The Pros and Cons of Selling to Cash Buyers

Crystal 

Walker

Content Writer

When selling your home, it's not uncommon to encounter cash buyers and “sell your house fast” investors/companies who won’t be relying on traditional mortgages to make a purchase. Their presence in the market can be mutually beneficial, but, as with any decision, there are upsides and downsides to take into consideration. Let’s take a look at the factors to consider and see if selling to a cash buyer is feasible for you.

The Pros of Selling to a Cash Buyer

Faster and Cheaper Closing 

Depending upon your situation, a speedy transaction may appeal most to you. Cash buyers won’t need to go through the drawn out process of securing a mortgage and the sale can close in less than a couple of weeks. Closing the sale quickly can also reduce closing costs significantly and eliminate appraisal costs required by loans. If you find yourself needing to close fast due to an estate settlement, relocation, or to avoid foreclosure, this avenue may ease some concerns.

Potentially Skip Repairs

It’s not uncommon for cash buyers to purchase real estate “as is”, allowing you to avoid costly repairs and updates. Selling to an investor with cash at the ready often means they assume the responsibility for renovations and fixes. This can be a huge relief for sellers whose properties may need a lot of work to pass an inspection for the average buyer.

Less Risk

Cash on hand means buyers are financially stable and less likely to back out of the deal before closing. Issues with obtaining financing, inspection hiccups, and other unpredictable factors can result in a sale falling through. Cash offers often come with more certainty, without relying on financing and other contingencies. 

The Cons of Selling to a Cash Buyer

Less Room for Negotiations

Cash buyers may offer up a take it or leave it proposition, looking to bypass negotiations on price, contingencies, and other terms of the sale. The deal may in turn be faster, but you would have to relinquish some of the normal flexibility you’d have in traditional transactions.

Possible Lower Sale Price

You may receive less money for your property than you’d get going the more typical sale route. Buyers with cash know that they are also offering convenience, so could present with a lower offer. This is particularly true if they are also to take on the repairs and improvements of the home. Buyers may offer you well under the market value if they know you are in a bind and need a quick sale. Always be sure to work with reputable companies and receive multiple quotes to determine your fair sale price.

Reduced Market Exposure

This is mostly true when you are selling to an investor or company with the intention of flipping your home. Selling directly for cash via this method reduces the broad exposure you’d usually receive when putting your property on the market. Traditional sales tend to draw in a much larger selection of buyers, which likely leaves you in a better position to rake in more competitive offers. 

Every Situation is Different

Selling your home to a cash buyer, whether that be an individual or company, can be a favored option if you find yourself in a situation demanding ease and speed. It may reduce or eliminate many associated costs in the selling process and get the deal done quickly. As great as it sounds, you must go into it with an awareness of the potential compromises you will need to make, such as settling on a lower sale price and less flexibility. Every situation and individual is unique, and you must take the time to reflect on your priorities and long term goals before making a decision. No matter which approach you take, understanding the pros and cons will help you reach a conclusion that will put you on the best path forward.