A seller’s goal should be to find the highest offer with the strongest probability of closing on time with no hassles. While a near asking price offer may look great at first, it may be full of contingencies that may put you in a bad position as the seller. What if you knew what to look for at the beginning of your home-selling journey? What if you knew what questions to ask of an interested cash buyer that would prepare you with the necessary information to make the best decision possible? Listed below are just some of the ideas that you should keep in mind when working with a cash buyer or investor on the sale of your home.
A capable cash buyer should be making an offer to purchase the property in “as-is” condition with no expectations that the seller would be doing any work to the property before the closing. Contingency periods should be short and should fall in the range of 5 to 12 days depending on the complexity of any necessary due diligence or inspection. The initial deposit should be substantial and submitted with the offer, usually being 2% – 3% of the sale price. While cash sales typically close quicker than traditional financed offers there is a flexibility that should be expected of the buyer to close on the Seller’s timeline!
Proof of Funds
One of the basic item’s cash buyer’s should provide when submitting an offer is a proof of funds letter. This letter is typically from an attorney or lender that shows they have the funds necessary to close. There are two important items you need to look at to confirm: the date of the proof of funds letter and where the funds are coming from. The date of the letter or on the account is important because, if it is a few months old, the funds may have already depleted. A very outdated proof of funds letter may also suggest the Buyer is not telling you the full story that could potentially cause additional problems.
It is also extremely important to note what kind of an account the funds are coming from. If the money is not in a liquid account such as a checking or savings account, there could be complications to access it. Without timely access to their funds, a cash buyer may have to delay the closing which could cause an inconvenience to the Seller.
Lack of timely response and poor communication can lead to trouble. This is very important when you’re trying to sell your home in an efficient and stress-free way. Real estate transactions require a significant amount of back and forth, whether it be in regards to contract terms, paperwork questions, deal structuring, disclosures, signatures, etc. It could be a warning sign if the buyer and/or their agent don’t respond to a call or text within a reasonable amount of time or return contract changes in a timely manner.
All cash offers are not created equal. Look out for both strengths in a cash buyer as well red flags that can be included in the offer. Picking the right offer is important, but picking the right buyer can make all the difference for a quick, smooth transaction.
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