Selling your house to a cash buyer means that the buyer is able to buy your home outright without the need for a loan or mortgage. They will need to have the money already available to them at the time of making the offer. This could be an individual or a company that buys properties for cash.
What Types of Sellers Might Want a Cash Buyer?
There are certain types of sellers who may be more in need of a cash buyer than others including:
1. Sellers Who Want a Fast Sale
The most common type of seller looking to work with a cash buyer is one who wants to sell their property fast. When selling a property to someone who is taking out a mortgage, the process is far slower as mortgage providers will want to assess the property and also guarantee that the borrower is able to repay the debt. Without the need for financing, the process is far quicker.
2. Those Selling Properties Which Are in a Poor Condition
Properties in poor condition are unlikely to be approved by mortgage providers meaning that cash buyers may be the only option without investing in a property renovation before selling.
3. Sellers Whose Property Chain Has Fallen Through As the Result of a Failed Mortgage Deal
If a borrower is rejected for their mortgage application after having put an offer in on a property, the seller will need to put their property back on the market. This is frustrating as they have probably lost a lot of time and potentially money. As a result, they may want to only work with cash buyers in the future.
What Are the Pros of Selling to a Cash Buyer?
Here are some of the advantages of selling your house to a cash buyer:
1. No Need to Prep Your Home
There are many actions that you normally need to undertake before putting your property up for sale. However, when you sell your property to a cash buyer, there is no need to undergo this same level of preparation. Cash buyers are not interested in decluttering, depersonalising or deep cleaning so it can save you a lot of preparation time.
2. Fast Completion
Working with cash buyers is known to be far quicker than other methods, especially that of selling with an estate agent. When selling with an estate agent, there can be many months between the moment you put your house on the market and when you actually close the sale. However, for cash buyers, this process is significantly quicker and can sometimes happen in a matter of days.
3. Challenging Homes Are Accepted
There are some homes which are difficult to sell for whatever reason – this may be their layout, design or lack of light. Whatever the feature that makes it difficult to sell, cash buyers are far less picky and are usually far more open to purchasing these difficult properties.
4. No House Viewings
When you sell your house via the traditional routes, it is common for there to be multiple house viewings or even an open house in which various prospective buyers visit your home at the same time. This can be a disruption to your daily life as you need to have your house ready and either be out of the house completely or out of the way of the prospective buyer and the agent. When you work with a cash buying company, there is no need for multiple groups of strangers to traipse through your home.
5. Save Money On Estate Agent Fees
Accepting an offer from a cash buyer means that you avoid the fees incurred when working with an estate agent. Estate agents typically charge a commission which is calculated as a percentage of the property’s final sale price. This can often end up being a significant amount of money. Cash buying companies tend to also handle the transaction fully including the paperwork meaning that you can also save money on those services.
6. A Good Way to Turn Inheritance Properties Into Cash
If you have inherited a home from someone who has died (a probate property) and do not want to keep the property, working with a cash buyer can be a great way to get rid of the property and immediately receive an influx of cash.
What Are the Cons of Selling Your House to a Cash Buyer?
Selling your house to a cash buyer, on the other hand, can come with its own set of disadvantages or risks:
1. Lower Selling Price
Usually when you work with a cash buying company, where you benefit from a much quicker sale, you sacrifice the final selling price. Cash buying companies tend to purchase properties with the intention of flipping them to use as a rental property or tearing the property down in order to use the land. This means that, as a business, they will want to pay the lowest amount possible and make the biggest profit. Subsequently, they are less likely to give you your asking price.
2. Fees Incurred
Selling your home through a cash buying company may save you estate agent fees; however, that does not mean you are completely free from fees. The majority of cash buying companies will charge a certain fixed fee or a proportion of the sales price for their services.
3. You May Need to Cover the Cost of Repairs
Some cash buying companies, depending on the company, could ask you to cover the cost of repairs which will be deducted from the overall sale proceeds to avoid it coming out of their profit.
4. Beware of Scams
Scams can sometimes occur when working with a cash buying company and it is always important to carry out your research beforehand to make sure you are working with a legitimate company.
Should I Sell My Home to a Cash Buyer?
If time is of the essence, it is definitely beneficial to work with a cash buyer as it will be significantly faster than selling via traditional means. That said, it can mean that you get less money than you expected. If you are willing to wait it out, it might be worth being patient and selling your home for a higher price.