The Ups & Downs of Selling Your Home for All Cash

With the home market heating up, many buyers believe that making a cash offer will give them an advantage over other buyers. But, as a seller, is it in your best interest to take a cash offer? Or are you better off sticking to your price and holding out for a lender-financed buyer? 

The answer is--it depends.

There certainly are some advantages to selling your home to a cash buyer. This is particularly true if you're in a hurry to sell because you're moving or you need money quickly. However, as with most things, there are some potential drawbacks. Let's take a deeper dive into the pros and cons of a cash sale.

1. Fast Closing
   One of the best things about a cash deal is the ability to go to closing quickly. When a buyer purchases a home with traditional financing, it often takes 30 to 60 days from the time the contract is signed until the closing date. Since a cash buyer doesn't have to undergo the loan underwriting process, you may be able to close in a few weeks or, in some cases, even a few days. 
2. No Need for Repairs 
   Before a lender approves financing for a home, they'll require an inspection. If your home needs major repairs and you're not in a position to make them, then an "as-is" cash sale is likely your best option. While you're required to disclose any problems with the home, it's up to the buyer to deal with them after the purchase is complete. 
3. Less Uncertainty
   Almost all lender-financed contracts have contingencies written into them. If the home appraisal isn't high enough or the buyer isn't able to obtain financing, the contract will likely fall through. While some cash deals do have contingencies written into them, they're less common. Generally, accepting a cash offer gives you more certainty that the deal will close. 
4. Lower Selling Price
   Despite the benefits of a cash sale, there are some trade-offs. The biggest is usually the selling price. Cash offers are almost always lower than what you could get if you waited for a traditional buyer, sometimes significantly so. However, once you factor in the cost of repairs, the stress of the uncertainty, and the money you'll spend while you're waiting to sell your home (for example, if you're carrying two mortgages), you may decide that the trade-off is worth it. 
5. Transaction Risks
   ​​​​​​​When you're selling your home for cash, it's essential to watch out for scams! You'll want to make sure the buyer has the money on hand to pay for the home. Ask to see a bank statement, or, even better, a "proof of funds" letter from the bank before accepting the offer. 

For your protection, never accept a personal check from a buyer to pay for your home. Instead, insist on a bank check or a check from the attorney's escrow account. Also, beware of a buyer who tries to purchase the home with actual cash. The cash could be part of a money-laundering ring or drug money. If that's found to be the case and you failed to report it, you could lose your home.

The Bottom Line

For sellers who are in a hurry to sell their home, a cash offer can be the perfect answer. However, if you have the time to wait and can deal with a minimal amount of uncertainty, you'll almost always get a better deal from a lender-financed buyer. Your circumstances will determine which is the best choice for you. 

If you're thinking about selling your home, give us a call. Working with a qualified agent can help minimize stress and give you the peace of mind that you're making good decisions. We'll help you determine your property's fair market value and find the perfect buyer, so you can sell your home without the hassle. 

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