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Are Cash Home Buyers Legit? Answering 5 Common Questions About Selling a House for Cash
by Dave Smith on Jun 24, 2021
Are homebuyers who pay cash and promise quick closings legit? If you have a home on the market and especially if you’re looking for a quick sale, this is a vital question, as you don’t want to face any legal headaches after you’ve handed over the keys to any buyer!
To help you make the right decision when it comes to selling your home, check out some commonly asked questions about home buyers offering cash payouts and quick closings. You can then decide the best option for yourself and know that you’ll be working with a legitimate buyer for your property.
1. Are Cash Home Buyers Legit?
In short, the vast majority of home buyers paying cash for properties are perfectly legitimate and legal! Very often, these individuals or companies start a home buying company looking for distressed properties or those that they can quickly resell for a profit, versus buying a home to live in themselves.
In some cases, the buyer might make repairs and updates to the property; the money they get from reselling that home gives them enough profit to repeat this process again and again! Not only is this process legal but it’s also an excellent way for homeowners to get through the selling process quickly, without many of the hassles and delays they might otherwise experience. It’s also a good choice for someone with a home that’s often difficult to sell, such as one needing repairs or updates.
2. How Is “Sell Your House for Cash” Different?
Selling a house to a cash buyer looking to resell that home for profit is similar to selling a home to a private buyer, with a few exceptions. One main difference is that a buyer looking to purchase a home for their own occupation will usually be concerned about the property’s overall condition. Private buyers wanting to move to a new property usually don’t want to then go through the hassle of making repairs and updating that house.
When you sell your house for cash, the buyer is not usually concerned with the home’s condition, other than how it affects their purchase price or offer to you. A cash buyer might not be overly concerned with needed updates or repairs, or even if the home is up to local building codes, as they often work with contractors whom they pay to handle those fixes! A cash buyer will usually have the funds available to make whatever repairs are needed and, since they’re not planning on occupying the home themselves, won’t be overly worried about the home not being up to code or outdated in any way.
Not only will a cash buyer have the funds to buy the home and make repairs, but note another vital difference between private buyers and cash home buyers. A private buyer usually needs a mortgage to purchase a home, but many lenders won’t provide loans for severely damaged homes or those not up to local codes. A cash buyer doesn’t need to worry about loan requirements or even applying for that loan in the first place!
3. Do Cash Home Buyers Really Purchase Any Home?
Only a cash home buyer can say if they purchase any or every home on the market, but most cash buyers specialize in distressed properties, meaning those needing repairs. This includes properties not up to local codes and even those that have suffered fire or flood damage.
Some cash buyers even advertise that they buy “ugly” homes, or those that don’t appeal to private buyers for any reason! If you’re concerned that even a cash buyer might not want to purchase your home, your best option is to simply call or otherwise contact them and be honest about the home’s condition, as you might be surprised to find that they’re still interested in buying it!
4. Why Do Home Sellers Work With Cash Buyers?
There are many advantages to working with a cash buyer when trying to sell your home. One benefit is that you don’t need to worry about the buyer being refused a mortgage. In turn, the selling process won’t be delayed because that buyer needs to search around for mortgage lenders willing to offer a loan, or because you can’t even find potential buyers in the first place!
Closing with a cash buyer is also faster than working with a buyer using a traditional mortgage, as lenders typically demand various property inspections that can delay your closing. Also, a traditional buyer might need to sell their own home before they can purchase your property! If you’re in a hurry to sell that property, a cash buyer is often your better option.
Since cash buyers often specialize in distressed properties, you also don’t need to worry about having your house inspected and then bringing it up to code for a sale, or even making it look presentable for open houses and walk-throughs! Cash buyers then eliminate much of the hassle of trying to sell properties that need updating, making it easier on the seller overall.
5. How Do Work With Cash Home Buyers?
If you’re considering working with a home buyer offering cash, it’s good to simply call or contact them and give them any available information about your home. For example, if you know the home needs certain repairs, don’t hesitate to tell them. However, they will still want to make an appointment to inspect the home so they can prepare their offer.
Once the cash buyer makes their offer and you accept its terms, they will usually handle a title search and arrange the closing, and tell you what’s needed for them to finalize the sale. In some cases, you might be able to close on your home and get your cash payment in as little as two weeks!
Since working with home buyers offering cash means closing that quickly, be sure you’re ready to sell your home and vacate. You also shouldn’t hesitate to ask any questions you have along the way, so you know you’ve made the right decision and also know what to expect when selling your home for cash.
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