Selling a home is always complex no matter if it’s your first time or your 1,000th. That doesn’t stop the practice from happening. In 2019, more than 5.25 million homes sold in the U.S. alone.
The process of buying and selling homes varies depending on your state and how the purchaser plans to pay for it. There’s a big difference between selling a home on a cash offer and selling it to someone who needs to finance the purchase with a mortgage.
If you’re interested in selling your Colorado Springs home quickly, consider accepting cash offers. Learn how the cash offer on house process works and find out the biggest advantages of cash offers over traditional financed purchases below.
What Is a Cash Offer in Real Estate?
The term “cash offer” is a bit misleading. The phrase “all cash offer” conjurers images of someone walking into your home with a suitcase full of cold, hard cash and making you an offer you cannot refuse. When, in fact, it’s actually illegal to sell a home for cash in the U.S. real estate industry.
A cash offer on a house refers to when someone buys a house outright rather than applying for financing to help fund the purchase. Upon closing, the buyer pays with a cashier’s check or electronically transfers the funds.
The Cash Offer on House Process in 6 Easy Steps
Not sure if you should accept a cash offer or financed purchase for your house? Here’s a breakdown of the cash offer on a house process in 6 easy steps to help make your decision clear.
1. Go Under Contract
First, you need to accept the buyer’s cash offer. This means drafting and signing a Purchase and Sale Agreement with the appropriate information.
Signing this contract is commonly referred to as “going under contract” in the real estate industry.
2. Verify Funding
Next, you need to verify that the buyer has the funds they claim they do. Your real estate agent will help you facilitate this process.
You may receive proof of funding in the form of an investment statement or bank statement.
Most sellers also request about 1-2% of the full sale price upfront as a sign of good faith from the buyer.
3. Hire the Appropriate Escrow and Title Companies
Either the buyer or the seller will hire the appropriate escrow and title companies. The rules regarding this vary from state to state.
The escrow company hired manages all the closing documents, completes the legal paperwork needed to finalize the sale, and facilitates the transfer of funds.
The title company issues title insurance, verifies the property lines, and checks for any property liens that need addressing before closing. They also ensure the property legally passes from the seller to the buyer.
The clearing of property liens is vital to the selling process. You cannot sell a house unless you clear any property liens set against you. These liens could come from a court settlement against you or failure to pay child support or taxes.
4. Home Inspection
If the buyer required an inspection contingency, now is the time to have an inspection done.
The home inspection may reveal issues not previously known to the buyer or the seller. The buyer can then request that repairs be made at the expense of the seller. Or, the buyer may attempt to renegotiate the sale price to reflect the repairs that need to be made.
Once the buyer and seller finalize this negotiation, it’s time to begin the closing process.
5. Bring the Appropriate Items to the Closing Meeting
You’re almost to the final step of signing the closing paperwork. You’ll need to bring the following items with you to ensure it’s all done correctly:
- A government-issued ID for the signer
- The house deed (if you own it in full)
- House codes for alarms and keyless entry, house keys, and garage door remotes
- A cashier’s check or certified check to pay for outstanding costs like liens, prorated utilities, and property taxes
Do not fret about being surprised by the final item. The escrow company will forewarn you if you need to bring a check to pay for outstanding costs.
6. Double-Check and Sign All Closing Paperwork
Finally, it’s time to review and sign the closing paperwork. There are still a lot of documents to go over and sign, even with a cash deal. Expect to sign the following on closing day:
- Certificate of title
- Final closing instructions
- Title deed
- Loan payoff statement
- Mechanics lien
- HUD-1 settlement statement
- Bill of Sale
- Statement of information
- Statement of closing cost
You may have more or less paperwork depending on the individual situation. These are fairly common documents, however, required in both cash and financed sales.
Advantages of a Cash Offer vs. a Financed Purchase
There are many advantages to accepting a cash offer over a traditional financed purchase. For one thing, you do not need to wait for the buyer to apply for a mortgage and get approved. There’s no waiting on the underwriting or the possibility of their application being denied.
This means you can end up closing your home in as little as two weeks. All you need is for the escrow and title companies to clear liens, approve the insurance, and finalize the paperwork. A traditional financed purchase takes at least 30 days, but more likely between 45 and 60 days.
An all cash offer also eliminates the need for financing and sale contingencies. You’re not waiting on them to sell their current property before purchasing yours. They already have the funding and can pay you directly.
Often, cash buyers waive the need for inspection before purchase as well. All cash buyers usually don’t mind buying the home “as is.” They’re prepared to fix things and make improvements before moving in or reselling the house.
Keep in mind, because of this, cash offers tend to be lower than financed offers. Though you may lose a couple of extra thousand dollars, you end up selling your home more quickly and with less hassle.
Sell Your Colorado Springs Home Fast By Accepting an All Cash Offer
The process of selling your home after a cash offer is still complicated, but it can save you a lot of time. It also helps you avoid the risk of the buyer’s financing falling through.
Do you want to sell your Colorado Springs home fast?
Lucky for you, Bonnie buys houses fast regardless of the house’s condition or the price.
Contact Bonnie Busy Houses Fast today to sell a Colorado Springs home for all cash, no matter your situation!
