Are you selling your house for cash in Houston for the first time?
Even if you’ve sold several properties, housing markets, real estate agent fees, and the closing process can be incredibly time-consuming and complex.
However, that’s not even the worst part. After an offer is made, you typically have to wait for financing approval, as well as the escrow company, title company, and even attorneys in some cases.
That’s a very long time to wait for other people to get their act together so you can finally sell your Houston home and move on.
Fortunately, there are other ways to make money off of your property by selling your house for cash. There’s less paperwork and decreased risk of the deal falling through as well.
All-cash offers can be very enticing, but which ones actually lead to benefits for the home seller?
Before selling your house for cash, it’s best to take some time to:
- Research the pros and cons of getting a cash offer for your Houston home
- Learn how the process of selling your house for cash works
Are Cash Offers for Homes Safe?
The truth is that the phrase “all-cash offers” in real estate is inaccurate.
This marketing phrase doesn’t really describe the real legal process to buying a home in the US.
Real estate purchases cannot be made with cash.
Instead, funds must be transferred electronically between the home seller and buyer.
This is a great benefit for the home seller because it means closing will move very quickly.
However, these sales are generally safe so long as the offer meets your price and the buyer provides earnest cash to prove that the offer is legitimate.
You’ll need to ensure that any cashier’s check given to you is authentic, and you never want to sign any purchase agreements for unfavorable terms during closing.
When in doubt, hire a lawyer or real estate agent to complete the closing with a cash home buyer in Houston.
Who Purchases Homes for Cash in Houston
Are cash buyers a scam?
Actually, they are typically just trying to turn a quick profit and will purchase homes “as-is”, saving you thousands of dollars on renovations, staging, and new appliances.
There are a few types of cash home buyers to look out for:
- Home remodelers/house flippers
- Corporate investors such as Zillow Offers
- Individual, domestic buyers
- Foreign investors
Out of all these investors, corporate investment companies like Zillow and foreign investors are the most risky. These investors are not local to Houston and may not be able to deliver on a quick “cash” offer in person.
Foreign investors may make promises of meeting your true market value, but when it comes to pay, they actually low-ball the offer and try to negotiate thousands off the price.
What can you do when they’re not in front of you to determine their sincerity? It’s simply too risky.
This is why it’s important to know who’s buying your property. While it may not matter if a local investor plans to meet your asking price with cash, it could take much longer to work with foreign investors who delay the sale for months due to travel problems or other delays.
So when selling your house for cash, remember why you chose this method: it’s the fastest way to sell your home.
Pros and Cons of Selling Your Houston Home for Cash
If you’re selling a property and an investor comes to you with a cash offer, you may think you’ve won the lottery.
However, before you sign any purchase agreement, it’s important to set expectations for cash buyers so you don’t get swindled out of time and money.
The last thing you want to do is wait for a buyer promising to pay market value with a “cash” offer, only to find out that they never intended to pay the original asking price or they back out after stringing you along for weeks.
As you embark on this process of selling your home for cash, you’ll meet a lot of individuals who want to invest in properties but may not have the money to purchase your home at fair market value.
However, most cash buyers in Houston are legitimate investors looking to remodel and flip a home for a profit or set up rental properties.
Here are some of the pros and cons to keep in mind with a cash offer:
Pros of Cash Offers
All-cash deals for homes mean that the buyer will purchase your home outright without any sort of financing. There are a lot of benefits to selling your Houston home for cash, especially if you need to close within 30 to 60 days.
- Cash Buyers Purchase “As-Is” Homes – Is your home in need of major repairs? Are these repairs necessary to bring up the price of your home to market value? You may end up spending $10,000 to $50,000+ on home renovations and staging in order to sell your home. However, none of this matters to a cash investor who wants to flip your home or plans to remodel anyway on their own. Typically these investors already know that they’ll be the ones paying for renovations and new appliances.
- Shorter Closing Times – Another huge benefit to selling your home for cash is the short closing times. You can typically close within 1 or 2 weeks working with a cash investor. That may seem too fast and risky, but as long as the cash offer is legitimate and in writing, you don’t have anything to lose. However, you may want to negotiate if they don’t offer market value for your Houston home.
- No Wait for Mortgage Approval – A major drawback in the selling process is working with buyers who aren’t pre-approved or don’t have earnest cash to prove they can purchase a home outright. You don’t want to wait for loan approval and take your home off the market, only to find out that the home buyers weren’t approved for financing. Cash buyers have a short process that includes a real cashier’s check or earnest electronic funds to show that the offer is legitimate. They are typically ready to close within a week since they don’t have to wait for any bank approval or financing.
- Flexible Purchase Arrangements – It’s not uncommon for homeowners who are underwater with their mortgage or who need to remodel an older home to sell their homes for cash. Investors may take over your mortgage or even finance the house back to you as a sale-leaseback option.
Cons of Cash Offers
Before you sign anything and accept an offer, you should always do your research on the buyer and follow a safe cash home buying process (see next section).
- Identity of Cash Buyer – You don’t always know who is buying your home with a cash investor. An investor isn’t bound by law to tell you who they are or even what they’ll do with your former property. Maybe it’s a developer known for tearing down homes and building condominiums. However, as a home seller, you generally have to make peace with the fact that your home is no longer yours after a sale. If you’re considering cash offers, it’s likely that meeting market value is your number one concern.
- Home Might Not Sell at Market Value – Most cash investors are not looking to pay more than the market value for a home. They are generally trying to find a bargain. Since they don’t have to tell you what they’ll do with your home, you may not know how much your house is truly worth. The best way to ensure that you get the full asking price and fair market value is to hire a real estate agent or at least seek outside help in determining the right price for your home. Anything less could mean that you’ll lose money on your home.
- Potential Scams – One scam has been verified with cash buyers. This is when a foreign investor or even an out-of-town buyer contacts the seller directly and asks to close right away on a home. They don’t ever come to look at the house, but they offer a ridiculous cash offer anyway. Then, the investor provides a fake cashier’s check and push a purchase agreement for unfavorable terms. Before the seller even realizes what’s happening, they’ve been bamboozled for thousands of dollars. To spot these types of fraudulent investors, you may want to hire a lawyer or real estate agent to facilitate a faster closing.
Step-by-Step Guide to Selling Your House for Cash
To avoid any of those scenarios above, we recommend determining the best asking price based on the current market value of your home.
You should never accept an offer that feels unfair or too low to cover your debts either.
1. Sign Sale Agreement
The first step to initiate a closing is that you accept the cash buyer’s offer and complete a purchase and sale agreement.
This is typically called a “going under contract”. Your home is officially off the market while you complete the sale.
2. Verify with Earnest Cash
After you sign the agreement, you quickly need to make sure that the cash buyer is legitimate.
You don’t want to wait more than 2 to 3 days to complete this process.
Cash home buyers typically put up the money instantly to ensure the sale after signing the agreement anyway.
However, in this step, you’ll ask for earnest money, which is 1 to 2 percent of the total sales price. You’ll also request proof of funds via a bank or investment statement.
If you’re uncomfortable with this process, consult with a real estate agent or even look for advice from a real estate lawyer on a site like JustAnswer.com.
3. Title and Escrow
In a home closing process, either the buyer or seller choose escrow and title companies to ensure property lines are drawn accurately and that there are no property liens.
Title companies will:
- Take care of filing all closing documentation
- They facilitate the transfer of funds and any legal paperwork to record the sale properly
Many companies handle both escrow and title responsibilities. Cash buyers may even work with a notable company to ensure that the closing goes as smoothly and quickly as possible.
If you have a mortgage at the time of selling the property, then you’ll need to sign a loan payoff statement at closing, which shows the total amount you owe to the lender as of closing, which must match the amount that the escrow company will pay on your behalf.
4. Pass Home Inspection
Some buyers will ask to negotiate on the price if inspectors find some major problem with your home, such as black mold or radon poisoning.
Even cash home buyers want to make sure that they aren’t buying a complete dud that will never earn them a profit, even if flipped.
While cash buyers do purchase homes as-is, they like to know all of the problems beforehand to ensure that it’s not a money pit.
If there are major issues such as a possible sinkhole forming underneath your property, the sale may not go through. However, these cases are very rare.
5. Review and Sign Closing Documents
To close on a home, you’ll need the following:
- Government-issued ID
- Your deed, if your home is paid off or loan payoff statement if you still have a mortgage on the property
- House keys, mailbox keys, entry codes, and alarm system codes, etc
- Certified cashier’s check if paying off liens, property taxes, or pro-rated utilities (Your escrow company will let you know before closing if you need to bring these additional funds.)
If all goes well and the cash buyer meets your asking price, then it’s time to close the sale.You’ll meet up with the agent or cash investor directly to sign multiple documents to finish the sale.
Then, the funds will be transferred to your account. Congratulations on selling your house for cash!
As you can see, there are lots of pros to selling your house for cash. You can sell your home “as is”, the closing process is shorter, and the purchasing arrangements are a lot more flexible.
However, there are always some drawbacks. You might not be able to sell your home for market value or you won’t really know the identity of the buyer.
So before you sell, it’s best to take some time and research any cash offers until you get the best one for your Houston home.
If you are still looking to sell your house for cash, we’re ready to give you a fair all-cash offer. Call us at 888-724-9603 or fill out our quick form to get an offer today!