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If you’re a homeowner and need to sell quickly, you might be wondering how to sell your house for cash. Some buyers offer to pay for homes in full — meaning they make a cash offer — instead of financing the purchase via a typical mortgage process. Cash offers can be appealing, as they close more quickly and are less likely to fall through, but it’s important to do your due diligence when dealing with cash buyers. Some can be predatory and might offer substantially less money, assuming you are in distress, than you would get in a traditional sale.
Selling a house the traditional way can be a lengthy process. If you work with a typical buyer who is financing the purchase with a mortgage, it can take quite some time to close. This is because the lender needs to check the buyer’s credit and financial situation, order an appraisal and do its due diligence to ensure that your home is adequate collateral for the loan.
According to the National Association of Realtors (NAR), homes sat on the market for 33 days before selling in January 2023 — notably longer than January 2022’s 19-day average.
By contrast, selling a house for cash moves on a much shorter timeline. That speed is likely a big part of why 29 percent of home sales in January were all-cash deals, per NAR data.
Cash closings can take as little as a week or two. “The biggest pro of selling your home for cash is the speed at which it can be done,” says Jeff Shipwash, founder and CEO of Shipwash Properties in Knoxville, Tennessee. “Homes sold for cash can be completed as quickly as the title company can process the paperwork.”
It’s complex, though, so work with a real estate attorney to handle the legal details and closing.
If you want to sell your house for cash, there are strategies you and your real estate agent can utilize to try to make sure it happens. Follow these eight steps.
The first thing you need to do when selling your house is figure out how much it’s worth. If you’re working with a Realtor, they can help with this by performing a comparative market analysis. This will tell you what other, similar houses nearby are being listed or sold for.
While it won’t give you a definitive value — all homes and situations are different, after all — the information is very useful in deciding the price at which you should list your home. A professional appraisal can also help you determine the home’s value before you put it on the market.
Once you’ve figured out the value of your home, it’s time to start looking for a buyer. You can put varying amounts of effort into this — the more effort you put in, the more you’re likely to get for your home. Here are three good places to start:
No matter which type of buyer you go with, take the time to evaluate each offer. The price is, of course, very important, but you should also consider things like the proposed closing timeline and any contingencies included.
Don’t forget to get proof of funds from the people or companies whose offers you’re considering. You want to be especially mindful when there are large sums of cash changing hands — make sure that the buyer can actually afford to pay, and that they aren’t a real estate scammer. Experienced agents and attorneys can be crucial in vetting your buyer.
Any cash offers you receive, particularly from an iBuyer or a “we buy houses” company, is likely to be on the low side. It may even be less than the home’s fair market value. This is because these buyers expect a discount for paying in cash. And sometimes, that’s fair enough. If you’re in a very hot market, you might be able to garner more with multiple bids, but that isn’t the case for everyone.
And don’t forget that, while the closing process for a cash sale is usually simpler than for a financed sale, the closing costs don’t disappear. You can expect to pay similar fees to your agent, title company and more, regardless of the sale type.
Once you’ve decided to accept an offer, it’s time to start the paperwork. Signing a contract makes the deal official. Work with your agent and attorney to determine the terms of the sale, including the price and the timeline of the close, before you sign.
Most potential buyers will want to inspect a home before they close on the deal to make sure there aren’t any major defects that could cost a lot to repair. The inspector will examine the home, its foundation and its exterior for any signs of problems, or potential problems. Many offers will include an inspection contingency, but even if it doesn’t, the buyer might still request an inspection.
If you’re selling your home as-is, you won’t have to worry about making repairs or fixing up the home as a result of the inspection. However, as-is sales usually lead to lower offers.
Before you can close on the sale, you’ll need to make sure that you have a clear title to the home and can legally transfer it to the seller. Your attorney can help you make sure all is as it should be. If you’ve previously paid off your mortgage, be sure that your lender filed a satisfaction. The buyer will also place money into escrow to show they’re serious about the purchase.
The final step in the home selling process is the closing. This is the finish line, where you’ll meet with both parties’ agents and attorneys and finalize the sale documents. As at any closing, there will be a lot of signing, initialing and check writing. Once it’s done, you’ll receive your payment and the home will become the buyer’s property.
The process of selling a house for cash is more streamlined than selling to a traditional buyer who is financing the purchase with a mortgage. It does come with its fair share of complexities, though. If speed is not your primary concern, consider working with a trusted real estate agent on an open-market sale. It adds some time to the process, but it will put more cash in your pocket.
The biggest benefit of selling a home for cash is getting that cash much faster than you would with a traditional, financed sale. “When someone buys your home for cash, they eliminate the need for a bank’s lengthy funding process,” says Shipwash. “This means there is no waiting on underwriting and a much quicker process.” Other benefits include a simpler closing process and less of a chance of the deal falling through, since the buyer has enough cash to pay the full amount upfront. In addition, homes in less-than-great condition can usually be sold as-is in a cash deal. That said, selling for cash usually means leaving some money on the table. Most all-cash buyers expect to pay less in exchange for offering cash. So if you’re trying to make as much money as possible from your home sale, it might not be your best option.
No, selling your home for cash is not illegal. You can even accept payment in physical bills if you want to. However, the difficulty of transporting that much cash and IRS reporting requirements for large transactions make this unrealistic — so don’t expect a Hollywood-style briefcase full of money. All-cash deals refer to the amount being paid in full upfront, not the amount being paid in actual physical cash. But it’s smart to keep the deed in escrow until your bank tells you that the funds are cleared and irrevocable.
Typically, yes. According to a 2021 study from the University of California, San Diego, the average cash buyer pays 11 percent less than those who use a traditional mortgage. But this largely depends on your market. In a quiet market, cash buyers often expect a discount. However, in hot markets, some might be willing to pay just as much as buyers who are financing.
Arrow Right Contributor, Personal Finance
TJ Porter is a contributing writer for Bankrate with eight years of experience writing about finance. TJ writes about a range of subjects, from budgeting tips to bank account reviews.
