If you want to sell your house, you may either accept a cash offer from an investor or opt for one who wants to buy the property with a bank loan. However, the former is a better option when you consider the advantages it brings in respect to timing and certainty. For instance, if you are moving out of the area and need to sell your house fast, cash offers are the best bet. In case you are facing some financial hardships and need the money quickly, a cash offer from an investor can help you tide over your problems faster rather than waiting for a buyer who needs bank loans or other financing modes to arrange the funds. If you are still in a dilemma, here are some advantages that a cash offer from an investor can bring your way & after going through it you will be surely in a mood to sell your home for cash.
Advantage 1: Guaranteed Deal
Certainty is one of the biggest advantages of a cash offer. In case of a transaction that requires financing, there are many risks involved. For instance, further scrutiny during the loan process may find a buyer ineligible for the funds, which could be due to various reasons like unpaid debt, divorce, sickness, not being in full time employment in the same occupation during the last two years etc. This can happen even with those who have been preapproved for a loan because their qualifications are found to have changed upon a detailed scrutiny. However, the biggest stumbling blocks are perhaps the appraisal. The comparative method is used mostly, which relies on comparable sales, and involves selecting a number of properties and comparing their values to the house in question, making adjustments (downward or upward) for location, upgrades, features and amenities. When the property fails to appraise for the purchase price and the investor is getting a loan that demands down payment of 20%, the lender won’t give more than the appraised amount unless the investor arranges for additional cash or the price is lowered by the seller. Though you have options for handling a low appraisal, there could be several concerns which may cause contract cancellation. With cash offers from investors, you don’t have to worry about appraisals, banks or lending institutions denying the loan or imposing restrictions, or other risks associated with traditional financing. No wonder why cash offers from investors are more reliable as they offer you a guaranteed deal.
Advantage 2: Zero Risk
Cash offers are more secure than financing options since they involve no risk. Financing from banks or other financial institutions often comes with stringent terms and eligibility criteria, which may be troubling for investors with short US credit histories or those with some financial problems over the last few years (unemployment, divorce, loss of job, unpaid debt etc.). Some transaction-specific factors such as pending litigation or long seller rent backs can also cause problems in getting loans from banks. Contrast these with cash offers from investors where you don’t run the risk of sales falling through because the banks or financial institutions declined the loan. Once the investors pass the cash along, there’s hardly any last-minute cold feet or backing out, which again makes cash offers a much sought after option among sellers.
Advantage 3: Time Limit
If you want to sell your house fast and in a hassle-free manner, cash offers give you the ideal way to do it. If you are in a rush, you can close in as little as two days with cash investors. In routine cases, it takes only seven to ten days for the closing, which can be a great benefit when you want to get the property off your hands fast. However, when you are dealing with investors who opt for financing, it would generally take anywhere from 21 to 30 days for the closing. If you don’t want to wait this long and would rather have the cash in your pockets faster, cash offers from investors are what you need. If you are living in the house at present, a ten-day closing could be a slight problem since you have to pack and move out. However, this is often dealt with by giving the seller some time (as a free rent-back) after closing. You may even use a traditional escrow period for the transaction to give yourself some time to move out. What matters is that you can structure the deal to suit your time when it involves cash investors, which couldn’t be done that easily with investors who need financing.
Advantage 4: Nothing to Do with Lender
When you have a cash investor, you don’t need to deal with a lender. A deal that depends on the investor securing funds from a lender can run into problems on various counts. From not getting the required funds and meeting stringent requirements to staring at the risk of non-approval when the appraisal fails to go through and much more, lenders can often make a deal a big headache and may even kill a deal with their non-approval or due to other issues. In contrast, cash investors are much easy to deal with and don’t have loads of problems to battle with that you usually come across with investors who need financing from lenders.
Advantage 5: Deal Gets Closed Quickly
Unlike investors opting for loan or other financing options, where the closing often takes 30 to 45 days, cash investors can get deals closed faster. Since only a handful of people are involved in cash sales, they typically close within seven to ten days after the home inspection as well as other contingencies are released or have been satisfied. Another reason for such quick closing lies in less paperwork. Since cash investors don’t have to deal with the time consuming and stringent requirements of lenders, they can get deals closed faster than those with traditional financing.
Advantage 6: Cost Saving
You can save on closing costs and some more when you have cash offers from investors. If your investor has obtained a mortgage loan, the lenders may often have closing costs that you have to pay as the seller. Again, when you have direct cash offers from investors, you don’t need to get your house listed by hiring a real estate agent and can thus save on the flat fee or commission (which is commonly charged on the basis of a certain percentage of the selling price, which is usually 6%). So, with a cash offer, you can not only sell your house fast but even save a significant amount in the process. Just make sure to check the closing costs (to find out who pays what) and know specifically what obligations you have as the seller.
Advantage 7: No Loan Funding Issues
With the tightening of financial restrictions over the recent years, investors seeking funds from banks and other financial institutions as well as lenders often run into several problems. From seeking additional documents and paperwork to becoming ineligible due to changed circumstances (such as losing a job, being in debt, divorce etc. even when they are pre-approved in some cases) or dealing with a low appraisal, several funding issues can crop up, some of which may eventually lead to the sale falling through. With cash investors, you don’t have to worry about such funding issues anymore.
Advantage 8: Leave Home in AS-IS Condition
A traditional home buyer expects to buy a home that’s in tip-top shape. So, you have to put more money into your home for painting the interior and exterior, fixing leaky roofs and plumbing issues, repairing the broken roof, replacing the flooring, improving the landscaping and perhaps much more. However, cash investors usually buy properties in as-is condition. So, you won’t have to clean or repair your home. You can simply sell it just as it is right away without spending precious dollars and yet have no guarantee whether all those repairs and fixes would help you get a high sale price that would let you recover the expenses you have made. Thus, you can forget to spend time, effort and money on improvements, repairs and cleaning since cash investors will buy your home as-is, no matter what condition it’s in.
Conclusion
As more and more people all over the US are looking to buy homes, there’s a lack of supply in the market, which makes this a good time for sellers since they can get good cash offers on their home. However, make sure to check proof of funds before you agree to a cash offer from investors. Remember that cash investors who would want to include contingencies for inspection, appraisal etc. may not merit a great discount since they somewhat defeat the rationale of a cash sale. Yet, when you need speed, less paperwork, convenience and fast cash for selling your house in as-is condition, cash offers are what you need. With so many advantages, it surely pays to accept a cash offer from an investor to get that unwanted property off your hands in a hassle-free, efficient manner.