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    How to Negotiate Selling Conditions With a Cash Homebuyer

    Posted by cfh-admin Posted at March 9, 2024

    You’re ready to sell your home, and you want to do it quickly and without any hassle. Cash homebuyers may be the answer you are looking for. These savvy investors are always on the lookout for properties they can snap up and either resell or rent out. But before you sign on the dotted line, you’ll want to make sure you’re getting the best possible deal.

    This guide will walk you step by step through the process of negotiating with a cash homebuyer.

    Understanding the Cash Buying Process

    First things first, let’s discuss the cash-buying process. It’s important to understand what you’re getting into, right? 

    When you sell your home for cash, you bypass the traditional mortgage process. This means that the buyer has the funds readily available to purchase your property outright without the need for a bank loan.

    • Quicker transactions: With a conventional bank loan out of the picture, the entire sales process can take days or weeks rather than 30-45 days with a traditional mortgage. You don’t have to wait on lender approvals, which can delay closing dates for months.
    • Fewer contingencies: Cash sales aren’t usually contingent on the buyer securing financing, the appraisal value meeting the purchase price, or the outcome of a home inspection. Expect fewer roadblocks on the way to closing.
    • Simplified closing process: All-cash deals involve less paperwork and underwriting. And you only have to negotiate with one buyer—not that buyer’s bank or mortgage lender too.

    The direct nature of these transactions gives sellers more influence in dictating their ideal terms. But you still need to understand the buyer’s motivations—cash investors plan to immediately list, flip, or rent the property. This timeline will help you gauge which concessions impact their bottom line.

    Determining a Fair Market Value

    Before naming your price or meeting with potential buyers, you need to nail down a fair asking price. Pricing too high could deter buyers, but pricing too low leaves money on the table that could’ve lined your pockets instead.

    The first step in determining a fair market value is research. Look at recent home sales in your area similar to your property. Doing so will give you an idea of what buyers will pay for homes like yours. You can also enlist the help of a real estate agent or appraiser to get a professional opinion on your home’s value.

    Next, consider your home’s unique selling points. Maybe it’s in a prime location that can’t be beaten, or perhaps you’ve recently given the kitchen a drool-worthy makeover. Whatever sets your property apart, make sure to factor that into your pricing strategy.

    Finally, be honest with yourself about any issues or repairs that need to be addressed. It’s better to be upfront about these things from the get-go to set a realistic price and avoid surprises.

    Know What You Want

    Now that you have a baseline price in mind, the next step is to decide on your other ideal sale conditions beyond the dollar amount. Take a moment to sit down and think about your ideal selling conditions. What’s your dream scenario?

    Think about elements such as:

    • Your preferred closing timeline: How fast would you like the sale to close—next week, next month, or something in between?
    • Repairs/renovation requests: Would you prefer to sell as-is without making any fixes? Or are you open to refreshing paint, fixing worn floors, or addressing bigger issues flagged in an inspection?
    • Inclusion of furnishings/personal property: Do you want to leave behind furnishings for an extra fee? Remove all items entirely? Negotiate piece by piece?
    • Handling closing costs: Typical seller costs fall around 3% of the sale price, encompassing legal fees, taxes, and document charges associated with the home transfer. Will you pay these or request the buyer to cover them?

    Discuss these conditions with any others who co-own the property (e.g., spouse, partner, roommate, or friend) to get aligned. Having preset terms makes it much easier to assess if a buyer’s offer meets your needs and expectations. It also helps you spot lowball offers that are unlikely to satisfy what you want.

    Setting Clear Selling Conditions

    After that, you must communicate these conditions to potential buyers. The key here is to be as transparent as possible about your selling conditions from the very beginning.

    Think of it like a first date: you want to put your best foot forward but also be honest about who you are and what you’re looking for. The same goes for selling your home. Be upfront about your desired sale price, your ideal closing timeline, and any existing issues with the property that buyers should know about.

    By setting clear expectations from the start, you’ll attract buyers who are on the same wavelength as you. And when everyone’s on the same page, negotiations are a breeze.

    Try to Sell As-Is

    If you want to streamline the selling process and avoid extra hassle, consider selling your home as-is. What does that mean, exactly? It means you’re offering your property in its current condition, warts and all.

    Now, you might be thinking: “But won’t that scare off buyers?” Not necessarily! In fact, many cash buyers are specifically looking for as-is properties. They are often investors ready to roll up their sleeves and tackle any necessary repairs or renovations themselves.

    The beauty of selling as-is is that you don’t have to lift a finger (or a paintbrush) to get your home ready for sale. You can focus on packing up and moving on to your next chapter while the buyer takes care of the rest.

    Plus, selling as-is means you can typically close the deal much faster than you would with a traditional sale. But dodging renovations means taking a hit on price is inevitable. So, when pitching this fuss-free option, suggest about 3-5% below your ideal price to leave room for back and forth. Then, let the buyer make requests from there if any glaring issues appear post-inspection that you may cover.

    Flexibility and Compromise

    As we’ve hinted at already, adopting a flexible mindset is key when negotiating with cash buyers if you want to seal the deal. Sure, you set the initial terms. But once an offer lands on the table, both parties will likely need to give a little to make it work.

    As long as buyer requests don’t drastically compromise your bottom line, at least hear them out. For example, you may be able to extend your preferred closing date by a week or commit to fresh paint on the walls without much sacrifice on your end.

    Pick your battles and weigh which terms are absolute must-haves versus nice-to-haves. 

    Leveraging Multiple Offers

    You’ve listed your home for sale, and suddenly your phone is blowing up with interested buyers. It’s like you’re the most popular kid in school, and everyone wants to be your friend. Congratulations, you’ve got multiple offers on the table!

    While you might feel inclined to accept the first cash offer that comes your way, we urge all sellers to tap into buyers’ sense of urgency instead. There’s immense power in invoking competition—nothing captures investors’ attention like rival bids they need to beat out.

    When marketing to cash buyers, always talk to more than one at once. Then hint an escalating offer could seal the deal sooner. Watch them scramble over 5-10k price increments trying to outbid each other all while your sale price creeps higher.

    Agree to Cover The Closing Costs

    A rookie mistake even seasoned sellers make is refusing to pay any share of the buyer’s closing costs, which include legal fees, taxes, and documentation charges tied to the property sale. While splitting these costs 50/50 is customary, smart negotiators often offer to cover the full 3% of the home price—yes, even for cash buyers!

    This small concession barely dents profits, especially after securing a nice purchase price. Yet it incentivizes investors who are cash-strapped post-purchase to pad other areas like your sale terms or price. Opting to foot the closing bill marks you as a motivated seller—plus, firming up this cost ahead helps guarantee the deal finalizes.

    For minor breathing room on their end, you can exchange a quick close and a higher sale price on yours!

    Be Willing to Compromise

    At the end of the day, selling your home is a two-way street. You and the buyer may have different goals and priorities, and that’s okay! The key is to find that sweet spot where everyone walks away feeling like they got a fair deal.

    Maybe the buyer agrees to your ideal close of escrow date if you foot all closing costs. Perhaps you settle for a sale price just shy of your max if fewer contingencies are tied to it.

    The key is to approach negotiations with a collaborative mindset. Instead of seeing the buyer as an adversary, think of them as a partner in this process.

    Selling to a Cash Buyer FAQs

    How soon can I expect an all-cash sale to close?

    The fastest we’ve ever seen with cash buyers is a next-day close! Typical ranges fall between 7-21 days though every situation differs. Leverage competing buyer bids to pressure rapid closing time frames in your favor.

    What typical selling costs can I expect with a cash buyer?

    The primary costs involve third party fees around property appraisal, legal documentation, recording, and any applicable state/local transfer taxes. These generally total 3-5% of the total sales price. Many cash buyers expect the seller to pay these closing costs so prepare for that concession!

    Should I let a cash buyer see inspection reports?

    Yes, always disclose any inspection reports in advance, even if selling as-is. Transparency around current property conditions allows buyers to assess if they want contingencies or repairs.

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