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What is a Cash Buyer in Real Estate?

front of house with grass, trees and american flag waving at sunset

Selling a home by traditional means can be time-consuming. Between inspections, financing protocols, and negotiations, many things can throw a home sale off course, or even derail it all together. In the several years, all-cash real estate transactions have increased.

Many home sellers like the prospect of accepting cash offers because there is less risk of the deal falling through due to financing problems. Certainly, many buyers are unable to offer cash to purchase a home outright, but there are cash buyers around who are helping to transform the real estate market landscape. Is a cash buyer ideal for you?

We’ll explore the ins and outs of the cash buying process as well as how to find real estate cash buyers.

What Is a Cash Buyer?

A cash buyer is a buyer, an individual, group, or company that purchases a house with cash–usually a wire transfer or check. Cash buyers do not rely on financing, so there’s no mortgage to procure, no pre-approval process, and none of the seemingly endless finance checks that come with a mortgage deal.

Cash buyers have the liquid assets needed to pay the seller for the price of their home–or for the offer that the seller has accepted. 

Are Cash Buyers Common?

Real estate statistics demonstrate that roughly ⅓ of the homes purchased in the first half of 2021 were cash sales. Cash buyers are actually quite common. Often, they are individuals or families who have previously sold a property and now have the cash on hand to purchase another property outright.

For instance, a person who is downsizing and has sold a large family home may easily be able to afford a condominium or smaller house; it’s common for these transactions to involve cash amounts. 

Of course, some buyers are wealthy enough and have the liquid assets necessary to purchase a home with cash if they choose. In addition, there are also iBuyers who purchase homes as is and also companies who pay cash with an eye to rehabbing and flipping houses.

Companies who purchase houses have different aims. As mentioned, some companies purchased older homes or distressed properties that need updating. The company or contractor makes the updates and then sells the home for a profit. 

iBuyers often purchase homes that are in good condition. They will resell the home, but have the ability to take their time. They’re not in the rush to resell the house and are able to let it sit on the market until it sells for their asking price.

The iBuyer model works well when sellers simply want to accept a fair offer and be done with the selling process. They are able to get an offer and cash payment quickly. This is a chief benefit of selling to an iBuyer. 

Benefits of Accepting Cash Offers

As a seller, you may want to get as much money for your home as possible. Not all sellers will receive the offers they want to see. Some sellers simply want to make a fast sale so they can obtain a good price for their house and be done with the entire home selling process.

There are many scenarios when making a fast yet fair sale are ideal. Someone who is getting married to someone who already has a home where they plan to live may want to sell their own home quickly so they can use the funds for their wedding, to travel, or other plans.

Someone who is relocating to another state for a job may want to make a quick sale so they don’t have to travel back and forth simply to sell their previous house. They can benefit by selling to a cash buyer.

The time factor is a considerable benefit to all-cash real estate transactions. Waiting for a buyer to go through the financing process can be stressful, knowing the many deals fall through because financing is withheld. The lender may not support the negotiated sale price. The lender may choose not to fund the mortgage for the requested amount.

When a buyer is able to pay cash, that financial element of traditional home sales is dramatically simplified. Typically, cash buyers are able to close deals in a period of weeks rather than months. 

For sellers, the cash buying process involves less risk. Once they accept the offer, they don’t have to worry about what the buyer’s bank or other lender is apt to say. They simply wait for the closing date when they will be presented with a wire transfer or check for the agreed-upon amount. 

Another benefit of the iBuying process is that the iBuyer isn’t usually interested in home repairs. That is, they will make an offer and won’t request the seller to fix anything or make any changes. Often, traditional real estate deals involve lots of haggling over repairs and their costs. When you sell to a cash buyer, you may be able to avoid having to make or fund home repairs. 

Finally, when you sell to a cash buyer such as an iBuyer, you don’t have to show your home to lots of potential buyers. That can be stressful, especially for households with kids and pets.

There’s no need to schedule open houses or accommodate realtors’ last minute requests for house showings. There’s no need to pack up until you’re ready to and no need to stage the home or spruce up its curb appeal. 

Why Do Buyers Want to Pay Cash for Homes?

Some sellers might wonder why a buyer wouldn’t want a mortgage, especially when the interest on the mortgage is a tax write off. Buyers who can purchase a house with cash, however, are able to avoid paying any interest at all.

They don’t have to pay on the home for 30 years before they own the deed. No bank or lender is involved. The buyer is able to save money on interest and is usually able to pay less, provided the seller accepts the offer, simply because they are paying cash. 

How Can I Find a Cash Buyer?

Many home sellers are turning away from the traditional real estate marketplace with its ups and downs to iBuyers. An iBuyer can make an offer on a home that the seller can choose to accept or not. Today, iBuyers use online tools and their own resources to evaluate properties.

They will arrive at a price that sellers may find in the ballpark of what they’re hoping to earn from the sale of their house. Once the seller accepts the offer, the process usually takes a few weeks to complete. 

How Does the iBuying Cash Offer Process Work?

These days, selling to an iBuyer is streamlined and easy. Sellers can submit their address to us, for instance, and create an account. In a matter of days, they can expect a vetted iBuyer to make an offer for the home–as cash offer.

Again, the iBuyer uses real estate data based on the house itself as well as its location to arrive at an iValuation. They will make an offer based on their own research. The seller may or may not choose to accept the offer.

However, many sellers do accept the cash offer because it’s fair and selling fast is convenient and allows them to avoid the hassle of listing their house (and showing it) on the real estate market–where it may or may not achieve a similar sale price. 

Cash Offers on your home? You’re in the right place!

Cash Buyers FAQs

Will I get a good offer from a cash buyer?

Today, roughly 30% of houses sell for above the seller’s asking price. It is, indeed, a seller’s market, especially since there are fewer homes to meet the demand for them. Some of these sales include cash buyers. Cash buyers do make very good offers.

However, it’s always up to the seller whether or not they accept those offers. A cash offer may be above, below, or at the seller’s asking price. Offers vary just as they do in the traditional real estate market, and as always, sellers can decide whether or not to accept an offer. 

Can I decline a cash offer?

If you receive an offer from an iBuyer or another cash buyer, you can decline the offer. You are not obligated to accept an offer that doesn’t meet your asking price unless you choose to. 

When can I close on my house after I accept a cash offer?

Usually, cash deals on real estate can be transacted in a few weeks. Traditional home sales may take months to close. Since there is no financing involved in the cash deal, the process can go much more quickly.

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