash offer should you be interested in one. Cash buyers don’t need more than 24 hours to get you an offer. When selling a house for cash, it’s always best to get multiple offers if possible. When ready to decide, remember that price is not the only factor to consider. The right buyer should offer the ideal price, inspection period, timeline, and terms that put you in the best possible position to sell your home for cash.
Strong Offer Terms
A strong cash buyer should be offering to purchase the property “as-is” in its current condition with no expectations of the seller doing any work to the property before close of escrow. Contingency periods should not be unnecessarily long, and should fall in the range of 3 to 10 days depending on the complexity of any necessary due diligence. The earnest money deposit should be substantial and submitted to escrow within 72 hours of offer acceptance or sooner. While cash sales typically close quicker than traditional financed offers, there should be no rush from the buyer’s side to close escrow. In fact, there is a flexibility that should be expected of the buyer to close on the Seller’s timeline!
Access To Capital
One of the basic items investors should provide when submitting an offer is a proof of funds letter. This letter is typically from an attorney or lender that shows they have the funds available to to clear their offer amount and close escrow. However, you shouldn’t give this a quick once over and assume everything is okay. There are two important items you need to look at to confirm: the date of the proof of funds letter and where the funds are coming from. The date of the letter is important because, if it is months old, they may have depleted the account. A very outdated proof of funds letter may also suggest the investor is not telling you the full story and could be an indicator of things to come.
It’s also extremely important to note what kind of an account the funds are coming from. If the money isn’t in a liquid account such as a checking or savings account, there could be red tape and hurdles to access it. Without timely access to their funds, an investor may have to jump through hoops to bring funds to the table to close escrow which could risk pushing out the agreed upon close date.
Responsiveness
Lack of timely response and bad communication can sour any relationship. This is even more amplified when the stakes are high you’re trying to selling your home in an efficient and stress-free way. Real estate transactions require a significant amount of back and forth, whether it be in regards to offer terms, paperwork questions, deal structuring, signatures, etc. If the buyer and/or their agent respond to a call or text within a reasonable amount of time or return contract changes in a timely fashion, something fishy may be looming. Be aware that there are buyers out there that don’t practice ethics and integrity that may just be spinning your wheels – bad communication can often be a tell-tale sign things are going in a negative direction
Step 2: Compare Offer Terms
Most buyers have specific offer terms to consider before moving forward, even when selling a house for cash. Offer terms protect all parties involved and usually consist of these key factors:
- Inspection: An inspection is a negotiating tool for buyers. They are almost always going to give you a list of deficiencies with the property in an attempt to knock something off the price. Understand that there may need to be some give and take at this point. Let the market be your guide on where you can concede and where you can take a hard line.
- Earnest Money Deposit: On every contract, there is a line where an Earnest Money Deposit (EMD). In simple terms, the EMD is a down payment subtracted from the final closing amount. The EMD is a way to gauge the interest of buyers. If the buyer breaks the contract or backs out of the deal without justification, the seller may deserve compensation.
- Closing Period: You have options to weigh when considering the closing period. You can either close a designated amount of days after the contract is accepted or a specific day. It depends on your preferred closing time. Here at Destination Home Solutions, we allow the seller to choose between 9-90 days.
Step 3: Accept an Offer and Open Escrow
When accepting offers, you’ll either sign a hard copy version of the offer or use an online contract signing service like DocuSign to execute the contract. Once you and the buyer have signed, escrow and title companies enter the transaction to help research any questions with title and coordinate communication. If the seller is unsure or has no preference for who helps with escrow/title, the buyers might have contacts. Once the offer is accepted, the transaction timeline begins!
Step 4: Monitor Major Deadlines / Complete Paperwork
Sellers often avoid selling solo because of the paperwork associated with the process. The process is simple with an efficient escrow or Transaction Coordinating Company to help execute these documents. Disclosures are always required when selling your home or a piece of property (realtor or not) and give the buyer a clear picture of exactly what they are buying. Work with a local expert to fill out necessary disclosures for your property.
Step 5: Closing Escrow
There are several documents needed to complete the closing. It is always a good idea to enlist the services of a real estate attorney. Not only will they expedite the closing process, but they offer protection. Even experienced real estate investors are not versed in every contractual scenario. With thousands of dollars of EMD at stake as well as potential litigation, it makes financial sense to spend the money on a good real estate attorney.
Destination Home Solutions Can Help With the Process of Selling a House for Cash!
There are many benefits of selling a house for cash but make sure you understand the process! It’s a great time to at least explore the option of selling a home for cash, but make sure you know what to expect. Contact Destination Home Solutions to learn more about our cash as-if offers to expedite your real estate experience today!
Source: https://www.cthomesllc.com/how-to-sell-your-home-for-cash-the-process/