Recently updated on January 13th, 2023 at 09:13 pm
What You Will Read In This Article
Are you ready to sell your house and are interested (and maybe even excited) by the idea of a cash offer? A cash offer is a great mode of selling real estate, and it could be the perfect route for you.
In this article, we are demystifying this process and breaking it down into actionable steps for you.
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1. Find Out What Your Home Is Worth Today
The first and the most important step to make when selling your house is to find out how much your property is worth. House valuations change over time, and the appraisal you had five years ago might not apply now. There are several ways you can go about this when preparing to sell to a cash buyer. Let’s go over them!
Request a CMA From Realtors
The first way you can establish what your house is worth is to request a CMA from a realtor.
A CMA or Comparable Market Analysis is a general estimate of your house’s value based on similar properties that have sold in your area in a recent timeframe. Looking at how similar properties to your own have fared on the market in your area will give you a good idea of what the market favors in your area. These other properties are often called comparables or “comps.”
A CMA usually comprises details about the property (such as construction type, age, style), surrounding neighborhoods, and comparable homes in the area. The CMA will make adjustments along the way, but in the end, the report will detail the house’s market value and its per-square-foot price.
You’re essentially getting the median price for similar houses in your area. The prices for other properties sold near you already take the local amenities into account, saving you a bit of time.
CMAs are not formal appraisals, so it is possible to do it yourself, but it is always a good idea to have a professional take care of it.
Hire an Appraiser
The second option for house valuation is to hire a certified real estate appraiser.
Real estate appraisers will take a tour of your home and document their visit with reports and photos, which results in an estimate of what your house is worth. They look not only at your home and its condition, though. They will also consider your neighborhood, local amenities, and other factors.
Appraisers will look at many of the same factors that you would for a CMA, but licensed appraisers bring a wealth of industry knowledge to the table to get the most accurate value and a formal appraisal to prove it.
You can find local appraisers through various directories like the Appraisal Institute Registry. From there, compile a list of appraisers and then narrow down your options by reading recent reviews of the appraisers.
Run Comparable Sales Yourself
But if you’re determined to work this out on your own and you’re confident in your skills, you can crunch the numbers yourself.
There are a few ways you can go about this. First, you can look at recent sales in your area and narrow your search by specifying specific aspects that match your own house. Consider local analytics, such as school districts, crime rates, and other impactful factors.
From there, compile a list of properties similar to your own and calculate the median price. Then, extrapolate your per-square-foot price from there.
2. Request Cash Offers
Requesting a cash offer on your house is the next step. Let’s go over various ways to do just that.
iBuyers (Opendoor, Offerpad, Redfin Now)
One option for finding a cash offer is to browse offers online from venues such as Opendoor, Offerpad, and Redfin Now. iBuyers tend to be linked to well-known real estate websites, but instead of listing your house on their website, you can sell it to the company directly.
Since these companies as well-entrenched in the real estate world and have been operating for years, they are reliable and trustworthy buyers for your home. Considering their size and prevalence, it’s safe to say that they have the money to purchase your house without hassle.
Opendoor takes a bold approach to this method. As of March 2021, Opendoor offers cash-backed offers to sellers, which has drawn quite a bit of attention from both buyers and sellers. Once a buyer pre-qualifies for a cash-backed offer, Opendoor will back the buyer’s offer to the seller with cash, giving both parties the benefit of a cash transaction without requiring the buyer to come up with the lump sum right away.
Offerpad offers a similar but more direct service through Offerpad Express. Through Offerpad Express, your house never hits the market while it’s in your custody. Offerpad buys the house from you and then takes care of the sale. This allows a greater level of flexibility for your moving-out date, and you don’t have to worry about hosting showings.
Redfin Now’s system for cash offers functions much like Offerpad. You sell your house to Redfin for cash, and then Redfin takes care of the sale from there.
We Buy Houses Companies
We Buy Houses companies are mostly legit businesses. Many of these companies can take your house off your hands quickly for a lump sum, but it’s always good to do thorough research when taking this route to make sure that the company you make a deal with is vetted and reliable. Unfortunately, scammers can lurk among legit cash offer companies. One trusted company is We Buy Houses.
Ask Real Estate Agents For Their Cash Buyer Clients
If you’re wary about stepping into the world of cash offers on your own, you can always visit a few of your local real estate offices and ask if they’re willing to share a list of their cash-buyer contacts. Since you’ll be getting these contacts through a legit business, you’re far more likely to deal with a list of safe and reliable buyers.
Read More: 13 Ways To Find Cash Buyers for Your Home
3. Review the Cash Buyers Offer and Terms
Once you’ve received an offer on your property, it’s time to review it to make sure you’re getting a good deal! This is where it gets exciting! We’ll go over the key points of an offer, and what makes an offer stand out.
You’ll want to make sure that the offer price is realistic. Make sure the offer price matches or exceeds your house’s worth. But many cash sellers accept offers that are lower than their house’s value. If you’re not in a rush, holding out for a better offer could be worth the wait.
Quick Closing Date?
Take your timeline into account when evaluating a cash offer. Some sellers who opt for cash offers are in a hurry to move, so cash offers make sense. Since there are no lenders in the equation, it’s much faster to move through the transaction process when dealing with cash. The process can be even faster if you’re selling to an iBuyer or a company that plans to turn around and resell the property.
If you’re in a hurry, go for it. If you’re not in a hurry, and you have the option of taking your time to find the right offer, then definitely take your time to make sure that you’re getting the best offer and the most convenient timeline for you.
Like with any sale of real estate, inspections are common when it’s an individual buyer looking to purchase a home. Buyers want to know what they’re getting into, and an inspection can influence their offer price.
However, cash offer sales lend themselves to investors and house-flippers who don’t mind repair work or are already planning on remodeling the place and then selling it on. These buyers might still request an inspection just to get an idea of what they’re walking into, but they’re less likely to expect you to handle the repairs. These buyers also usually have established relationships with contractors in the area who they may already have to deal with, even regularly, for any repair or maintenance work required.
Bottom line, while an inspection might be a good idea to give peace of mind to all parties involved, you don’t have to have one, since you don’t have to worry about following the regulations of a mortgage. Many cash buyers understand that buying with cash often means buying the home as-is.
4. Make It Official By Signing the Contract
Now that all that is out of the way, you’re so close to completing your sale! If you’re satisfied with the offer presented to you and everything is settled, sign that contract. You can then move on to closing!
5. Hire an Attorney For Closing
Even though the cash offer process involves fewer outside parties, no lenders, and optional inspections, it’s still vital to hire an attorney to oversee the closing process. Not only does this give everyone peace of mind, but it also ensures that there are no loose ends in your contract and that everything is legal.
Whether you’re selling for cash or going through a bank, real estate sales are complicated, and require considerable industry knowledge that isn’t available to the general public. In some states, especially New York, it is vital to have an attorney present to write up the contract no matter how you’re selling your house.
A real estate contract comprises:
- Basic property and seller details
- The agreed-upon price and any applicable terms
- The closing date and any applicable costs
- Taxes and assessments
- Applicable property classifications for legal purposes
- Any aspects of the home that will be included, such as furnishing and fixtures
- Various disclosures such as the presence of a well, tree roots, lead paint, and other possible toxins
- Disclosures regarding pest damage
- Applicable contingencies
- The property deed and title
This is not an exhaustive list, but it’s a good metric for the number of documents you’ll need even if you’re selling for cash rather than a traditional mortgage. For everyone’s sake, it is much easier to hire an attorney. You can find one online, or your real estate agent might have a few contacts you can speak to.
6. Work Through Escrow
Even when selling for cash, you’ll need an escrow company to handle the transaction.
An escrow company will safe-keep the cash while the transaction is taking place. They’ll also review the contract to ensure everyone is satisfied, every part of the contract is met, and that the money is transferred smoothly from buyer to seller.
Having a third party handle the transaction ensures that everything is fair and neutral.
Escrow companies also usually handle the title transfer and record the deed.
7. Close On the House
You’re all ready to close on your house! Once you’re past this step, you can move on and leave your former home in your buyer’s capable hands.
One of the biggest perks of a cash offer sale is that closing takes a fraction of the time that a traditional sale via a lender would take. Here’s a list of the documents required for completing the close.
Closing requires a lot of papers to sign. We went over some of the paperwork involved in the contract itself earlier, but here’s what to expect to sign and supply during the final closing process:
- A list of any applicable closing instructions for your escrow company.
- A HUD-1 settlement statement, which states all applicable costs involved in the sale.
- A Certificate of Title and title insurance decreeing that you are within your rights to sell the property in question.
- A loan payoff statement, if you have any open loans that need to be tied up during the closing process.
- A Mechanics liens, stating that there are no liens on your property in terms of outstanding payments for work done on your house before the completion of the sale.
- A Bill of Sale, which covers any furnishings and fixtures left with the house.
- A statement of closing costs, certifying that you are aware of all fees and closing costs.
- A statement of information that confirms your identity.
In addition to signing a boatload of paperwork, you’ll need to provide a handful of other items and documents, including your government-issued ID, any modes of entry such as keys, garage door openers, keypad codes, and a means of covering any outstanding costs that aren’t included in the contract itself. You will generally know ahead of time what the costs add up to.
We recommend bringing a cashier’s check to pay for these costs.
Let’s go over some frequently asked questions on selling your home via a cash offer.