According to data from the Case-Shiller U.S. National Home Price index, home prices have climbed more than 30% since 2020, fueled by increased buyer demand from low interest rates and low inventory.
The National Association of Realtors reported properties typically remained on the market for 16 days in May 2022, down from an average 25 days in 2020.
But as the Fed continues to hike interest rates to combat rising inflation, those high prices are expected to fall. What does that mean for homeowners? It might be a lot harder to sell your home in the very near future.
If you need to sell your home quickly — because of divorce, foreclosure, or out of financial necessity — a traditional home sale may not be your best option.
In addition to the time it takes to put your home on the market and find a buyer, most home sales have a closing period of 30-45 days. That’s not including the time it takes to find a real estate agent (if you choose to use one), take care of major and minor home repairs, and prep your home for showings.
While you might not get as much money selling your home for cash to a cash buyer (about 11% less, according to University of California, San Diego researchers), it is a viable option to sell your home if you don’t have time or simply don’t want to go through a traditional real estate sale.
How does a cash house sale work?
In a cash house sale, a buyer pays the seller an agreed-upon amount to purchase the home, without a mortgage or other financing. Cash sales can be made by individual buyers, real estate investors, or by companies that regularly buy houses for cash, called iBuyers. Some of the biggest and most reputable iBuyers are Offerpad, Opendoor, Zillow Instant Offers, and RedfinNow.
If you sell directly to an iBuyer, the process typically works like this:
- Go to the iBuyer’s website to submit information about your home, including videos and photos if possible.
- Receive a cash offer from the iBuyer based on the information you’ve provided.
- If you are happy with the initial offer, accept it and set a date for the home inspection and closing. If you aren’t happy with the offer, you may be able to negotiate a higher price if you are able to prove your home is worth more.
- The iBuyer will order an inspection of the home and recommend any repairs or a decrease in the quoted offer.
- Close on the home and move out (learn where to find affordable movers).
How to sell a house for cash before or after divorce agreement finalized
In general, attorney legal advice is to not sell any assets acquired during a marriage, or that may be considered marital assets until the divorce is finalized. However, if you and your soon-to-be ex agree, you could sign an agreement through an attorney to put your house on the market to free up much-needed money for both spouses to buy new homes, pay for attorneys, and otherwise get on with life.
If you choose to sell your house — through an agent, For Sale By Owner, or for cash to an investor — typically if it were purchased during the marriage, then any profits would be split 50/50 between the husband and wife (or wives/husbands).
You can use your cash to pay off debt, buy a new home, invest in a different career, save for retirement, or your kids’ education.
How much do I get if I sell my house as is for cash?
How much money you get selling your house for cash as is depends on the type of cash buyer you sell to, as well as the current state of the market and the condition of your home.
According to research from the University of California, San Diego, home buyers who took out a mortgage paid an average 11% over what all-cash home buyers paid for a home (which means you could make about 11% less selling your home for cash).
Real estate investors and iBuyers will usually try to buy your home for cash below market value so they can turn around and sell it for a profit.
Tomas Satas, a real estate investor/flipper and founder and CEO of Windy City HomeBuyer, an iBuyer based in Chicago, says the maximum he pays for a cash deal for a home is 98% of the listing price.
“This is for a property that I am not going to have to rehab before I can sell it,” Satas says.
Rinal Patel, a licensed Realtor based in Philadelphia, says that while you may have to accept a lower selling price if you choose to sell your house as is for cash, you will avoid paying a real estate agent’s commission (6% is standard) and traditional closing costs (typically 3-6% of the home price).
Some iBuyers do charge a commission fee to cover the eventual closing costs involved in selling your home. For example, Offerpad’s service fees range from 4-7%.
“If you're looking to sell your home fast and don't mind a lower price, selling for cash may be the way to go,” says Patel, who is also the co-founder of We Buy Philly Home, a house flipping and rental business serving the greater Philadelphia area.
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How do you negotiate a cash offer on a house?
If you don’t believe an initial cash offer is fair, you can negotiate with the buyer to arrive at a price that works for both of you. For example, Offerpad allows you to discuss with your Offerpad advisor why you think your home is worth more and try to negotiate a higher price.
Bill Manganaro, a real estate agent and investor in Columbia, Tenn., says a seller negotiating a cash offer on their house should aim to get enough money to cover what's left of their mortgage. He says cash buyers typically look for homes that would be a good flip, so they have to determine the cost to fix the home, put it on the market, and sell it at a profit.
“Based on these costs, we can arrive at a fair offer amount to present to the seller,” he says. “Whoever the buyer is, if he's ethical, he should never make his offer based on how desperate a seller is to sell.”
Who buys houses for cash?
There are several types of cash buyers:
- iBuyers – These are companies, like Offerpad, that buy houses for cash directly from homeowners and sell them for a profit.
- Investors – Real estate investors might work on their own or as part of a team of investors to purchase properties and either sell them as is, rehab or “flip” them, or turn them into rental properties.
- Traditional cash buyers – These are buyers who can afford to buy a home outright without taking out a mortgage. They might be looking to buy the home as a primary residence or vacation property.
Are companies that buy houses for cash legit?
“We pay cash for your house.”
“We buy ugly homes.”
“Cash 4 homes.”
There are many quality local real estate investors who will pay cash for your home,
Offerpad and some of its competitors are legit, as are many local investors. If you plan to sell to a cash buyer, read previous customer reviews to ensure you’re selling to a reputable company or person.
Sell house for cash? Pros and cons
Selling a house for cash isn’t for everyone. Here are some pros and cons to selling your house for cash:
6 pros of selling your house for cash
1. Selling your home for cash is nearly always faster than selling on the market — there is one offer, and no financing required. “Financial distress typically comes with a tighter timeline and doesn’t allow for a financed sale,” says Andy Kolodgie, owner of The House Guys in Virginia. “If a foreclosure or tax sale is set to take place in two months, a financed purchase will not occur in time. This is where selling your home for cash can provide value with a faster close.”
2. You only negotiate with one party: The buyer. If you put your home on the market, you likely have to make concessions with the real estate agent and negotiate with one or more offers, as well as deal with the lender, inspector and appraiser.
3. It's easy — you don't have to clean up, fix up, repair or show a home if you are selling for cash. No open houses, keeping the yard kept or the rooms tidy. The buyer likely an investor with plans to tear down, renovate or otherwise has plans for what they are buying. Sold! See if you qualify for a home loan or mortgage refi >>
4. No dealing with a lender, and financing that can fall through. “When you sell a house for cash, you avoid the complications that come with a traditional home buyer's loan application,” says Chris Chavez of DFW Fast Home Buyers in Fort Worth, Texas. “Your buyer may not get the loan approval when it was anticipated or they may change their mind altogether. Since most cash buyers use their own cash to buy houses, we can close quickly and aren’t at the mercy of banks. This means a faster closing with less hassle than going the traditional route.”
5. Selling a home quickly might save money — especially if you do not live there. Each month that goes by without a sale means another payment for mortgage, taxes, utilities, yard maintenance, and lost interest on any profits!
6. You are behind on mortgage payments or taxes and a quick sell will help save your credit score.
3 cons of selling your house for cash
1. You will likely get less money for your home. Most cash buyers want to buy your home below market value so they can turn around and sell it at or above market value.
2. You may have to pay some fees. Offerpad, for example, charges service fees ranging from 4-7% to cover the closing costs involved in eventually selling your home.
3. Some cash buyers may request repairs or lower the offer price on your home before the sale is finalized based on an inspection of your home. Some cash buyers only want to buy homes that require minimal repairs.
3 ways to avoid foreclosure
If you are behind on your mortgage, or otherwise worried you can't afford your home, there are ways to avoid the bank declaring your house in foreclosure and taking the property from you:
Forbearance
If your lender believes that you have a valid reason behind the missed payments (medical emergency, job loss), it may grant you a forbearance: a repayment plan that temporarily lowers or suspends your payments under the agreement you will stick to the new payment plan.
Mortgage Modification
Mortgage modification allows you to refinance your loan or extend its term to allow for lower monthly payments.
A repayment plan may also include the regular monthly mortgage payment plus a prorated amount of arrears be paid each month.
Reinstatement
Reinstatement lets you pay back mortgage in one, lump-sum payment (which may include any interest and penalties) by a specific deadline.
Reverse mortgage
If the homeowner is at least 62 years old and there is enough equity in the home to cover the defaulted amount, a reverse mortgage involves a lender takes on your mortgage, and the owner receives a lump sum, fixed monthly payment, or line of credit for the value of the equity in the home, minus interest and fees.
The entire loan balance then becomes due when the borrower dies, moves out permanently, or sells the home.
Refinance
If you have equity in your home, a refinance may lower payments, net you a cash payout you can use to catch up on missed payments, and otherwise make your house more affordable. See what your refi options are:
Short refinance
A short refinance is when the bank forgives a part of your debt and refinances the remaining debt into a new loan.
Sell your home
Of course, if you can't afford your home, you can always sell before you fall behind on payments and ruin your credit.
Frequently asked questions about selling your house
Who benefits from selling a house for cash?
Manganaro says the people who benefit the most from selling a house for cash are people in some sort of distress, whether they’re facing foreclosure, divorce, or bankruptcy — or have an old home that needs a lot of repairs.
“Or maybe the house was inherited and the new owner couldn't or didn't want to care for the property and just wanted to get rid of it,” Manganaro says.
Is it wise to sell your house for cash?
For many sellers, especially those that need to get money quickly, a cash sale can make sense. Do your homework first!
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Is it quicker to sell a house to a cash buyer? 5 tips for selling to a cash buyer
- Check the online reviews of the buyer, including Better Business Bureau, Yelp, as well as ask around on local Facebook groups, Nextdoor, and your local friends and neighbors.
- Some agents recommend at least trying to sell your home on the open market first — either with an agent or for sale by owner.
- Before agreeing to a sale, require the buyer provide proof of funds, as well as an Earnest Money Deposit (EMD) — funds in escrow while the deal closes.
- Beware of very high offers. “An investor may offer way over the home’s value to lock you in with them only to bring an inspector through and severely lower the price,” says Kolodgie, who is a real estate investor. “You’re then stuck with that investor even though their offer is now the same as all the rest you previously received.
- Get multiple quotes, including from iBuyers like Offerpad and Opendoor, as well as local cash investors.
Is it better to sell a house for cash?
Most homes benefit from being sold on the market with the help of a realtor. However, there are some houses, and some sellers, who should consider a cash sale to a quality buyer or investor.
- Your house is in need of major repairs, you have few interested buyers, in part because no bank will give anyone a mortgage for your home.
- You are behind on mortgage payments, are facing a tax lien or are already in foreclosure.
- You are going through a divorce, and selling your house for cash makes the divorce settlement fast and easy, and helps pay for a new life for both of you.
- You need the money quickly.
- You don't have the time, inclination or patience for showings, negotiations or contingencies.
- You're not getting any regular offers, and tax and mortgage payments are accruing. In other words, you don't have many other choices.
- You are eager to buy another property, and without a fast cash sale of your current house, you may miss out on your dream home.
- There are emotional reasons you need to get out of a property quickly: Maybe you are selling a home you inherited and need to settle a loved one's estate without family drama, your relationship ended and you want to settle any debt owed to your ex, or you have a business debt that needs paying.
Can you sell a house for cash without a Realtor?
Yes, you can sell a house for cash without a Realtor, either as a For Sale by Owner seller or in a direct sale to a company that buys houses for cash.
Bottom line: What is the fastest way to sell a house for cash?
There are just as many shady cash real estate investors as there are legit ones. iBuyers are increasingly popular, thanks to their easy customer experience and streamlined technology. A quality local investor can be a great option, especially if you live outside of a metro area served by an online cash home buyer.
Please be advised that the operator of this site accepts advertising compensation from companies that appear on the site, and such compensation impacts the location and order in which the companies (and/or their products) are presented, and in some cases may also impact the rating that is assigned to them.
In a cash house sale, a buyer pays the seller an agreed-upon amount to purchase the home, without a mortgage or other financing. Cash sales can be made by individual buyers, real estate investors, or by companies that regularly buy houses for cash, called iBuyers.
How much money you get selling your house for cash as is depends on the type of cash buyer you sell to, as well as the current state of the market and the condition of your home.
If you don’t believe an initial cash offer is fair, you can negotiate with the buyer to arrive at a price that works for both of you.
Manganaro says the people who benefit the most from selling a house for cash are people in some sort of distress, whether they’re facing foreclosure, divorce, or bankruptcy — or have an old home that needs a lot of repairs.
Most homes benefit from being sold on the market with the help of a realtor.
Yes, you can sell a house for cash without a Realtor, either as a For Sale by Owner seller or in a direct sale to a company that buys houses for cash.
