Most homeowners live in their homes and don’t give much thought to selling until the time is right. This is often driven by life changes such as having kids, becoming empty nesters, or finding the home is too much work to maintain. However, there can also be financial drivers such as seeing your home value skyrocket or changes in income that make paying the mortgage a challenge.
If you need cash now, and your only option is to sell, it is possible to sell your house for cash. When you choose to sell for cash, you avoid lender involvement, which takes time. Instead, once you’re under contract, you can complete a cash sale in just a few weeks. Here we cover the Cash offer on house process to a cash buyer.
Why Would I Sell My House for Cash?
There are many reasons selling a house to a cash buyer might make sense, including…
- Behind on payments
- Behind on taxes
- Death of a family member
- House is outdated or in need of repairs
- You have a job relocation
The reasons might vary, but the desired outcome is the same: You want to sell your home fast and as-is.
The House Assessment
In most cases, finding a real estate agent to perform the evaluation and assessment is a logical first step. They will provide a realistic asking price for your home based on the following:
- Condition of the home including the roof, windows, HVAC, plumbing, electrical, foundation, etc.
- Square footage
- Bedroom and bath count
- Lot size
- Year built of the home
- Nearby comparable houses
- Neighborhood amenities, schools, nearby homes, etc.
However, when selling for cash, you could take a different route. Instead of working with a real estate agent to find a buyer, you could work with an investor who will take on the property challenges and allow the sale to go through much faster.
The Basic Steps of Selling a House for Cash
Regardless of the buyer, the Cash offer on house process includes the following steps:
- Contract: The offer is accepted, and you complete and sign a Purchase and Sale Agreement.
- Purchase funds: You verify your buyer does in fact have the cash to buy your home. You’ll ask for money upfront, referred to as “earnest money,” which is usually about 1 or 2% of your sale price.
- Title search: A title company assists with researching the property to define property lines, as well as looking into property liens. These issues will be addressed before the sale can move forward. They also issue title insurance and manage the transfer of ownership on closing day.
- Escrow: An escrow company manages all closing documents. They also facilitate the transfer of the funds and prepare the legal paperwork for the sale.
If you work with a property investment company, all of the paperwork is managed easily.
Addressing Property Liens
As mentioned, the title company prepares a title search that includes researching the property to see if it has any liens. Property liens refer to any unpaid debts related to the property. This can include debts such as taxes, settlements in court due to lawsuits, unpaid bills for contract work or installations within the home such as a new furnace or roof and even child support. When these types of debts remain unpaid, a lien can be placed on your home, which means that when it comes time to sell, all these liens must be cleared. The house can’t be sold unless the debts are paid.
Although your home will be assessed in order to come up with a price for your home, in most cases when selling the buyer will require a home inspection. The home inspector’s job is to look for issues that could interfere with the enjoyment of the home or cost the buyers money such as a leaky roof or foundation issues. Most offers drawn up include a contingency for inspection.
Following the inspection, it can be expected that the buyers request repairs be made prior to closing or put in a lower offer to cover repairs that are recommended or even required following the inspection. This is another step when selling a house to a cash buyer that could eat into your profits. As well, if your home doesn’t pass inspection, the potential buyers could pass on the sale. This is why working with an investment company is your best option.
Once everything is approved and the buyer is satisfied all their needs are met, the paperwork is drawn up and signed. This involves a lot of work and outlines the duties each company will have to complete including lenders, escrow and title related responsibilities. Closing documents include:
- Federal law requires a HUD-1 settlement statement is prepared which details the money related information for the sale. It has all the negotiation points, the sale price, balances to be paid off, and things like pro-rated tax and utility bills. You also need the form for your taxes.
- Certificate of title: This document is signed by the seller to confirm the property is theirs to sell.
- Title deed: This document is required to transfer ownership and is signed by the current owner.
- Loan payoff statement: This shows how much is still owed on your mortgage at the time of the sale and for which a lump sum will be paid to the lender on your behalf by the escrow company.
- Mechanics liens: This is signed to confirm you do not owe money to contractors or laborers who have performed work on your home.
- Bill of sale: This will list all the assets included in the sale, such as light fixtures, appliances, window coverings, etc.
- Statement of closing costs: This is signed to confirm you understand all related closing costs and fees.
- Statement of information: You sign this to confirm your identification.
In order to sign all of the forms involved when selling a house to a cash buyer, you will need to present a government-issued ID, the deed to the home if you own it outright and all entry keys including remotes and anything related to your security system such as codes. If there were any outstanding costs that must be paid at closing, you must also have a certified or cashier’s check to cover this in full. This could include lien payments, prorated utilities, property taxes, etc.
Is There an Easier Way?
There are many moving parts to selling including finding a buyer, paying the real estate agent their share, working with lenders and the escrow company, title issues and dealing with all the legal work. You can take the easier route and work with a company that specializes in buying homes for cash. They can handle everything for you so you get the best price for your home, have the cash you need, and can move on with your life.
This is an even better option if you find your home is in bad condition and you can’t afford the repairs. You will have a hard time finding a buyer willing to take on a home with these issues, without facing some embarrassingly low ball offers that will eat into your profits. If you choose to work with a company willing to pay cash for your home, you avoid the usual selling steps like staging and showings. You have a more flexible approach for closing so you can make arrangements to move with less pressure and focus on the next stage of your life.
Property Sales Group specializes in acquiring and selling homes for cash. For more information, contact our team today.