When it comes to selling your home, the ideal scenario to get your property sold quickly is to find a buyer who has cash at their disposal.
Having said that, cash buyers don’t come along very often, and finding someone who has cash funds can often be a difficult task. As a property seller you really need to know the facts about dealing with cash property buyers, whether it is on the open market or via a quick property sale company. Below are some common misconceptions that you may or may not have known.
Cash Buyers Never Pay Full Market Value
One fact that all home sellers need to bare in mind is that no cash property buyer will ever pay 100% market value for a home. It’s inevitable that anyone looking to sell their home quickly for cash is going to receive a lower offer – as the buyer is the one in a more powerful position. Let’s look at it this way, if a used car trader bought your vehicle from you at 100% market value, and then went on to sell your vehicle on their car lot at 100% market value; how would they keep their business running? The answer is they couldn’t. The same applies to cash property investors, they are in the property business to make a profit. Some cash buyers will want more than others, some are fair with their pricing whereas others will want 30-40% discounts on current market value.
A cash property buying company is likely to pay less than a cash buyer you find on the open market via an estate agent. The reason for this is that the cash buyer on the open market doesn’t usually have as many overheads (staff, offices etc) as a big cash buying firm. Having said that you may be surprised at the offer some companies will make, so it’s always a good idea to shop around when you are looking for a company to deal with.
Cash Buyers Rarely Search the Open Market
The next snag about cash buyers is that they rarely search the open market. You wouldn’t see an investor on the high street browsing the local estate agents window or looking at the premium listings in the Newspaper and Magazines. The likelihood is that you will find cash investors at auctions, on estate agent mailing lists and investment companies. Some companies that claim to buy cash buyers and say they have investors available are actually relying on Buy-to-Let mortgages, and you need to be careful of this situation arising. A mortgage investor can only complete as quickly as the mortgage company will allow, and this isn’t what you are signing up for! What you want is a quick sale, and the only way to guarantee this is with a genuine cash buyer. You can determine if a company are genuine cash buyers by asking them to provide you with proof of funds.
Explore Joint-Venture Cash Buyers
With cash home buyers being as rare as they are it is always worth while exploring joint venture property buyers. Joint venture property investors are 2 or more parties who combine their resources when buying property. Goodwin argues that joint cash buyers can be more common as expenditure and resources are split. On the other hand Bigger Pockets claims that many joint ventures can lead to conflict between parties affecting progress. Having too many cooks in the kitchen is a very real concern with joint venture buyers. To avoid this, it is common for parties to have a lead member while others remain reasonably passive. Without this or a similar structure in place it becomes more likely that negotiations may be halted due party disputes. Regardless of this, we believe joint venture buyers should always be considered when looking for any potential property buyer.
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Cash Buyers Are a Rare Breed
As mentioned before cash home buyers are rarely looking on the open market, and what makes things even harder is that they are rarely discover-able at all! The easiest way to source a cash buyer is by using an established firm. Remember you must do your homework on quick sale agencies, and you need to make sure the company you are dealing with are legitimate and honest. Always check the reviews, don’t accept the first offer you are given, and definitely don’t be bullied.
Using a cash buying firm or seeking a quick sale via a cash house buyer should be the very last step in your search for a fast sale. The advantages are you will get a guaranteed quick sale, and the disadvantage is that you will be selling at a below market value price. It is up to you to make this financial decision.
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This actually answered my drawback, thanks!