When you sell your house, you typically face a long, confusing process. Under the best conditions, it takes an average of 65 days to sell a home and between you and the buyer, there are numerous parties involved who can complicate and elongate the process even further.
However, when you accept cash for your home, you can simplify the process. It typically takes less time, involves fewer parties, and the deal has a lower risk of falling through. Let’s take a look at what exactly the process of selling your house for cash is and how it works.
What Is a Cash Offer?
Before we dive into the steps of accepting cash for your home, you should know what an all-cash offer actually is. Contrary to what it sounds like, you don’t receive the value of your home completely in cash. It’s actually illegal in the United States to close a real estate deal with cash.
An all-cash offer just means that a house buyer is purchasing a home without financing. They’ll typically transfer the funds electronically or with a cashier’s check. By not involving a bank that needs to approve financing, the buyer can purchase a home more quickly and confidently. While individual buyers who plan to live in the home can do an all-cash deal, it’s more common to see it from home investors who can help you close your house quickly and easily.
Now that you understand what an all-cash offer is, let’s take a look at the steps involved in selling a house for cash. The exact timeline for this process will vary, but a cash sale can close in as few as two weeks once you’re under contract.
1. Sign the Contract
Going under that contract is the first step when you accept cash for your home. In this contract, you officially accept your buyer’s offer. This contract is known as a Purchase and Sale Agreement contract.
2. Verify Proof of Funds
The next step is to ensure that the buyer actually has the money available to buy your property. This is especially important because they’re relying entirely on their own cash to close the deal. You’ll usually ask for earnest money upfront, which is about 1% to 2% of the sales price. Then, you can request proof of funds by seeing the buyer’s bank or investment statements. If you have a real estate agent, they can help with this process. If you don’t have an agent, be sure to work through this step thoroughly to be sure that your buyer is truly able to purchase your home. If you’re selling to a company that buys homes for cash, you’ll just want to verify that the company is trustworthy and has a good reputation for fulfilling their deals.
3. Hire Title and Escrow Companies
You may have the job of choosing the title and escrow companies or your buyer might, depending on your state. The title company ensures that the property lines have been drawn correctly and that there aren’t any property liens that need to be taken care of. A property lien is a legal notice related to unpaid debt and you won’t be able to sell your home until all liens are cleared. The title company also issues title insurance and ensures that the ownership of the property changes hands on closing day.
The escrow company manages all closing documents, completes the paperwork that records the sale, and facilities the transfer of funds. You may be able to find a company that acts as both the title and escrow company to make the process even simpler.
4. Pass a Home Inspection
While some cash buyers may choose to have an inspection and renegotiate the sale prices based on the repairs the property needs, many home investors that pay cash will not be concerned about the state of the home. This is one of the many perks of accepting cash for your home from a company that buys homes as-is. They won’t put any financial responsibility on you for the state of the home and will accept the responsibility of fixing up the property.
5. Sign Closing Documents
The final step is to review and sign your closing documents. Even though you don’t have to worry about the buyer’s financing, there is still quite a bit of paperwork you need to work through to close on the deal. These are the documents you typically sign before you close:
- Certificate of title
- Title deed
- Final closing instructions
- HUD-1 settlement statement
- Mechanics lien
- Loan payoff statement
- Bill of sale
- Statement of information
- Statement of closing costs
Even with this list of documents, closing on a cash sale will typically happen much more quickly than closing on a deal that involves financing from a lender. If you’re ready to sell your home for cash to a home investor that buys ugly houses, contact Problem Property Pals today.