How To Sell Your House For Cash: Everything To Know

Selling a home can take a month or more between getting offers, waiting for your buyer's mortgage to be approved, going through the inspection and appraisal, and more. The good news is that if you’re on a tight schedule, selling a house for cash can help you speed up the process.

Flippers and other real estate investors often buy homes for cash, hoping to turn them around for profit quickly. While the fast cash can be attractive and may even feel necessary in some situations. However, there are also some downsides to consider.

What Does It Mean To Sell Your House For Cash?

Selling your house for cash doesn’t mean that the buyer physically hands you a pile of cash. Instead, it means the buyer is paying for the house in full rather than financing it with a mortgage.

Cash offers aren’t the norm for individual buyers since most people can’t afford the hundreds of thousands of dollars required for a typical house. However, investors and other parties with a lot of cash on hand might choose to buy a house in cash.

Who Buys Houses For Cash?

Cash offers aren’t the majority of home offers and likely never will be. However, in 2023 about one-third of home buyers purchased homes with cash. Here are some of the most typical cash buyers:

• Buy-and-hold investors: A buy-and-hold investor is someone who buys a rental property and then typically rents it out to create a stream of cash flow. Not only do they make money from tenants, but they also enjoy capital appreciation as the home value rises.
• House flippers: A house flipper is someone who buys a distressed or aged home, renovates it and then sells it for a profit. Flippers often use the proceeds of their last sale to buy their next home, which allows them to do so in cash.
• iBuyers: iBuyers, also known as instant buyers, are companies that make all-cash offers on homes using online transactions. They use digital algorithms to choose homes to buy and determine offer prices – this helps them find and close on properties quickly.

Why Should You Sell Your House For Cash?

Selling your home for cash offers some key benefits and helps you avoid some of the biggest downsides of selling a home to a buyer with a mortgage. Benefits include an overall simpler and faster process.

Simplified Financing

One of the biggest benefits of selling a house for cash is the simplified financing. When you sell your house the traditional route, the buyer must apply for a mortgage. The mortgage process can slow down the selling process since the buyer must go through the underwriting process, get an appraisal and get approved for a loan.

Selling a home with financing also has other risks. First, if the buyer's mortgage application is denied, the deal will almost certainly fall through. Even a low appraisal could cause issues if it comes back too low.

A cash offer eliminates those key issues – the buyer can skip the mortgage process altogether and go straight to the closing.

Faster Closing Process

The closing process when you sell to someone with a mortgage can take upward of a month or two – and it could be longer if there are issues. But sometimes, you need to sell your home as quickly as possible, such as if you’re struggling to make your mortgage payments or need to move quickly due to a job change.

A cash offer can help you sell far more quickly than a traditional mortgage offer. Rather than waiting months to close the deal, you could do it in a week or two.

Easy Prep

Selling a home the traditional way requires a lot of prep work, even before you list the home. You may need to make home improvements to make the home more appealing to buyers. You also have to hire an agent, stage the home, host showings and more.

Selling a home in cash, on the other hand, allows you to sell your house as-is. Cash buyers often plan to make repairs themselves, meaning they don’t need the home to be in the best of condition or to be staged to make it look more appealing.

Why You Should Not Sell Your House Fast For Cash

Just as there are some key benefits of selling a house for cash, there are also some downsides, including a lower potential sale price.

Lower Sale Price

One of the biggest disadvantages of selling a house for cash is that you're likely to get less money for it. Sellers who are accepting cash offers often want to sell as quickly as possible. In exchange for avoiding the lengthy selling process and the investment of both time and money required, they are willing to accept less money.

The amount you’ll be able to sell for with a cash offer depends on several key factors, including your local housing market. You shouldn’t be surprised if your cash offer is upward of 20% less than the market value of your home.

Limited Negotiations

When selling a house the traditional way, there’s plenty of room for negotiation. You and the buyer can negotiate contract terms such as the sale price, seller concessions, contingencies, and more. But that doesn’t necessarily apply to cash sales.

Often, a cash sale doesn’t offer much room for negotiation from the seller’s perspective. The cash buyer makes an offer, and you may be left to either accept or reject it. Buyers with cash know that they are making the process much easier for the seller, so they may have the upper hand and the ability to control most negotiations.

Chance Of Predatory Buyers

Unfortunately, selling your house for cash can open you up to potential scams or predatory parties. First, cash buyers may recognize that sellers selling for cash often need money quickly. They might take advantage of that by making low-ball offers, knowing the seller has few options.

Additionally, as with other areas of the financial industry, all-cash home purchases may attract potential scam artists. For that reason, it’s important to do your due diligence with any buyer to ensure it’s a legitimate deal.

Cash Home Sale Vs. Traditional Home Sale: Timeline

How To Sell Your House For Cash In 7 Steps

If you’re considering selling your home for cash, here’s a step-by-step guide to help you:

1. Determine Home Value

It’s important to determine your home’s value before you try to get any cash offers on your home. Knowing your home’s value ahead of time can help you decipher which offers are good and which buyers are trying to low-ball you. Consider hiring a professional appraiser prior to putting your house on the market. Or work with a real estate professional who can help you find a good price for your home.

2. Find A Reputable Cash Buyer

Cash buyers are often real estate investors looking to make a profit from the sale. Unfortunately, they could also be scam artists or people making predatory offers. Before accepting any offer, make sure to do your due diligence to ensure the buyer is reputable.

3. Compare Offers

Whether you’re selling your home for cash or through any means, it’s important not to simply accept the first offer you get. Instead, you should get multiple offers so you can compare them and choose the best one. A real estate attorney or real estate agent can help you review these offers.

4. Get Proof Of Funds

When you’re selling to someone with a mortgage, you know the deal has the backing of a financial institution. But with a cash offer, that’s not the case. Because of that, it’s important to request proof of funds so that you know the buyer can go through with the deal.

5. Complete A Home Inspection

Just like when you sell a house the traditional way, a cash buyer may still require a home inspection so they can ensure there are no major issues with the home. Depending on whether there’s an inspection contingency in the contract, this may or may not affect the deal.

6. Conduct A Title Search

A title search is a necessary part of any home sale. It allows a buyer to verify that the seller has the legal right to sell the home and that there are no liens or other encumbrances.

7. Close On The Home

Selling A House For Cash: FAQs

Before selling a house for cash, be sure to read the answers to these frequently asked questions.

Is selling your house for cash a good idea?

Selling a house for cash isn’t right for everyone, but it does have some benefits. It allows you to sell more quickly and remove a lot of the red tape in the traditional home buying process. However, it can also result in lower offers.

Is it illegal to sell a house for cash?

There is nothing legally preventing someone from selling their house for cash. However, you’ll need to go through some of the same legal steps as you would with a traditional home sale.

Do I need a real estate agent if I sell my house for cash?

The Bottom Line

Selling your home for cash helps speed up the process, allowing you to walk away with the sale proceeds far more quickly than you would if you’d gone the traditional route. However, there are also some downsides, including a lower sale price.

If you’re planning to sell your home, regardless of whether you’re considering a cash sale, a real estate agent can help you. Get connected with an expert real estate agent today to help you start the home-selling process and get the best deal.