How do cash home buyers work?
A cash buyer pays for the house without a mortgage loan, so there is no lender, appraisal or loan approval to wait on. They look at the house, make an offer that reflects its condition, and close at a title company, usually in two to four weeks.
Because there is no bank involved, the deal does not depend on the house meeting a lender's standards. That is why cash buyers can buy houses that need major repairs, houses with tenants, and houses that have sat empty, the ones a traditional buyer often cannot finance.
How is a cash offer calculated?
Most cash buyers start from what the house would be worth once repaired, subtract the cost of the repairs, the costs of buying, holding and reselling, and a margin for the risk they take on. What is left is the offer. A good buyer will walk you through those numbers.
I do it that way and I show you the pieces: what similar fixed-up houses near you have sold for, what I think the work will cost, and how I got to the number. You may disagree with a piece of it, and that is a useful conversation.
How do I tell a reliable cash buyer from one who won't close?
Ask questions before you sign. Who is the buyer named on the contract? Can they show proof of funds? Which title company will close, and is it local? How much earnest money goes down, and when can the buyer walk away? A reliable buyer answers all of it plainly and in writing.
- Proof of funds: a bank or lender letter showing the money is there.
- A real title company: one you can call yourself.
- Earnest money: a deposit held by the title company.
- Inspection period: how many days the buyer has to back out, and why.
- Reviews: from real sellers you can look up.
Be wary of anyone who pressures you to sign on the spot, will not put the offer in writing, or wants to lower the price at the last minute for reasons they could have seen at the walkthrough.
Are there fees when you sell to a cash buyer?
There should not be commissions. Ask who pays the closing costs: with me there are no fees or commissions, and I pay my own closing costs. Your mortgage, any liens and back taxes are paid from the sale price at closing, the same as any sale.
Get every cost in writing before you sign. A clean offer says the price and what, if anything, comes out of it.
When is a cash buyer the wrong choice?
When the house is in good shape, you have time, and the market is strong. Then listing with a good agent will often net you more, even after commissions. A cash sale earns its keep when speed, condition or certainty matter more than squeezing out the top price.
I will tell you if I think that is your situation. See selling as-is and selling without a realtor to compare your options.
"I told him what I would like to have as a buy price and he said it was too low, and paid me $15,000 more than that number. But he said there is one condition: that I would use that money and prepay for one year for an apartment my sister and I could move to so we didn't have to worry about finding a place to live and pay for it. Greg was an answer to our prayers, he handled every document and everything needed for us to sell. Great guy, great company."
Greg Carpenter is a licensed real estate agent in Ohio. When Deforest Solutions makes you an offer, Greg is buying the house for himself, not as your agent.