Posted over 3 years ago

Options for a Home Seller – Part 4

Part 4: Cash sale (off market)

Part 4 of an 8 part series -

Goal: To educate a home seller on the options for selling their home.

“What are my options?”

This is one of the most common questions I receive from home sellers, and it’s a valid question. How do you, as a home seller, expect to make an informed, intelligent selling decision without knowing all the options you have available? The short answer is you can’t. But don’t fret! The goal of this article is to clarify and explain all the options you (home seller) have when liquidating your property.

Below is an outline of the options at your disposal (in no particular order):

  1. Traditional Listing
  2. Net Listing
  3. Mortgage Assumption
  4. Cash sale (off market)
  5. Owner financing
  6. Short sale
  7. For Sale by Owner (FSBO)
  8. Foreclosure

Now that you know all eight options let’s dive into more detail describing each option and cover a few pros and cons.

4. Cash sale (off market) – The buyer of an off-market cash transaction can be anyone that has the cash to close. It could be a friend, relative, investor, etc. The most common cash buyers are investors. Investors, like all cash buyers, are most useful when you (seller) need to sell your property quickly and/or hassle-free. You will not typically get the highest purchase price from a cash buyer but the convenience and speed of closing are second to none. If you are thinking of selling to an investor, then in addition to reading the pros and cons below, ask yourself, “What do I really want to accomplish by selling my house? Do I have time to list it on the market and wait? What am I going to do if I can’t sell the house?”

  • Pros
    • Fast. A cash purchase can close as quickly as a few days since there’s no lending company and minimal paperwork.
    • Easy. Investors are typically easier to work with; no showings, simple paperwork, no repairs and flexible timeframe. An experienced investor will walk the property and write you an offer on the spot, not needing to take unnecessary time for inspections and repair estimates.
    • Flexible close date. Since the investor is not moving into the property, they have a flexible timeframe to meet your needs. You can close in days or months down the road.
    • No realtor commissions. Since the transaction is just between you (seller) and the investor (buyer) there are no pesky realtor commissions, which are typically 6% of the sales price (not including closing costs!).
    • No showings. Again, since the transaction is between you (seller) and the investor (buyer) there is no need for inconvenient showings of random people walking through your house.
    • As-is purchase. Most investors will purchase in as-is condition, meaning no need for you to spend the time or money to complete repairs and maintenance. In a traditional sale the buyer usually asks for concessions if the inspection report reveals deferred maintenance or repairs.
    • No closing costs. You won’t pay any closing costs with an experienced investor. Seller closings costs on a traditional sale can be as high as 5% of the contract price.
  • Cons
    • Unknown/Unqualified buyer. Anyone can claim to be a cash buyer or investor, the question is are you armed with the tools to determine if the buyer really has the ability to close? You’re in luck! We created the Texas Home Selling Guide to educate sellers on what to look for in a contract to ensure you are protected from unethical buyers. As with any profession there are good and bad investors. To protect yourself please read the Texas Home Selling Guide.
    • Lower price. The biggest downside to selling to a cash buyer or investor is the lower contract price. But when you do the math, you may be surprised how similar your walk-away money is from a traditional listing with a realtor and a cash sale with an investor. Remember, a realtor comes with commissions, closing costs and uncertainty. An experienced investor’s offer will not have closing costs or commissions, and will have a definitive closing date (of your choice).

Continue with Option 5 of our 8 Part series!