What to Know About Accepting Cash Offers For Your Home

Sell a home to a cash buyer? It could cost tens of thousands of dollarsThe signs can be seen on street corners and light poles. There are ads on radio and homeowners may even get postcards or letters making offers. They claim to “Pay cash for your home.” Similar versions claim to “Buy junk houses” or “Sell your home FAST!”. If you are thinking of selling your home fast, especially in a competative housing market, then are these offers something you should consider?

What do homeowners need to know about these cash offers? Are they in the best interest of a homeowner and what do those who have a home need to look out for? Here’s what needs to be known about accepting cash offers for a home.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Who Are These Buyers?

Generally, these cash buyers are individuals or companies who are looking to profit off of the cash purchase of a home. They find sellers who may be interested in the convenience of selling a home to a cash buyer quickly, far below market value. In some cases, they may just secure the resale rights to a property while they seek a buyer at full value, pocketing the difference. They are not interested in buying a home to live in as much as they want to turn a profit on your home through a flip or resale.

Who Are They Targeting?

Generally, all cash buyers will target any property they can turn a profit on. Those who frequently use these cash buying services fall into one or more of several categories.

  • They are behind in their property taxes
  • They are facing divorce
  • The home is being foreclosed upon
  • Their property is in disrepair, and they can’t afford to fix it up to sell it
  • They own a home in a desired area where property values are increasing quickly
  • They need to sell quickly because of other personal or professional reasons

Some sellers will sell for cash simply because they don’t want the hassles or to take the time that may be required to sell a property for full value.

What are the Downsides of Selling to a Cash Buyer?

The biggest problem with selling to a cash buyer is they will offer a low-ball price that is usually far below true market value for a home. They will claim you will pay a real estate agency commissions anyway, or you may end up negotiating less for your house later, but it will be hard to justify the tens of thousands of dollars that may be lost selling to a cash buyer.

Are there Legitimate Cash Buyers

Yes, there are legitimate cash buyers. These Duluth MN home buyers will complete a reasonably quick transaction, paying you cash for a home no matter its condition. While they may be considered legitimate, the bottom line is that sellers are giving away a significant amount of their equity in most cash sales. If a homeowner feels the convenience of selling a home to a cash buyer is worth the time savings and convenience, perform due diligence to make sure it is a legitimate company with a solid reputation. Selling to a company because a handwritten “We pay cash for houses” sign was seen on the corner is far from a good reason to choose that buyer.

Before selling to a cash buyer a homeowner should understand the full value of their home and the true cost of selling to a cash buyer. For most, it will still be beneficial to seek the assistance of a real estate professional.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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