Reasons to sell a property for cash
Now that you know what it means to get cash for your home, is selling your house for cash a good idea?
“The value a cash buyer offers is convenience and speed,” says Will Holly, owner of Holly Nance Group, a boutique real estate investment firm in New Jersey. “You’ll avoid the time hurdle involved with back-and-forth negotiations with multiple buyers.”
“With cash, it turns into an easy transaction where the seller doesn’t have to be stressed out. It just takes all that pressure off the seller,” adds Mark Abdel, a top-performing real estate agent in Minneapolis who sells properties 62% faster than the average agent in his market.
Let’s review some of these benefits more in-depth.
1. Faster closing
When you sell a house for cash, you can get money for your home much faster (usually in a week or two compared to a month-and-a-half with a non-cash buyer).
Mortgages are time-consuming. As of 2024, mortgages are taking an average of 45 days to complete from start to close. The lender will also require an appraisal to confirm the amount of funds they’re willing to provide, which can introduce additional delays.
All in all, with a cash offer from a house-buying company, you can often close the sale in as few as seven to 10 days. For sellers who need cash quickly, this is a huge advantage.
2. No repairs or home staging
According to a recent survey, nearly 70% of home buyers prefer a turnkey home that doesn’t require additional repairs or renovations. If your house needs work, it can be more challenging to find a traditional buyer.
When you sell your home for cash to a house-buying company, you can skip the repairs and other preparations typically required when selling on the open market.
Cash-for-homes companies often purchase homes “as-is” since they have the capital and expertise to update a house. This removes the repair burden from the seller’s shoulders.
A cash sale also means you won’t need to stage your home or worry about keeping it spotless for weeks or disrupting your schedule for repeated showings.
3. Reduced closing fees
Besides repair and staging costs, a cash offer can cut out additional closing costs. Many house-buying companies will cover closing costs in full for the seller, which can amount to 9% to 10% of the sale price. (The largest cost is typically the agent commission at an average of 5% to 6% of the sale.)
These savings can act as a counterbalance to a lower offer price. The average cost to sell a house is 9%–10% of its sale price, including the real estate agent’s commission and closing costs. When deciding whether or not to sell your house for cash, you should always factor in the fees and costs associated with the home-selling process.
4. Smaller holding costs
So long as you own a house, you’re responsible for its holding costs (also known as carrying costs), which include utilities, taxes, insurance, maintenance, and other fees amounting to a decent chunk of change each month.
In a sluggish real estate market, Holly says it could take as long as six months to sell a house. This can cause delays upward of half a year to get the equity out of a home while the owner continues to cover the costs of heating, cooling, mowing the lawn, etc.
A cash offer provides more immediate relief from these ongoing costs. Plus, the longer your home sits on the market, the greater the likelihood of reducing the list price.
5. Peace of mind
Holly also points out the peace of mind and financial certainty that comes with a cash sale, especially for homeowners juggling life challenges. “Any home seller with any complexity to the sale is better off with a cash buyer,” he says.
Those complexities might include a death in the family, bills stacking up, or expensive repairs. A cash offer may come in lower, but it won’t hinge on your home appraising at a certain amount or the financing working out for your buyer. When you need cash now, a drawn-out sale can be a major stressor.
6. Interest rate immunity
As home shoppers face today’s higher interest rates, a buyer with cash in hand eliminates the uncertainty of getting a loan approved. Mortgage interest rates peaked in mid-October of 2023 and have been steadily declining ever since. However, rates are still hovering around 6.6% (as of late January 2024), making it challenging for some prospective buyers to qualify for a home loan.
“A cash buyer is not susceptible to rate hikes,” says Holly. An increase in interest rates or a change in the buyer’s credit history or employment situation could cancel or delay a settlement just days before closing. “Contracts are falling out more often,” Holly adds about the current real estate market.
Without the added risk of a financing contingency, selling to a cash buyer is typically a simple, more certain process.
7. Flexibility
Whether you want to move next week or stay put for a couple of months, a cash sale generally gives you plenty of wiggle room. Sellers who work with a house-buying company often select a move-out date that works best for them.
