6 Reasons why a cash home buyer is better than an agent
Never a fast cash offer
When you sign up with a real estate agent to list your property on the multiple listing service (MLS), there’s no guarantees of when you will be receiving an offer, if ever. Even in hot markets, the competition can be fierce, with some properties being sold due to minimal feature differences and upgrades.
If you are looking for a fast cash offer, then why would you ever sign a lengthy real estate listing contract? While it’s true that contracts do not have to be lengthy, most realtors will push hard to get one that is 6 months or longer. They will tell you that the average days on market may not support a 30 day listing. Choosing to go directly to a cash home buyer will ensure that your house is sold quickly.
Cash home buyers are investors looking for properties to flip or hold and rent for cash flow. They desire to close quickly, and many do so in a matter of days.
Retail buyers need bank approval
Okay, this isn’t entirely accurate. However, for the most part, your retail buyer will be using traditional bank financing in order to purchase your home. Investors do buy houses off of the mls, but the bulk of single family listings will be sought out by individuals and families looking for a home to live in. In that case, it is unlikely that you will be faced with a buyer purchasing with an all cash offer.
This doesn’t sound too bad, but consider that not everyone will make it through the financing process. There are multiple risks involved in a retail sale that can derail the purchase before closing. Take for example, the buyer’s credit score changing during the final credit check before funding. This happens more often than one would think. Such things can occur because the buyer thought it would be alright to purchase a vehicle while also trying to secure a house. Not only will this result in a hard inquiry on their report, but it will also increase their debt to income ratio.
When using a cash home buyer to sell your house fast, they would close with their own funds, private money, or a hard money loan which is based solely on the asset (your house). This reduces the amount of time needed to close, as title won’t be waiting on the bank to transfer the funds to escrow. This major difference can mean that the closing could be as fast as a few days.
You may have to make repairs
Sure you can sell your house “as-is” on the retail market, but don’t expect retail profits for your equity. Not only will you have to absorb the price difference, but pay the hefty commission on top of it. Putting that aside for a later point, many buyers will make demands for repairs. This will often happen after the property is carefully inspected by a professional, which is used as a negotiation tool as well as a buyer protection.
The simple fact is, if you want to get your equity out of a retail sale, you should expect to pay for repairs that you may or may not know are needed.
Unrealistic expectations on market value
Often times, real estate agents will hype the market value of the home. In reality, the market value is often speculation. The same is true for the projected days on market. Just because another home sold quickly with similar features within the last six months does not mean yours will. There are many factors determining what the sold value will be, as well as the amount of time the home will remain on the market.
As you may very well know, a house that stays on the retail market for more than a few months will often become stagnant and put off buyers. Selling to a cash investor will reduce that time, while eliminating commissions and other off-putting obstacles in the process.
Bad tenants can kill the deal
A bad tenant is a tenant that fails to pay rent on time, often repeatedly, if they pay the rent at all. They will not take care of your income property, and may cause major damage. This kind of tenant may even have a regular police presence at the property, making it harder to rent out to a good tenant in the future.
Bad tenants can kill a deal in many ways.
- They may become an obstacle for showing the property.
- The buyer may not want to deal with an eviction.
- An eviction may land in front of a sympathetic judge causing delays.
- The property can become even more damaged while in escrow.
If you are a tired landlord unwilling to manage the property any longer, your best bet would be people who buy houses for a living. They wouldn’t mind evicting the bad tenants and cash-flowing the property again.
Agent commissions can be huge
Often, the commission will be around 6% of the sale price. Don’t let a licensee tell you that a fee is standard however. By law, the real estate commission is negotiable, and agents or brokers cannot legally say that it’s a standard fee. Doing so will mean a violation of their license. Regardless, the commission at any rate will be one of the largest costs you will have when selling a house.
When you’re already bleeding money, the last thing you need is an agent siphoning more of it from your wallet. Cash buyers can be found without using agents. You landed on one right here as a matter of fact. We buy houses without charging fees or commissions, and we pay the closing costs.
Your situation right now is the ultimate decision maker for which path you take; Real estate agent or cash home buyer. There are clear differences between the two, in not only the amount of cash and equity you can walk away with, but also the time spent selling the property.
Before signing a lengthy listing agreement, take a long hard look at all of the possibilities. Signing that agreement can mean the difference in thousands of dollars in cash for two reasons:
- Commissions and Fees
- Time it takes to SELL
If you are facing foreclosure or bankruptcy, that time can make all the difference.