A Cash Offer Might Look Good, But Here’s Why You Should Look Again

Two women sitting at a desk filling out paperwork - Veteran Realtor, Home Buyer, Home Seller - Bill Salvatore, Arizona Elite Properties

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If you’re financially savvy at all, you’re well aware that buying a home is one of the most significant investments you’ll ever make. Initial outlay aside, you have maintenance costs, improvements and upgrade expenses to take into account. Depending on the price you paid, your expenditures and current market conditions, you may not be able to recover every penny you’ve invested, nonetheless all of these things need to be considered when you decide to sell your home. A cash offer might indeed seem appealing.

Cash buyers ( or iBuyers) often promise higher sales prices, less hassle and frequently, uncertain favors like staying rent-free after closing. As tempting as it may seem to skip the middleman, make sure you have weighed any perceived gains of the cash offer against a clearly negotiated contracted transaction and all you have invested. The high cost of convenience might just come as an unpleasant surprise as you get closer to your close date.

All-Cash offers on your home generally fall into one of three categories: first are iBuyer companies like Open Door, HomeVestors, or Offer Pad, then there are the individual fix-and-flip investors with no company backing, and finally the mainstream home buyer who just happens to have cash on hand. The first two may approach you even before you’ve contemplated selling your home, often by phone, mail or email sometimes even in person. The last is more likely to be introduced to your property by your Realtor.

Cash buyers often promise higher sales prices, more convenience and very often, uncertain favors like staying rent-free after closing. There are definitely some benefits to an pre-list cash sale, but one of those benefits is usually not you walking away with more money in YOUR pocket.

Pros and Cons of iBuyers and All-Cash Investors

Pros:

There is are undeniable upsides to selling your home to a cash buyer without ever actually putting it on the market.

Quick Close – There is no traditional mortgage company involved so it’s easy to put a rush on closing.
- Note: Once you have contracted with an iBuyer or Fix-and-Flip cash buyer, you’ve eliminated any possibility of obtaining multiple offers or entertaining a bidding war to increase your sales price. Certainly something to consider in our current Real Estate market.
No Fuss – You never have to pick up the kids cloths off the floor or scrape the gunk off the countertops, no deep cleaning or depersonalizing. Clutter can stay where it is and the grass can remain un-mowed. Cash buyers don’t care what your home looks like.
No Strangers – In a traditional sale, depending on your pricing strategy you may have a few to a multitude of potential buyers touring your home. Selling to an iBuyer or cash investor eliminates the need for anyone else to view your property.
No Formal Home Inspection – This is certainly a 1/2 day inconvenience for the traditional home seller but you will notice below, that this convenience will likely cost you extra money at closing.

Note: To address the possibility of staying in your home after closing- this is nothing new or unique to iBuyers, you’ve always had that power. As your representative I can, and in fact have on many occasions, insert a provision for you to remain in your home after closing until a contracted date of departure.

Cons:

No One Representing YOUR Interests – iBuyers do not in any way represent the best interests of a home seller. When you sell to an iBuyer, no one is on your side, no one is advocating for you.
Sales Price – An iBuyer may offer you current market value. But, since iBuyers purchase your home for the sole purpose of reselling as quickly as possible, they MUST and do, ultimately pay you well under fair market value.
Misleading – iBuyers claim not to charge commission. We find this misleading. They demand a sizable amount in service fees and repair charges.
No Formal Home Inspection – Did you notice that this heading also appears under Pros? Yes a home inspector will probably take 3-4 hours to point out health and safety hazards or troublesome issues in the home. But that’s why you hire a Real Estate professional, to negotiate what really needs attention and what might be unnecessary to include in repairs.
- In addition to costly service fees, this is where the price of ‘convenience’ can carry a significant cost to you at closing, as you have no power to negotiate the iBuyer’s estimated repair charges.

As Your Realtor I Will:

— As your Realtor and fiduciary, it is not only my job but my ethical responsibility to represent you and your best interests at all times.

— I will show you current, and accurate market comparisons for your home- verified sales data in and around your neighborhood. In addition, I will apprise you of today’s market conditions as the Real Estate market fluctuates daily.

— You will set the sales price and terms of the listing contract.

For a complete list of my duties, services and guarantee see
‘What Can I Do For You’