How to Sell your Home for Cash: The Process!

Throughout the country real estate is exploding.

In many markets property values have taken off to levels not seen in well over a decade. Depending on your financial situation and the growth of your market it may be a great time to explore cashing out and selling your home.

Real estate agents are vital in most transactions, but there are times when selling on your own could benefit your bottom line. Not only can you control the transaction but you can save money on commission, putting more money in your pocket. As great as this sounds on paper, selling your home does not come without potential hurdles. Knowing how to navigate these hurdles allows you to not only find the right buyer but move the transaction smoothly to closing. Here are six steps if you are considering selling your home with a cash offer.

Find a Buyer

The first step in selling on your own is finding the right buyer. With the growth of social media and the power of the internet, it is easier than ever to advertise your property. If you are not experienced in sales it is easy to get tempted into moving forward with the first offer that comes your way. As obvious as it sounds, the goal is to find the right buyer and not get caught up with a buyer that can not close on time or honor the terms of the agreement. It’s extremely important that you do your due diligence on every interested buyer that submits an offer. Here’s a great checklist on what to look for in a strong cash buyer! Take to the internet and do some research on testimonials and any reviews you can find. Try to get a sense of how experienced they are and how man years they’ve been in the business. The longer a buyer has been investing the more likely they are to close! If you’re looking for an offer on your property Reach out to us.

Remember: accepting an offer that doesn’t end up closing not only wastes your time, and potentially money, but deters you from negotiating with real buyers who are legitimately qualified.

Review offer Terms and Accept Offer

As nice as your photos and description of the property may be, they will not be enough to secure an offer. Selling on your own means you need to accept the fact that there will be plenty of showings. You can make it easier on yourself and have the showings in a few dedicated time blocks a week, but this may steer some buyers away. Any worthwhile investor is going to walk the property and know exactly what they are buying before closing. Even if the market is in demand, buyers are not going to just recklessly submit an offer. Before accepting any offer make sure that the terms are to your liking. It is easy to get seduced by the price, but there are other important factors to review. Look to see that the inspection period is not unnecessarily long. If they are offering cash make sure they submit an updated proof of funds letter. The closing date doesn’t need to be ten days, but it shouldn’t be two months either. Ask if the offer is contingent on selling their property or liquidating assets. Sales contracts are different in every state.

Make sure you know every section of your contract before accepting an offer. Take a few minutes and review these common cash offer red flags that investors include in their offers.

Inspections

It’s reasonable to expect that any buyer will perform some type of inspection after you accept an offer. Typically, it’s agreed that the time period for inspection starts the day after an offer is accepted or “Executed”. You want inspections to be done as soon as the contract is accepted. If there are issues you need to know about them before you get too deep in the transaction. The inspection can be anywhere from a half-hour to numerous hours depending on the specific inspector. You can try to impart information about the property, but they are going to do their own legwork regardless of what you tell them. It is important to understand that the inspection is used as a negotiating tool for buyers. They are almost always going to give you a list of deficiencies with the property in an attempt to knock something off the price. Some are legitimate and some are exaggerated. Don’t take anything the buyer does personally. Understand that there may need to be some give and take at this point. You can stand your ground, but the next buyer may find the same issues on their inspection. Let the market be your guide on where you can concede and where you can take a hard line.

Earnest Money Deposit

On every contract, there is a line where an Earnest Money Deposit (EMD) amount is indicated. In simple terms, the EMD is a down payment made that is subtracted from the final amount needed at closing. The EMD is often used as a way to gauge true interest from a buyer. If the buyer breaks the contract in any way or backs out of the deal without justification the seller may be entitled to this money. It is a way to incentivize them to keep their word and not simply shotgun offers without following through. This money should be received within THREE (3) business days of offer acceptance. For example – if the offer is accepted on Monday the funds should be in escrow by Thursday. Your attorney or escrow company will hold this money in a separate account. Any cash buyer who is truly interested should be able to produce these funds within 3 days. If they’re not able to, it may be a red flag, and could be time to start considering backup options.

Disclosures/Paperwork

Sellers often avoid selling on their own because of the paperwork associated with the process. We get it – the paperwork can be overwhelming! The process is made easier with an efficient escrow and/or Transaction Coordinating Company to help execute these documents. If you didn’t know, disclosures are always required when selling your home or a piece of property (Realtor or not) and are intended to give the buyer a clear picture of exactly what they are buying. Sellers are often expected to fill out disclosures on anything they know about the property with regards to radon, flooding, mold, lead paint, structural issues, asbestos and much more! Needed disclosures vary by location, ownership type, and a number of other factors. Work with a local expert (escrow, transaction coordinator, or otherwise) to fill out necessary disclosures for your property.

Closing Escrow

There are several documents needed to complete the closing. It is always a good idea to enlist the services of a real estate attorney. Not only will they expedite the closing process, but they offer protection. Even experienced real estate investors aren’t versed in every contractual scenario. With thousands of dollars of EMD at stake as well as potential litigation, it makes financial sense to spend the money on a good real estate attorney.

Now is a great time to at least explore the option of selling your home and taking advantage of a cash offer. Before you do anything know the process and understand exactly what you are walking into.

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How to Sell your Home for Cash: The Process!