9 Reasons Why You Should Sell Your Home For Cash Instead of Using a Brokerage
Why would you sell your home for cash directly to a buyer instead of using a real estate brokerage?
- Save Big On Commissions
The standard real estate commission rate is still 6%. That’s 6% of the sales price of your home. That’s of the gross sales price. On a modest $300,000 home you’d be giving up $18,000 to Realtors if you list it. On a $1M home that’s $60,000! Even with those so called discount and MLS services you’ll still end up having to pay a competitive rate of commission to a buyer’s broker, on top of the original fees. That’s a lot of money to put towards a new home or your new home decor.
- You Can Sell As-Is
Cash home buyers are a lot easier to work with than agents and most of their retail clients. Most cash buyers will purchase the property just as it is. Even if you haven’t cleaned, mowed the lawn, or there is a hole in the roof.
Realtor’s buyers are trained to either ask for repairs to be made, require cash credits at closing to cover repairs (at least up to 2% of the sales price), or to re-negotiate if there is anything that needs repairs according to the disclosures provided or home inspections.
- No Gambling on Home Improvements
Real estate agents are smart. They know that their job is going to be a lot easier if you turn their listing into a model home. They will be very interested in making all types of recommendations on remodeling and staging your home. Those things cost you money, with no risk to the listing agent at all. The thing is that there is no guarantee they will help. In fact, most home improvements actually lose money. You won’t even get out what you put in dollar for dollar. On many improvement projects you will immediately lose half of what you spend. With a cash buyer you just sell it as-is and keep that money for your next place.
- Avoid Being Locked into Long Contracts
It’s typical that a Realtor will want you to sign a year long listing agreement. Yet, they’ll probably tell you they are confident they can sell your home much faster. So, why such a long agreement. If you check out listing history on Zillow you’ll see that many homes become expired listings. Meaning they didn’t sell within that 12 month time frame. Often even despite several price cuts. Many end up renewing for a second term too.
During that time you are locked in. If they bring you a buyer, you owe them, even if you change your mind about selling. You can’t even refinance your home if it doesn’t sell, because banks don’t want to loan to people who have been trying to get rid of their homes. If you want out, you can expect that most brokerages will have cancellation fees written into their agreements. Expect the brokerage to chase you down, send it to collections or set their attorneys to get their money. Even though it is because they failed to sell your home.
- Avoid Showing Hell
Agents like to look productive. They may even use your home listing more for positioning their other inventory as a good deal, rather than trying too hard to sell yours. They may bring lots of lookers through that aren’t even qualified, host open houses every weekend so they can generate more leads, and host ‘brokers opens’. These are little parties to impress other real estate brokers and network. That’s a lot of hassle and stress as an owner. Not to mention the risks of all these people going through your home. With a cash buyer you might show it once, if that, and you are done.
- No Sleepless Nights Waiting on Buyer Financing
One of the worst parts of not choosing a cash buyer is waiting on buyer financing. It can take months. Closings will often get delayed due to last minute underwriting department requests. A good share of loan applications fall apart long after the so called ‘pre-approval’. It can be highly stressful. It makes it really hard to plan your life until it is all completely done and you have the money in hand.
- Cash Buyers Close a Lot Faster
A cash buyer can close in just a few days. Maybe 7 to 14 days if your situation is really complicated and there are holidays. A financed buyer can take at least 30 to 45 days to close. Longer in busy periods. That’s after one if found and the deal is negotiated over a few days.
- Preserving Your Most Precious Asset
If you think your home is valuable, your time is priceless. Between searching for and interviewing agents, staging homes they way they want, dealing with showings, negotiations, and waiting around for closing, you can expect to burn a lot of your time working with a brokerage. Time is something you are already probably pretty short on and wish you had more of. With a cash buyer you can wrap up an agreement from start to finish in less than an hour of your time, and have cash in just a few days. Done.
- Cash Buyers Know How to Handle Issues
Most agents are new or have very little experience. Most don’t make it through their first year in business, so there are always new ones. Others might have had their license for a decade, but have only done a few deals part time for friends. It takes hundreds of transactions to really get the hang of all the issues that can creep up and kill deals before closing. Most cash buyers are repeat buyers and are often investors. They know how to spot potential hiccups and get them handled for you in advance.
- Aligned Interests
When it is just you a home seller and your home buyer working together, you are working for the same goal – to close the transaction and exchange money for the deed.
When you have two sets of real estate agents and brokers involved there are a lot of different personalities, politics, priorities, and interests all struggling against each other. All these parties are looking out for their own paydays, brands, and industry, not just focused on getting this one deal done.