Selling a home is a big decision. Homeowners have two routes available to them, accept a cash buyer or go through with a conventional sale. Your choice is dependent on your individual situation.
A review of cash and conventional sales from the homeowner’s point of view assists in making this major decision.
Sell a House for Cash:
- Con: Expect to receive less than fair market value for the house. 60 to 80 percent of fair market value, minus possible repairs, can be expected from a cash buyer.
- Pro: Cash buyers will pay from cash they have on hand. Sellers can ask for proof of the cash in the form of a bank statement or other document.
- Pro: Cash purchases typically go through more quickly, from a few days to a few weeks, from start to end. Homeowners will shoulder fewer maintenance costs and the responsibilities of homeownership as the period until closing is shorter than with a conventional sale.
- Pro: Appraisals and inspections are up to the buyer. They do not have to abide by requests from lenders as in a conventional sale.
- Pro: Cash buyers often take the property in “as-is” condition, without additional investment on the part of a home buyer.
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Conventional Home Sale:
- Pro: Homeowners can potentially receive fair market value or more for a home in move-in condition with high-end finishes in a desirable neighborhood. In most situations, the final sale price can be or be near listing price.
- Con: A conventional buyer will likely require financing and go through their own approval process with lenders. This requires a credit and work history as well as bank statements that satisfy basic lending requirements. A potential buyer may be interested in the home but need to repair their credit before becoming eligible for a mortgage.
- Con: The conventional buying process has more elements and without approval from banks during the loan process can force homeowners to begin anew with another potential buyer since the original buyer can no longer proceed.
- Con: Conventional home sales take longer than cash sales with additional hurdles to overcome. Homeowners are responsible for all maintenance costs and associated taxes until the deal is final.
- Pro or con (depending on market): Conventional home sales generally include appraisals and inspections. Appraisals may be required from the lender with mortgages provided only for homes that are valued for a specific amount.
- Pro or con (based on return): Potential home buyers may require homeowners to make improvements as part of a contingency to a sale. Homeowners may also need to perform repairs in order to increase their listing price.
Homeowners must choose an option that best suits their individual needs. Some homeowners have substantial equity in their home and want a full return on their investment. They are willing and able to spend time and money in finding the home buyer that will pay close to their listing price.
Other sellers may not have such luxuries and need to sell a home in its current condition quickly. Evaluate each option carefully and perform your own due diligence in either scenario. Contact Jerred today so that you can discuss your options.