Selling to a Cash Buyer - HELP
Member since 2023 · 3 posts · 2 votes
I inherited my father's home and am entertaining someone who has cash offer for the house. What do I need to know about? Some questions I have are:
1. Can I use real estate lawyer and go without a realtor?
2. How do these types of transactions usually work? Do they put the money in a third party account or do we just get a check?
3. Generally, what are some other pitfalls to be aware of?
4. What things from the buyers side are they considering when making an offer? For example, will the sale be going through a title company?
5. Any other information or resources you can provide would be helpful.
Thank you.
Hey @Rachel Garcia,
I'm with @Jerryll Noorden on this one. Why are you in need of a cash offer? Are you desperate to sell?
If you want to sell to an investor, vet them first. I would recommend asking for POF and a good earnest money deposit.
1) You need neither of them. You own title to the property, meaning you have the right to sell it to whomever without needing a Realtor or attorney. You will work directly with the title company to ensure all legalities and documentation are correctly executed and recorded.
2) You will work with a title company for the transfer of ownership and they will collect the money accordingly and hold it in an escrow account until closing, where they will disburse the proceeds of the sale at closing by check or wire.
3) - The buyer not depositing the EMD on time
- Too long of an inspection period where they can back out anytime without risk.
- If they decide to cancel make sure there is not a memorandum recorded with the county.
4) Yes, the sale will be going through a title company.
5) Reach out and I would be more than happy to answer any questions.
Before I answer, let me ask you this.
Why are you entertaining a cash offer?
What is your motivation?
Hi Rachel,
There is no requirement to use a real estate agent or attorney when selling a home although it is highly advised.
The sale should always go through a reputable title company where they handle the funds in an escrow account.
(My transparent advice) The biggest question is, WHY would you want to entertain an offer from one of these companies? As a real estate agent, and having dealt with these companies, you could end up leaving a lot of money on the table. Their whole goal is to buy your house cheap enough so that they can then turn and sell the Contract to an investor for a mark up.
Some of the usual reasons why people would sell to these companies: If there is money owed on the house, the house is in terrible shape, you don't feel like dealing with selling it, or you don't want to pay realtor commissions. In the end, there could be a cost to any way you sell the home, I would just look at all options to see what fits your needs the best.
Feel free to send me a private message and I'd be happy to show you what the numbers would look like selling through different channels.
- Chris
Yes, you can use an attorney to close without using a real estate agent, and they can usually hold the earnest money deposit and distribute funds after closing. Be careful if the actual contract has any terms about assignment or allows their private access to the home before closing, as many "cash" buyers out there try to tie up your house for a low figure, then sell it higher to someone else before they decide to close it with you. Some even just walk away if they can't find a higher buyer, so get a large non-refundable earnest money deposit. There are also many cash buyers who will try to use an inspection period to drop the price, so make sure if they do ask for inspection contingency, it's a very short period, so they're not wasting your time. Likely worth it to ask your attorney to review any contract before you sign anything to make sure it's solid all the way through. Unless it's in really bad shape, it's usually worth it to get 2-3 real estate agents to give you a market analysis with estimated seller net (even if you're out of state, they can email it to you) so you can compare before you agree to sell. You might be surprised at how much more it can be. Or at least then you can make a more informed decision.
@Rachel Garcia a real estate lawyer is advised. They can write a contract and abide by your states laws. Make sure you specify what is and isn't included, also time to close, inspection period if any. Get a date of death appraisal. You will need it for your taxes. Make sure you are getting the best value out of the property, you have a fiduciary responsibility to any other heirs and you don't want to shortchange yourself.
Cash buyers are often vultures who will swoop in with an offer while you are still dealing with your loss. In some instances where the property isn't salable otherwise they can be a good option otherwise it is possible they are NOT your best option. I am not saying private sales are bad, (i'm not a real estate agent) they happen all the time just make sure you aren't jumping on a " cash " offer. It's all money when you get it.
You will always use a title company but depending on the state it will determines if they will handle the closing.
Hey @Rachel Garcia,
I'm with @Jerryll Noorden on this one. Why are you in need of a cash offer? Are you desperate to sell?
If you want to sell to an investor, vet them first. I would recommend asking for POF and a good earnest money deposit.
1) You need neither of them. You own title to the property, meaning you have the right to sell it to whomever without needing a Realtor or attorney. You will work directly with the title company to ensure all legalities and documentation are correctly executed and recorded.
2) You will work with a title company for the transfer of ownership and they will collect the money accordingly and hold it in an escrow account until closing, where they will disburse the proceeds of the sale at closing by check or wire.
3) - The buyer not depositing the EMD on time
- Too long of an inspection period where they can back out anytime without risk.
- If they decide to cancel make sure there is not a memorandum recorded with the county.
4) Yes, the sale will be going through a title company.
5) Reach out and I would be more than happy to answer any questions.
Thank you everyone! I appreciate the information. I followed up with a few cash offers and they ended up being pretty low. We ended up listing with a realtor and accepted a decent offer. Cheers!