You’re thinking about selling your house but you’re not sure about the differences between an all-cash offer and financing.
While taking out a mortgage might be the most common way to purchase a home, the percentage of buyers taking out this kind of financed offer is slowly declining. That’s because there are better financing options available, including cash offers.
Today, you will be learning all about selling your house for cash vs financing options.
About Cash Home Offers
To get the best of the real estate hot market, cash home offers are advantageous to both the buyer and the seller. That is why the percentage of home purchases paid in cash is increasing. In the first quarter of 2021, 30 percent of all home purchases were paid in cash. That’s up by around 5 percent from the previous year.
With a cash purchase, the seller and the buyer come to a price agreement between themselves. It’s one of the quickest ways to make a home sale because both parties can close the deal without needing to wait for the approval of any third-party, such as a bank.
There are a few types of cash home buyers. Sometimes, you may find a private buyer and deal with them directly. The problem with this method is that you have to vet the buyer first. Typically, the bank will vet the buyer, but only if the buyer is applying for a loan, not if they are paying the full asking price in cash.
Dealing with private purchasers can be time-consuming and tiring. In the seller’s market, might have to deal with scammers and low-ballers (people who make offers well below the home’s value). Furthermore, you have to make sure the buyer has the necessary funds to purchase your home. Some buyers aren’t serious and end up wasting your time.
That is why it is better to sell your house to a company that specializes in buying houses for cash. These companies make cash sale deals every day. They’re willing to pay top dollar to buy my house in Long Island, even when paying in cash, because they know they will be able to sell it later and make a profit.
Professional cash home buyers in Nassau County always have the necessary funds on hand and can close a deal quickly. They don’t bother with low-balling you because it’s not worth their time to do so. They know your time is precious, and their time is precious too; they won’t waste it. They will give you a fair cash deal and get you a faster closing.
About Financing a House
Typically, most home buyers find some way to finance the home they are buying. Not everyone has hundreds of thousands of dollars in the bank to hand over for a home. So, they often turn to a bank and ask them to lend them the money.
The problem with this is that it gives a lot of control to the bank. Not only can the bank take over the home if the buyer doesn’t pay their mortgage loan on time, but such arrangements typically come with additional fees, not just for the buyer but for the seller as well.
All those extra fees can drastically increase the cost of selling your house.
All Cash Offers vs. Financing
All cash offers tend to be a lot quicker and simpler than financing.
Dealing with a bank can take time. For example, the bank will typically send an inspector to make sure the home is in a livable state as part of the pre-approval process. The seller doesn’t need to inspect their home beforehand. However, they will usually pay for a prior home inspection to discover potential structural damage.
If such damage exists, the owner will typically have to pay for the necessary repairs. Such repairs can take a lot of time. That’s one of the main differences between cash offers and financing. With cash offers, you can sell your house as-is. Even if it has structural damage, such as if there was a flood or fire, home sellers can sell it to a company that buys such houses.
Of course, the sale price for a home that has structural damage isn’t the same as for a home that doesn’t. However, you won’t have to pay upfront for fees or repairs. Instead, you can get a fair offer and quick cash for your home to get it off your hands.
Cash offers take a lot quicker, too. Once we give you our fair offer, we can close on your schedule. Just pick a date! That’s because cash buyers don’t need to wait for a home appraisal from the bank.
The bank might not want to loan out money unless they appraise the house first and confirm its value. However, a private buyer can decide on a price that is fair to them without a third-party valuation.
Financing Types
The most common financing type is a fixed-rate mortgage from the bank. However, there are other types of loans as well. For example, adjustable-rate mortgages allow the borrower to pay lower interest rates in the early stages of the loan. There are also government-backed loans for qualified buyers, allowing them to put up a smaller down mortgage payment, making home purchases more affordable.
There is also owner financing, which is more common when the seller trusts the buyer, such as when they have a preexisting relationship. With seller or owner financing, the seller lends the buyer all or part of the price of the home.
If the buyer is only able to get the bank to loan them 80 percent of the purchase price of the home (excluding the down payment), the seller can lend them the other 20 percent. Or, the seller can lend them 100 percent of the price (not including the down payment).
With seller financing, the buyer might have to pay a larger down payment. In addition, they will have to pay the seller interest with every payment. The seller is taking on a big risk here.
Benefits of Cash Offers vs. Financing
There are a lot of reasons to choose cash offers instead of financing. With cash offers, you don’t have to worry about the buyer getting denied by the bank, which can lead to a cancellation of the contract. You can close the home buying process quickly, within a week, and use that money for buying a new home, an emergency expense, or anything else.
There’s a level of certainty that you get with cash offers that you just can’t get otherwise.
You don’t have to pay any fees or closing costs or for repairs. Nowadays, many cash buyers are making offers that are just as good or even higher than the standard listing price, so you have nothing to lose.
Cash Offers vs. Financing in New York
Let’s face it: New York is one of the best places to sell your house for cash. With such a prime and competitive market, you can get an amazing cash offer for your home and get your cash quickly, with fewer contingencies.
Instead of paying commissions to a realtor, which can make the closing process take well over a month, deal with companies that buy houses in New York and pay you directly, within days.
More and more New York homeowners are selling their homes for cash and using that cash to buy new homes elsewhere. Regardless of why you want to sell your home for cash, however, we can help.
Conclusion
If you want to avoid the typical fees and commissions that come with selling a home, as well as the headaches of dealing with buyers, real estate agents, and banks, contact us. We have a lot of experience with buying homes for cash in New York. Just call us or request a quote online. You can send us pictures of your home or have us meet you there so we can give you our fair offer. Then, we will close on your schedule.