Selling Your Home to a Cash Buyer vs. a Professional Home Buyer

While all professional home buyers are cash buyers not all cash buyers are professional home buyers.

Cash buyers can include the one-off investors who went to a weekend seminar on house flipping but have little to no experience. Then there’s the scenario where the home is listed on the MLS and someone who intends to live in the home gives a cash offer. Neither are professionals and tend to give cash buyers a bad rap.

If you’re planning on selling your house for cash, or thinking about it, it’s important to understand what separates a professional home buyer from a cash buyer.

Here are the main differences between selling your home to a cash buyer vs. a professional home buyer:

The Offer

sell my house fast california, sell house fast, we buy houses california, sell house fast, we buy housesInexperienced cash buyers tend to purchase homes at a much lower price to leave more wiggle-room for error.

In the case of a professional home buyer, the cash offer you receive may seem low, but you have to take in account all the things you’re not paying for such as real estate commission (typically 6%), escrow fees, appraisal costs, inspection reports, seller concessions, repairs, and holding costs such as taxes, insurance, and mortgage interest.. All of it added up is usually  8 – 15 percent of the purchase price – about what you would net if selling your home the traditional route.

Buying As-Is

A cash buyer who’s inexperienced or planning on living in the home may ask you to fix certain things or give credits towards hefty repairs such as roof repair, termite extermination, or plumbing replacement.

They can’t buy as-is because they haven’t established relationships with the right insurance companies yet, and most insurance companies won’t insure a property until certain criteria is met (things like windows, the foundation, and the roof all need to be in working order, and trees need to be properly trimmed).

A professional home buyer will always buy as-is. And since they do a lot of volume, they get a discount on construction costs and are able to pass that along to the seller.

Escrow Fees

Title and Escrow FeesAn inexperienced cash buyer may not have the right contacts to be able to get a discount on escrow. But professional home buyers are able to cover escrow fees because they get a savings due to the volume of business they do, and they in-turn put the savings into the seller’s pocket.

Real Estate Commission

If you list it with an agent and get a cash offer from someone intending to live in the home, you still have to pay for the real estate commission, but with a professional home buyer, you can skip that fee.

Closing Timeframe

An inexperienced cash buyer, or someone who intends on living in the home, may need a longer period of time to assess the feasibility of the project, or what they need to do to move in, so they may not be able to close quickly.

A professional home buyer can typically close as quick as seven days.

If you’d like more information about how selling a property to a professional home buyer works, you can click here or fill out the contact form below.

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