Cash Buyers vs. Traditional Listing

cash buyers vs traditional listing

You can take two main routes when selling a home: listing the property or searching for cash buyers. In today’s fast-moving real estate market, sellers will likely have no trouble with either option. However, there are a few factors to consider before deciding which path to follow.

cash buyers vs traditional listing

Cash buyers have become increasingly common in the last few years as more and more people have begun real estate investing. Working with a cash buyer can be tricky for sellers, as they may be unfamiliar with how the home selling process works. Many sellers fear that cash offers are too good to be true, but this is simply not the case. There are several situations where a cash buyer might make the most sense when selling your home.

Selling Direct To A Cash Buyer

Cash buyers are exactly what they sound like: buyers ready to purchase your home without a mortgage or long-term financing method. They typically buy properties to renovate or rent and are willing to move quickly to land deals. If you are curious about selling your home to a cash buyer, there are a few things you should consider first: 

Pros:

The most significant benefit of a cash offer is the potential for an overall easier transaction. Cash buyers are usually ready to place an offer on a home. They also in a very short amount of time. Investors do not need to wait for a bank’s approval to sign the papers and finalize the purchase of the property. This can save sellers the stress of financing challenges that could delay the sale of the home. For these reasons, cash offers typically result in faster closing timelines. For example, here at CT Homes, we average a ten-day closing period as opposed to the traditional 30-day closing.

Buyers paying cash will also typically forego a traditional home inspection or appraisal to make their offers more favorable. They are in the business of upgrading, renovating, and doing work to add value to the properties they purchase. Many of them anticipate purchasing your home “AS-IS” in its present condition. That means you’re expected to do absolutely no work to the home before closing. 

Another benefit is cash buyers will often offer to pay for the Seller’s Closing costs. They also typically do NOT expect to be paid a commission as a result of the sale. These two benefits in combination can save sellers between five and eight percent of their net profits on average during the transaction. 5-8% is a chunk of change! Not only will selling your house to a cash buyer help save on closing costs and commissions, but it will also help maintain your privacy and well-being during the sale. Many cash buyers will not request multiple viewings or extra photos of the property. You will not have to have a horde of people through your home! This privacy can be especially important as many individuals continue to minimize close contact with strangers as a result of COVID-19.

Cons:

The number one tradeoff for a fast closing and simple transaction is the prices. Sellers will likely find that cash buyers tend to offer lower amounts than a traditional home-buyer would be able to. Many cash buyers are going to rehab or rent the property, and to make that profitable need to minimize their upfront costs. Unfortunately for sellers, this can result in an underwhelming offer. Sellers should also be prepared to handle any negotiations attached to the sale. Investors will typically gather information about the property and even request to speak with you one on one during the process. In a traditional real estate transaction, negotiations are handled by real estate agents. Don’t let this intimidate you! As long as you do the right research and background check the cash buyers you’re considering, you should not be concerned about the negotiations!

Traditional Listing A House For Sale

The most common way to sell a home is to work with a real estate agent and list the property for sale. By selecting the more familiar option, sellers can leave the heavy lifting up to a professional. That being said, there are still some factors to consider before listing a house for sale: 

Pros:

Exposure is one of the most important reasons sellers choose to list their homes with an agent’s help. A real estate agent will list your property and walk you through the marketing steps necessary to bring in offers. These include taking photos of the home, hosting open houses, and listing the property online. These tactics could open the door to multiple interested buyers and increasingly high offers. There is no guarantee that a bidding war will happen, but listing the property with the help of a qualified agent can boost your chances of selling the property for the price you want. 

Listing a house for sale can also help you avoid some of the more challenging aspects of a typical transaction. You will not be responsible for reviewing contracts, negotiating offers, or even coordinating viewings of the home. An agent’s expertise can guide you through the home selling process, thus taking away some of the more stressful components associated with selling a home. 

Cons:

Listing a house does have its drawbacks, namely added costs in the form of agent commissions. Sellers are typically responsible for some, if not all, of the fees that help pay both the buyer and seller agents. These costs can range anywhere from five to seven percent of the closing price. Let’s say a property sells for $685,000 — the commission will be between $34,250 and $47,950.  Sellers may also be responsible for additional closing costs that could further reduce the takeaway money from the sale. 

Another thing to consider when listing a property is the potential for additional contingencies to be added to the sale that isn’t relevant when selling to a cash buyer.. Depending on the property appraisal and inspection, sellers could be responsible for making repairs before they move out of the house. Unfortunately, home inspections often reveal problems about a property that sellers may not even know about. This can invite buyers to request repairs or even de-rail the transaction before the buyers officially close on the property. Together, these factors could undermine the profits from the sale of the house. 

Summary

Deciding to sell your home is a big decision to make, both emotionally and financially. Prepare yourself for the process by learning more about traditional listings vs. cash buyers. You may find that listing your home relieves some of the stress during this time; however, you may need the speed that only a cash buyer can provide. Each situation is going to be different, but take time to consider how either of the above routes could allow you to maximize your profits when selling your home.

Want to sell?

Whether you’re looking to sell with a cash buyer or go the conventional route of listing your property on the market, we can help you out! We at A Team Property Solutions have a wide network in real estate and can help with all your real estate needs. Call us at 855-66A-TEAM (855-662-8326) or fill out our contact form here!

Published by Jeff Anderson

We are your premier real estate solutions team. We solve complex real estate issues.