If you’ve been following the real estate market at all since the outbreak of the coronavirus, you know that it’s been kind of a wild ride. With historically low-interest rates, low inventory, and rising sales prices, in many places, there is a strong seller’s market.
In fact, in some cities, the most attractive homes are receiving all-cash offers on their homes. However, all of the sensational news articles can make it seem like if you listed your home on the market today you would start a bidding war immediately. This is not necessarily the case, and you might find that your house sits on the market for much longer than you hoped.
While selling your home on the traditional market is a process with an uncertain timeline that can cause a lot of stress, the option to sell a house for cash can appear as an attractive alternative.
Are you wondering whether you should sell your home for cash or if you should list it on the MLS? Let’s take a look at everything you need to know.
Should You Sell Your House on the Traditional Market?
The most common way to sell a house is to hire a real estate agent and list it on the MLS. Through this avenue, the buyer you find will most likely require financing from a lender for the purchase. Here are the pros and the cons of going this route.
Pros of Selling a House on the Traditional Market
If you list your home on the MLS, you are marketing your home to the greatest number of people. This can mean that you are able to receive the greatest possible profit versus other options. However, there are many fees and costs to consider before doing so and it’s important to understand how long this process generally takes.
Most people hire a real estate agent if they are selling their home on the traditional market. There are benefits to hiring a realtor, as it lets you tap into their network of real estate professionals, helps you out when it comes to negotiations, and allows you to benefit from their expertise in terms of marketing the property.
If you are trying to save money on hiring a real estate agent, you can choose to sell your home “for sale by owner.” However, many people don’t realize just how much work goes into selling a home, and there are a number of hurdles you’ll have to cross in order to do so successfully.
Cons of Selling a House on the Traditional Market
While there are some compelling reasons to list your house on the traditional market, it might not be the right choice for everyone. The most obvious of these is the realtor commission fee, which can really take a chunk out of your profit.
Preparing your house for listing can be incredibly time-consuming and costly. In order to make your home appealing and able to qualify for financing from a lender, you will need to prepare your home for sale. This can mean everything from fixing major problems to repainting, staging, decluttering, and deep cleaning.
Once you finally list your home, it can still take quite some time to sell. Depending on your home and the local market, your house might sit on the market for months or even years before you receive an offer you are happy with. Even if you do get an offer right away, the financing process typically takes between six weeks and two months at least.
It can be incredibly stressful to sell your home this way. If there are financing, appraisal, and inspection contingencies in the purchase and sale agreement, it means that the buyer has a number of opportunities to walk away from the deal and leave you back at square one.
Another major drawback of selling your home this way is how disruptive it can be to your life. If you don’t live in a place where the market is extremely hot, you will likely have to endure showings for weeks or months. Showings can often be scheduled last minute, meaning that you’ll constantly be in the position of panic-cleaning your home and rearranging your schedule to accommodate this.
Should You Sell Your House for Cash?
Depending on your situation, there might be some benefit to selling your home for cash. Let’s take a look at some of the advantages and disadvantages of doing so.
Pros of Selling a House for Cash
Whether you are selling a vacation home, a home you inherited, or your primary residence, there are a number of benefits to selling your home for cash.
The first advantage is that you can get an offer on your home right away. When you find a reputable company that buys houses for cash, you can have them make an offer nearly instantaneously. These offers are typically no obligation, meaning that if you aren’t happy with the offer you aren’t required to accept it.
The second benefit is that the whole process is quite a bit faster than if you were to sell your home on the market. Because cash buyers don’t have to go through the arduous financing process, the closing can typically happen in as little as a week after you’ve accepted the offer.
Another major pro of going this route is that you don’t have to deal with making repairs, cleaning, or staging your home. Cash buyers typically buy your house “as-is,” meaning that you don’t have to do any of these time-consuming or expensive tasks. When you sell your house on the market, you have to prepare your home in a way that doesn’t just appeal to buyers as an investment but also as a place they relate to emotionally as their new home.
Cash buyers are typically real estate investors. This means that they buy houses with the goal of fixing them up to rent out or to flip for a higher profit. This means that you can sell to a cash buyer for a quick and stress-free sale without fixing your roof, updating your kitchen, or repainting the peeling walls.
Selling to a cash buyer means that you can sell your house even when you are experiencing difficult circumstances with the property. There are a lot of things that can kill a deal on the traditional market because lenders won’t finance homes with certain issues. Some of the circumstances where selling your home for cash can make a lot of sense include:
- If your home is storm or fire damaged
- If your home has a large amount of past due fees and taxes
- If your home has title flaws
- If your home requires major repairs
- If your property has code violations or illegal conversions
Whether you inherited a home from a relative or you are selling your own home, selling to a cash buyer can be the best possible option when your property poses problems for buyers seeking financing.
Cons of Selling a House for Cash
There are also some drawbacks to selling a house for cash. It’s important that you weigh out the pros and cons in relation to your individual circumstance. This might be the right choice for some people while it might not be appropriate for others.
One of the cons when it comes to selling a house for cash is that the purchase offer will likely be lower than you would receive on the market. This is because the buyers are expecting to put money into the property in order to profit off of it in the future. Rather than you doing the work before listing it on the MLS, the buyers will make an offer that factors in the repairs that will have to be made.
However, this isn’t necessarily a con depending on your situation. For some people, the advantages of a faster and simpler sale that can accommodate difficult circumstances are absolutely worth the reduction in profit potential. If you are simply trying to sell your home so you can move on with your life, there is certainly an argument to accepting a lower offer rather than putting tons of money and time into prepping your house for the market.
Another reason that the price you receive for your home could be lower when you sell for cash is that you aren’t opening the sale up to as many competing parties as possible. On the market, it’s possible to receive a number of offers that you can choose between. In some very hot markets, bidding wars can begin and drive the price up.
Lastly, it’s worth understanding that it’s also possible for cash sales to fall through. While you don’t have to deal with the difficulty of having a buyer that is receiving financing through a lender, there are no guarantees in any sale until the closing has occurred. It’s also important to know that there definitely are scammers out there that are looking to prey on people, so finding a reputable “we buy houses” company is an essential step in the process.
Should I Sell My House for Cash?
Only you can decide what makes the most sense for you in terms of selling your home. However, there are a number of reasons why selling for cash might be the right choice for you when considering all the factors.
For one, you might find that selling your home for cash presents you with the best offer. Whether it’s the best offer because the closing will be quick, the price is right, the contingencies are waived, or something else, sometimes this is clearly the best option.
Secondly, it can also be a good option if you have a rental or investment property. If you are having a hard time finding tenants or you are done with being a landlord, selling your home for cash is the fastest way to extract your equity from the property and move on.
Another good reason to sell your home for cash is if you inherited a property. While you could move into the home or keep it as a rental property, you might find that this isn’t possible or something you’re interested in. If that’s the case, a cash sale is the fastest way to turn your inheritance into cash.
You also might choose to sell your home for cash if you are moving and money from the sale is necessary for your next downpayment. It can be tremendously easier to purchase a new house once you have already sold your home. Rather than waiting some undetermined amount of time for the house to sell on the market, you might choose to sell it for cash quickly.
Lastly, this is also a reasonable option if you need access to the equity in your home now rather than later. Selling your home is never a decision you want to make rashly, but you might find that, once you weigh out all the options, selling for cash is the best available choice for you.
Are you wondering how a cash sale would work? Check out our process here.
Sell House for Cash: Is It Right for You?
As you can see, there are pros and cons to both selling your house for cash and to listing your house on the open market. Weighing out the advantages and disadvantages of each option can help you arrive at the right choice for you.
Is it time for you to sell your house for cash in North Carolina? At Smith Liquidations, we buy houses in any condition. When we make an offer, there is no obligation to accept and there are never any commissions or fees. If you want to get your free cash offer today, fill out this simple form.