Selling a House to a Cash Buyer: Steps in the Process

“A lot of sellers think selling a house ‘for cash’ means the buyer is going to show up with a briefcase full of money for them, but that’s not the case,” says Lucas Machado, a real estate investor and owner of House Heroes, LLC. A “cash offer” simply means the buyer has cash readily available to pay for the home, and the offer is not dependent on being able to secure a mortgage. But that doesn’t make the process of selling your house for cash any less mysterious if you’ve never done it.

10 key steps to selling for cash

We’re here to walk you through it, step by step, so you can make an informed decision about whether it’s right for you. We’ll cover all of the basics, and you can navigate our guide using the chapter headers below.

1. Check on the value of your home

Cash buyers provide a variety of conveniences to sellers, including a shorter closing, increased level of certainty, and the option to sell “as is” and save money on repairs. However, cash offers historically tend to be lower than financed offers. So while you can expect to receive somewhat of a discount on price — how much so will depend on market competition and the state of your home — you should get a ballpark idea of your home’s current fair market value so you can recognize if you’re getting lowballed.

Since around 2005, homeowners have been able to request a free home value estimate online thanks to the development of algorithmic pricing tools. These online appraisal tools gather data from a variety of places, including county assessors, recorder’s offices, real estate property listing websites, title companies, and user-generated questionnaires to spin out instant property value estimates.

While an online valuation won’t deliver the same level of accuracy of a professional appraisal or a real estate agent’s comparative market analysis, requesting one is quick — not to mention completely free. Our Home Value Estimator is a good place to start.

Our tool pairs housing market data with your own personal insights about your house, such as its overall condition and what type of property it is (condo, single-family, or townhome). We then combine your answers with housing market data from multiple trusted sources to come up with an estimate you can use as a market-value comparison point when shopping for a cash offer.

2. Find a cash buyer and request an offer

You know your home’s worth and you’re ready to search for a qualified cash buyer. Below are some of the most common and effective ways to find one:

Use Simple Sale

HomeLight’s Simple Sale platform makes it easy and safe to get a competitive cash offer in a matter of days. Here’s how it works:

HomeLight’s Simple Sale platform makes it easy to request a competitive cash offer for your property. To get started, you’ll complete a brief questionnaire to get us up to speed on your home and selling goals. Tell us a little bit about the property you’re looking to sell, like whether it’s a ranch or two-story, and how much work you think it needs. Share some background on how soon you plan to sell. From there, we’ll provide an all-cash offer for your home within 48 hours and you can choose to take it or leave it. With Simple Sale, you avoid the costs of commissions and repairs — and collect your funds in as few as 10 days.

Tell us a bit about your home and selling timeline

Our easy questionnaire makes getting set up on the platform a breeze. Just enter your address, then tell us a little about your house.

Is it a traditional Ranch home, cozy Craftsman bungalow or spacious contemporary Mediterranean in a newer sub-division? Does it need a little TLC, major repairs or is it in tip-top-shape? How soon do you need to sell?

We give you flexibility, whether you want to sell in the next couple of weeks, 12 months down the road, or somewhere in between.

Get an all-cash offer in as few as 48 hours 

After analyzing your information, we’ll get back to you in just a few days with a competitive offer. Of course, there’s no obligation on your end to accept it. Need help making a final decision? HomeLight can introduce you to a top real estate agent in your neighborhood for an expert opinion on what your home is worth so you can make sure you’re getting a fair price.

Sell your house “as is”

Skip the repairs, prep hassles and agent commissions. This can save you time and money — a 2021 study we conducted found that on average, sellers spend over $5,000 prepping their home for the market. By contrast, the Simple Sale platform will provide a full cash offer for homes in almost any condition — without any hidden fees.

Close for cash in as few as 10 days 

A 10-day closing translates into selling your home around 5-times faster than the typical financed sale in today’s market. Plus, you can pick a move date that fits your schedule.

3. Consult with a top real estate agent

Maybe requesting a cash offer online right off the bat isn’t your style. You’d like an advisor to walk you through the process. No problem!

You can also ask a knowledgeable real estate agent experienced with cash sales for a cash buyer recommendation. Many agents are active in their local investor community and have an inside track to finding cash buyers.

Indar Lange, owner of Honolulu-based Our Home Investments, Hawaii’s largest home-flipping company, says 60%-70% of his cash investments are the result of his relationships with agents. “We work with multiple agents who know we can buy for cash, including homes no one wants,” he shares.

4. Online search

This may be the least ideal route since the internet is teeming with cash buyers — some of whom can offer sellers a higher level of service than others. Just make sure you do your homework to weed out possible scammers and find the best investor for your situation. “Check their website to make sure they’ve actually purchased homes, ask about the kinds of projects they work on, and get references,” advises Lange.

5. Review the price and terms of your offer

Evaluating a cash offer can be tricky. There’s no one-size-fits-all formula to calculate the strength of an offer. And there are other factors to weigh besides the amount of profit you’ll make. Here are some key things to keep in mind when assessing an offer:

Your home’s condition

If your house is in great shape, Travis Steinemann, a real estate investor and founder of BuyHousesBR.com, says you can look at comparable properties that have sold recently in your area with a similar size and level of finish, and then subtract the agent’s commission and throw in whatever discount you feel the benefits are worth.

“That will depend on your situation — someone who is going through a foreclosure or who has a vacant house may value the speed and benefits of cash more than someone who just wants a bigger house,” Steinemann shares from his experience working with a variety of sellers.

If your house needs work, he suggests taking the approximate value of updated houses in your area and subtracting what it would cost to get your house in that condition. Then deduct the commission, subtract the investor profit (usually 15%), and you will arrive at a fair price.

Terms (it’s not just price that matters!)

Price is one thing, but not all cash offers will offer sellers the same terms either. Read the fine print to determine which steps the buyer is requesting to take before closing. For example, some investors will purchase the home “as is” but still require an inspection; some will offer to waive the inspection entirely, though it may mean accepting a reduced price to hedge the investor’s risk of finding major issues with the property.

While the use of all-cash eliminates the need for a lender-ordered appraisal, some buyers may still request to have the house appraised before closing. What type of terms you can negotiate will depend on factors like the condition of your home and whether it’s a seller’s market. The fewer contract contingencies, the better (if you’re the seller).

Legitimacy of the offer

Before you move forward with the offer, you should review the following:

• Does the buyer plan on depositing an appropriate amount of earnest money?
• Does the buyer have a good track record of closing transactions?
• Is the buyer using a standard contract? If not, will you need an attorney to review the terms of the contract?

Shaun Simpson, a top Columbus, Ohio real estate agent who sells homes 38% faster than other agents in his area, echoes that getting adequate earnest money, the deposit that represents a buyer’s commitment to a sale, is essential.

“If you’re buying a $500,000 house that’s supposed to close in a week, you should have no problem putting a 2%-3% deposit into earnest money,” he explains.

You should also request proof of funds to confirm that the buyer actually has the available cash to complete the purchase. This verification can come in the form of a certified bank letter with the official letterhead and should have the signature of the authorized bank personnel.

And Simpson recommends going even a step further to confirm that the proof of funds letter hasn’t been forged: “Make sure you call their bank to verify they have funds and that they’re liquid,” he advises. “Don’t just accept a letter from the buyer saying they have the money.”

Compare your offer to an agent’s CMA

When you’re considering a cash offer, consider reaching out to a trusted real estate agent to do a comparative market analysis of your home. This tool calculates the market value of your home by pulling in a bunch of details about nearby properties of a similar size and style that have recently sold in your area. An agent uses these sale prices as a benchmark to set a home’s list price.

As an alternative, you could also order your own home appraisal. “Although appraisals vary quite a bit and aren’t an absolute guarantee, it could help if you’re really struggling to pinpoint what would be a good price,” says Joanne McCoy, a top real estate agent in Lincoln, Nebraska, “At the end of the day, if you’re going to get less than market value, you have to decide whether the benefits outweigh that loss.”

Happy with the offer? Sign the contract!

After accepting a cash offer, it’s time to sign the contract. This part of the process is very similar to what happens during a conventional home sale. You can choose to sign and accept the contract or have an attorney review the terms. The contract, which is usually prepared by the buyer, should include the following key details:

• purchase price
• deposit amount
• closing date

6. Submit disclosures

Sellers are usually required to disclose any known information about a property that could impact its value or the ability to live there safely. Every state has its own rules about what’s legally necessary to disclose, and you can ask a real estate attorney or representative from the title company to provide you with the right documentation for your locale.

Regardless of your state’s specific regulations, however, real estate experts generally advise erring on the side of transparency to avoid legal blowback from a buyer down the line and to conduct an honest sale. If a house has a history of flooding, had a major addition a few years back, or is showing signs of foundation issues, for example, it’s recommended to openly communicate what you know. Thankfully, many investors have enough funds on hand to handle even the most daunting of problems.

7. Handle any unique requirements of the sale

While most cash sales are quick and straightforward, there are sometimes extenuating circumstances that can lengthen the process a bit. For example, if the house is in a homeowners association, the HOA may require 30 days to process the buyer’s application. Another aspect of a real estate closing is the municipal lien search. In some municipalities, it only takes a few days. In others, it can take up to three or four weeks.

8. Complete the home inspection

Some cash buyers require a home inspection. Others may purchase a home “sight unseen” or choose to waive the inspection.

“They would do this if they know their price is so good that anything wrong with the home is not an issue, or if they are planning on tearing down the home and the land value is all that matters to them,” explains Steinemann. Those types of offers usually close very fast, in around 7 to 10 days.

But buyers who opt for an inspection may renegotiate the final offer price to cover any required repairs, so it’s smart to anticipate and plan for more back-and-forth and a potential price reduction if an inspection is required for your sale.

9. Clear title

Title problems can delay your closing, and a title search will be necessary to close the sale regardless of whether your buyer is paying all-cash or needs a mortgage. Unpaid taxes, a second mortgage, mechanic’s liens for past work done on the property, and outstanding alimony or child support are all common defects that can appear on your title and prevent the sale from moving forward until cleared. You can get ahead of any surprises by ordering a preliminary title report and handling any disputes or paying off liens ahead of time.

10. Review and sign your closing documents

The closing will likely be held at the office of a title company, escrow company, or real estate attorney, depending on customs for your state. You’ll sign the same documents as you would in a traditional sale, such as the deed, settlement statement, and any property disclosures that haven’t already been completed. You can choose to have the title company draft the paperwork or let an attorney handle it.

Benefits of selling a home for cash

Now that you’re familiar with the process of selling a house for cash, should you do it? Here are a few benefits that can make this avenue more enticing.

Fast and guaranteed closing

Across the board, the main draws of a cash sale are speed and certainty. There’s always a chance a financed deal could fall through if the buyer doesn’t get approval for the loan or if the appraisal comes in lower than the contract price — a long and frustrating process may take a seller back to square one.

“With cash, you can close fast without any hassles,” says Lange. “With a mortgage, lenders can take 60 days, sometimes more, to clear everything — there are a lot of hoops to jump through.”

Check out this table for a snapshot of how much faster each step of a cash sale moves compared to a financed sale.

Less stress

According to a recent marketing survey by 1000Watt Inside, more than 70% of respondents found the traditional sale process stressful. When working with a cash buyer, many of the common headaches and uncertainties of selling a home— such as staging, showings, and appraisals — are off the table, which means a simpler, more straightforward process.

Reduced fees

Although the offer amount from an investor will likely be lower than what you could get in a traditional sale, it can be offset with money you don’t have to spend on commission, concessions, and prepwork.

“In a retail market sale, most of the transactional costs, such as agent commissions for both listing and buyer’s agents and closing costs for escrow, fall on the seller,” noted Johell Aponte, founder and acquisitions manager with Move On House Buyers.

“Plus, the seller is often asked to support buyers with closing cost concessions, pre-listing repairs and updates, post-inspection repairs, and possible extended hold times, all of which can add up to substantial costs.”

Flexibility

In addition to speed, a flexible schedule is another benefit of selling for cash. For example, if you need to close on your next home before moving, an investor or flipper will be more likely to delay possession after closing than a traditional buyer would. 

Quicker path to your next home

Let’s say you’ve found the perfect home that checks off all the items on your list and is within your price range, but it’s getting a lot of interest and multiple offers. By taking a cash sale on your current house, you’ll be in a better position to secure your next home, because that seller won’t have to wait around on any contingencies or financing delays.

Skip repairs and sell “as is”

Some loan programs that a traditional buyer would use to purchase a home come with strict guidelines that can make fixer-uppers more difficult to sell. “Many of the houses we purchase are not livable — the owners couldn’t get a loan even if they wanted to,” says Lange. “Sometimes the bank is knocking on their door or there are eviction notices in the window. Cash gives them a way out.” 

What to watch out for with a cash sale

A cash offer isn’t always a silver bullet (no solution to selling your home is), so before you move forward, you should be aware of these common drawbacks.

Lower price

When selling for cash, all of that speed and convenience comes at a cost: You’ll generally sacrifice a chunk of change on the sale price, as cash buyers are typically looking to pay below market value.

“It depends on the market hold times and costs, but sellers may expect to leave on the table anywhere between 8% to 15% of what they would have projected to get from a successful retail sales process,” says Aponte.

At the end of the day, investors are running a business — a low-margin one, at that — and they need to make money to keep buying homes. “Investors need to buy at a discount because they’re often putting hundreds of thousands of dollars into a property—they have to find a way to get value out of a purchase,” says Lange.

“Selling a home for cash should be a win-win for both sides. Both parties should feel comfortable with what they’re getting.”

Potential for fraud

The cash-buying market can be riskier, and some have been called out for predatory tactics. Before entering into any contract, thoroughly research the company or person and ask for references of past sellers.

Be wary of any buyers who show no interest in seeing your home in person and who only correspond via email, as those could be red flags of a scam. HomeLight, which provides cash offers through our Simple Sale platform, has more than 500 BBB reviews with an average 5-star rating.)

To avoid getting lowballed, perform a few price checks using a Home Value Estimator or ask a reputable real estate agent for a second opinion.

Possibility of “bait and switch”

Kevin Kendrick, a top Orlando agent who sells homes 45% faster than average and is also a certified iBuyer, sometimes sees reasonable cash offers come in for his sellers, which can be exciting at first — but that offer isn’t set in stone until the contract is finalized.

“A cash buyer might make an offer that’s close to list price, but then they often ask for pricey repairs at the inspection stage,” he explains. “When all is said and done, the final price might be up to 15% below fair market value.”

Is cash king? It’s your call!

Now that we’ve demystified the process of selling a house for cash, you can decide if speed and peace of mind outweighs having buyers compete over your home and driving up the offer price.

Think it’s a worthwhile tradeoff? You’re not alone. A growing number of homeowners are embracing the idea of selling for cash. In fact, data from 1000watt Inside indicates that 77% of sellers would sacrifice 5%-10% of their profit for the convenience and certainty of a cash sale.

“As a seller, one of the big things you want to do is eliminate all of the question marks,” says Simpson. “Cash does that.”

Header Image Source: (Roger Starnes Sr / Unsplash)