Why does selling for cash matter? It allows you to accelerate your timeline significantly. Home sales are complex transactions, with multiple parties working hard to coordinate various tasks to move forward with the closing.
A typical financed offer usually takes 30 to 45 days to close and even longer if complications arise. During this period, the bank diligently verifies the buyers’ creditworthiness and ensures the home doesn’t have issues that will cause someone to walk away and default on the loan. This takes time.
When you eliminate the need for financing, the deal can move forward with a simplified closing and a shorter timeline. This is why it pays to find someone to buy your house with cash. While cash closings still take time, working with a company that buys homes for cash and its team of experts in quick closing can speed things up drastically.
Here’s a typical timeline for closing on your home. You don’t need to be involved in all these steps as a seller. But it’s helpful to know what’s happening behind the scenes to move your home to a completed sale.
The Beginning
The Offer
The first step is finding a buyer and entertaining offers. At this point, you are either listing your home on the MLS (multiple listing service) or contacting real estate investors. While you may see a cash offer via a traditional sale, they are more common when you work with an investor.
Once someone makes an offer, you can negotiate the terms before settling on a final contract. This stage can take as little as a day but can last multiple days as both parties work to find a middle ground they are happy with.
Verifying Funds
You will want to verify the credibility of the offer. With a financed offer, you will receive a pre-approval letter from the bank. When the buyer offers cash, they should provide you with proof of funds. They can submit bank statements to show you they have the money they promised to pay for your home.
A cash buyer who cannot prove they have the money to move forward is a huge red flag. If you cannot obtain proof showing cash on hand, it is worth asking for more information or moving on to a different offer. Verifying funds is quick and easy and can be done at the time of the offer.
The Nitty Gritty
Appraisal and Inspection
Next, a buyer can move into the appraisal and inspection phase. These steps allow the buyer to examine the home in more detail.
- An inspector will assess every element of the home, looking for damage and code violations and outlining necessary repairs.
- An appraiser will determine the house’s value by assessing its condition and features and comparing it to similar, recently sold homes in your area.
Appraisal and inspection require scheduling the professionals and a few hours for each to complete their job. On average, it takes anywhere from three to seven days to complete these tasks.
If you have a cash offer from a real estate investment company, they will often move forward without an outside appraisal or inspection. With vast experience in the industry, they can perform a soft inspection themselves to determine the home’s value, the cost of the work it will need, and their potential for profit without needing to bring in additional experts. If you are looking to speed the transaction along, this is where you can gain some time.
Title
The title company will prepare to transfer the title. They look at the property’s history for anything that might complicate the transaction. They will verify that you have the legal right to sell and ensure no liens or debts are tied to the property at closing.
Potential Speed Bumps
A home sale can encounter speed bumps along the way. Because it involves a large sum of money, every detail must be in order before closing. A property with legal issues will take more time to close. But there is a remedy for even the most complex situation; it just takes some extra time.
Liens
Unpaid taxes or HOA dues frequently result in home liens. These debts must clear before the sale is complete, so finding a lien on a property will slow the process until someone settles the debt.
Bankruptcy
Bankruptcy proceedings tie up assets that are attached to the person declaring bankruptcy. Selling a home owned by someone going through bankruptcy will often slow down the transaction and create a legal hurdle to overcome.
Death
When someone listed on a home’s title passes away, it creates extra work before you can sell it. Whether the house is tied up in probate, attached to a reverse mortgage, or the subject of conflict among heirs, it cannot proceed until everyone involved is satisfied.
Inspection
Buyers use an inspection to protect themselves from purchasing a property that requires significant work. Traditionally, a buyer can negotiate with the seller to settle issues with the property by asking for repairs, credits, or a discount on the sales price. An as-is sale, often done by investors, will bypass an inspection, and the buyer agrees to deal with issues after the sale.
Appraisal
A discrepancy between the sales price and the home’s appraised value can complicate a sale. When a buyer finds they are paying more than the market value of a home, they may want to renegotiate the price. Selling for cash to an investor can also avoid this step.
The Final Step
Closing
On the way to closing, a neutral party holds all funds related to the transaction in escrow. On closing day, they will distribute the funds to the appropriate parties as per the contract, and the sale will be legally finalized. Closing requires a bundle of paperwork from both parties, which will be scheduled in advance and can take a few hours to complete.
Whether you close independently or with a real estate agent, a reputable real estate investor’s cash offer on your house is the best option for a fast sale. With experience in the real estate game and a competent staff well-versed in closing deals quickly, they can move through all these steps and have your deal done in a few weeks or less.