How Much Can Cash Buyers Offer for a Home?
What is a cash buyer?
You’ve probably heard the term on TV and seen it floating around on internet ads.
But what exactly does a cash buyer have to offer that a realtor or wholesaler doesn’t when it comes to selling your home?
A cash buyer gives you the chance to get rid of the headache that is the home-selling process.
Here are the benefits a cash buyer can offer and what to expect when you work with one.
Is Selling to a Cash Buyer Stressful?
Not really. What often stresses people out about the home-selling process doesn’t exist with cash buyers.
With a cash buyer, there’s no:
- Lengthy sales timeline
- Private showings
- Repairs to make
- Open houses
You don’t even have to clean up the place or take belongings with you. A cash buyer will often buy a house as-is. There are no back-and-forth negotiations, inspections and re-inspections, or any other part of the listing process that is taxing.
What Are the Requirements to Sell to a Cash Buyer?
You must have a property and be willing to take money for it. That’s about it.
Cash buyers will usually buy homes in any condition. There is no need for you to do any repairs. You don’t have to meet any safety standards or codes. You won’t have to argue with the potential owner over which problems must be fixed by closing day.
With a cash buyer, you get in and out of the deal with little effort and the ability to move on without any extra work or stress. The investor likely plans to renovate your house with a team of general contractors to bring value to the home. All you need to do is sign on the dotted line, hand over the key, and take the cash.
Are There Reduced Fees with a Cash Buyer?
There are hardly any fees when you work with a cash buyer.
Here’s a list of what comes out of your profits with a traditional real estate transaction:
- Home repairs in sales contract or repair work done before house was for sale
- Debt obligations to pay off existing mortgage(s)
- Government recording and transfer charges
- Preparations to get the house ready for sale
- Any additional settlement charges
- Real estate sales commissions
- Title charges
- Closing fees
When you sell your home to a cash buyer, all the money is yours. No fees are taken out; no deductions are made. The cash you see is the cash you get.
How Much Can Cash Buyers Pay for a Home?
If you need cash fast, selling your home to a cash buyer is the best way. But, you still shouldn’t give it away.
Here is the formula cash buyers typically use to determine their maximum offer. It’s commonly referred to as the 70% Rule.
- Estimated sales price x 70% – rehab costs = maximum offer
This formula leaves the cash buyer with a 30% gross margin when they sell the house. The maximum offer will usually yield around an 8-15% net profit—which is fair given the risk and work that goes into flipping a house.
A legitimate cash buyer is going to be objective about the estimated sales price and construction budget when formulating an offer. The seller needs to be objective, too, or risk overvaluing the house and spending more on holding costs.
How Fast Can Cash Buyers Close?
Cash buyers can take a home off your hands and close in as little as seven days. You don’t even have to bring the original deed or any paperwork. Just make sure the settlement statement is correct.
When you list your home with a real estate agent, getting to closing day takes a lot longer. You have to get the house ready to sell by staging the interior and enhancing curb appeal. There will be open houses and individual showings to deal with as you wait for an offer. Your house could be on the market for weeks, months, or even years.
Once you do find a potential buyer, you have to go through the inspection process to see if any repairs need to be made and comply with them. Even then, the deal could still fall through, especially if the prospective buyer has financing issues. Then you’re back to square one.
When you deal with a cash buyer, there’s little chance of the deal not happening and having to repeat everything you went through before.
What Are the Benefits of Working with a Cash Buyer?
Now you know the benefits of selling your home to a cash buyer and how they make the process faster and easier.
A cash buyer offers less stress, fewer requirements, reduced fees, a fast closing, and, here’s the best part: cash!
If you’re looking for a simpler way to sell your home, contact New Again Houses and we’ll get started with an evaluation.