If you want to sell your house in today’s strong seller’s market, you may find yourself getting at least one cash offer. In March 2021, 23% of home buyers (including real estate investors) financed their purchases using cash, according to the National Association of Realtors. Although a cash offer may be ideal if you want to sell your house fast, find a new home, or don’t want to deal with contingencies, it may not be the best option if you’re looking to maximize your profits.
Who buys a house with cash?
Home Buyers, investors, and other Real Estate may be drawn to the no-minimum deposit requirements of some homeowners and banks these days, with rates on mortgages so low.
In fact, as of March 27, 2019, the national average rate on a 30-year fixed-rate home loan was 4.41%, according to Freddie Mac. By contrast, the average rate on a 5-year adjustable-rate mortgage (ARM) was 3.71%, and the national average rate on a 1-year ARM was at 3.19%. It makes sense to grab a deal when it’s here.
And many of those cash offers may come from legitimate investors or other buyers, not scammers. (It’s worth noting that some cash-for-homes scams do exist, so it’s important to be aware of common scams and procedures to prevent being taken advantage of.)
What are cash offers?
A cash offer is any offer that’s fully funded when a buyer first submits it. This can be a private cash investor or a mortgage buyer.
What’s a mortgage buyer? Mortgage buyers are individuals or firms that are structuring their purchases in such a way that they can be financed with a mortgage — but also include simultaneous cash funds from a buyer or a partner. This can be an individual with a down payment and mortgage funds or an investor who puts down cash for the mortgage and is renting out the home to make a profit.
If you’re a seller and you accept a mortgage buyer’s offer before any contingencies are written into the contract, you could have less control over major decisions regarding the transaction, such as closing dates and repairs. In contrast, with a private cash investor, you can often negotiate with them directly on these points.
What are the benefits of a cash offer?
If you need to sell your house quickly, a cash offer is an instant answer. You know you can close in an often-faster timeframe because the buyer won’t need to wait for mortgage approval or other contingencies.
Because an investor has a cash reserve, there’s no need for extra financing. This can speed up the process and prevent a seller from getting caught up in contingencies that can delay the sale.
are you a seller in a hot market? You may be able to sell your house faster by getting one cash offer instead of several traditional mortgage offers.
If you have a house in a strong market, where other sellers are getting multiple cash offers, you may be able to get a good price by accepting a cash offer.
trying to sell your house quickly enough to buy another home, your seller’s market will generate multiple cash offers on your house, making the sale proceed quickly.
Looking to sell your house for cash? We’re here to help. Get in touch with us today for a quick sale!