It’s common for real estate investors to send all-cash offers. Ideally, a cash offer should be the problem solver. Selling for cash should be easy for the homeowner. There are no bank approval delays. Homeowners can sell their property as-is without hassle. However, there are somethings that create problems for the seller. Instead of making it easy, sometimes, cash buyers make the decision difficult for sellers.
Let’s read about that.
Two common contingencies are a standard part of any real estate contract.
The first clause states that the purchase decision is contingent upon inspection results. What is the condition of the house? If It’s in a good state, the buyer can purchase the property.
The second clause mentions that the deal depends on bank approval. If the bank doesn’t approve the mortgage request, the buyer cannot finance the house.
As a cash buyer, you don’t face any such issues. You are paying cash, so you don’t have to involve a traditional bank. You can buy a house in any condition. In this scenario, you can send a non-contingent offer, but this is like twisting the reality. You can surely buy a home in any condition, any price range. However, that doesn’t mean that inspection results or the value of the house won’t affect your offer. If inspection results are not satisfactory, you’ll have to spend more on repairs & renovations. Explain this scenario to the seller instead of waiving all the contingencies.
It can be tempting to send a quick price for a desirable property. However, let’s not do that. Carefully research the numbers. Visit the house with your team of contractors. Review the condition of the house. Calculate the value of repairs and the as-is price of a home. Factor in the cost of your time and labor. Then send an offer.
You should be able to explain the numbers when a seller asks you questions.
Sellers will reject high-offers that sound too good to be true. There is another downside of sending an unresearched offer. Later on, you’ll need to reduce the price to cover the property-related expenses. That creates trouble both for you and the seller.
Cash buyers can purchase houses quickly. You can complete a cash sale in as little as 7-10 days. However, it cannot happen if you’ll spend days inspecting the home or if you take late action. It is a red sign for the seller if your offer has ten days for inspections. It’s best to complete the checks quickly so that the seller can get the time to think about your offer.
A good faith deposit is a mandatory part of the offer. It is your trust in the seller and indicates that you are a serious buyer. It’s easy to forget the importance of this deposit; however, it matters to the seller.
Let’s say an investor finds a great property and knows someone else who would be interested in the deal. So the cash buyer will purchase the house from the seller and will assign the agreement to the other investor. This scenario is typical for real estate investors.
However, the situation is not clear to sellers. When working with a homebuyer, don’t leave them confused. If you’re going to assign the contract, explain the situation, and make sure to close the deal as soon as possible.