How Do I Sell My House For Cash In Washington?
If you need to get your house sold quickly in the Seattle area, or anywhere in the state of Washington, it may make sense to look to an all cash home buyer to make an offer on your home.
But beware, not all cash offers are the same, and some “We Buy Houses” real estate investors or investment companies can be unscrupulous. For the most part, you will not get top dollar when you sell your house to an investor for cash. But you will get paid quickly and have less risk of the transaction falling apart.
Before You Take The Cash Offer:
It may make sense to first consult with a real estate agent to determine the fair market value for your home, and then determine if you want to list your house on the open market to see if you can get a higher price.
Make sure you ask the realtor about things like the average Days on Market, and the “Comps” (“Comparative Market Analysis” or Comparable Sales) so you can see what other homes in your neighborhood are selling for, and what your home is likely to be worth.
a) You need to sell your house FAST
b) Your home needs a lot of repairs and might not appeal to individual buyers, couples or families who want to see home staging and shop around for a home in pristine condition
Then a quick cash offer may be the best option for you.
Getting a cash offer is a little bit like selling items at a pawn shop – You can get the property sold fast, but you might NOT achieve the maximum price and profit for your property sale. If you want MORE MONEY for your home, a cash offer is not always the best choice.
How Does A Cash Offer Work? The 5 Simple Steps
Typically, when you call an all-cash buyer to discuss receiving an all cash offer, they will talk to you on the phone a little bit and may ask you some questions about your property. Then they will assess the value of your property as-is, and in the future when it is repaired (if needed) and ready to sell on the open market.
After adding in their profit, or the amount of money they expect to make after doing the repairs, they will tell you the amount of the cash offer for your house. The buyer may be able to close in as little as one week, or he may plan to complete the home purchase more slowly, especially if he needs to complete inspections, have professional repair bids made, or come up with large sums of money to pay you for the house.
1) Cash Buyer Will Collect Information Over The Phone
Questions A Cash Buyer May Ask You About Your Property:
- How Much Do You Owe On the Property? (What is your mortgage balance?)
- How Long Have You Owned The Property?
- How Much Money Do You Want To Get From the Sale Of Your Property? (Or what is your asking price?)
- How Much Work Does The House Need? (It may need a lot of repairs and most “motivated sellers” may want to just sell the property as-is.). Sometimes people sell “ugly houses” that are in need of extensive repair.
- Are You Behind On Payments Or Approaching Foreclosure?
- When Would You Like To Vacate The Property, Get Your Money and Close The Transaction?
- What Is Your “Plan B” – If you don’t sell the house now, what will you do instead?
2) Cash Buyer Visits Your Home & Assesses Its Value
After you’ve convinced the home buyer on the phone that your house might be one he (or she!) is interested in buying for cash, usually he will come out to the property to take a look around.
Before he comes he might do some homework and research in advance to find out what homes are selling for in your area. This is important so the investor can determine how much money he can make and how much he can afford to offer you all-cash for the house in as-is condition.
While at your property, the investor will look around, and may bring a checklist to make notes of items that need repair. He needs to know what will have to be fixed before he can rent-out the property to a tenant, or sell it to an end-user. He will be working to make an estimate of all the repairs that are needed, because this will figure into his bottom line and the amount of money he can pay in an all-cash offer.
3) “We Buy Houses” Home Buyer Makes You A Cash Offer For Your Home
Once he’s sharpened his pencil and done some math, the investor will be able to figure out how much he can pay you for the home. He may be able to make you a cash offer there on the spot, or he may need to do some due diligence first before he can come up with a final number.
Most home buying investors will have their own contracts and paperwork and will not use the more “neutral” NWMLS paperwork. Whoever brings the contract usually has it drafted to favor THEM, so the home buyers’ contracts will probably lean in their favor. Take your time and don’t feel pressured to sign anything in a rush, or anything you don’t understand. Even if you are pressured, most likely the offer will still be around the next day if you need some time to decide what to do.
4) Under Contract And Ready To Sell Your Home
Once you have signed your Home Sale Agreement, you and the home buyer will both have some things to do. If you are living in the property, you will need to prepare to move out by the closing date. Sometimes the home buyer you are working with will give you some cash upfront, or offer to get you a truck or some movers to help you get your possessions out of the property. You also need a new apartment or another place to live! Remember, you’ll need to be out of the house by closing day – can you act that fast?
If the house is already vacant, you can just sit back and relax while you wait for your money.
5) Closing Your Cash Home Sale – Signing The Paperwork & Getting Paid Large Sums Of Money
In order to complete the all cash transaction, the buyer will probably still need to have the paperwork handled by an escrow company or closing agent, just like a traditional sale.
They may run a title report, find out if there are any extra liens on the property, figure out who is going to be responsible for the excise taxes, and prepare the deeds for signing in front of a notary.
Some home buyers may try to save money by handling the closing themselves – I have done this myself about 10 times. It is perfectly legal and it has always worked out fine. But I do think it is wise to get professionals involved as needed so you can have more confidence that the transaction is being handled correctly and everything is on the. up-and-up.
How Much Money Will A Cash Buyer Pay Me For My Home?
Now that you know how the selling process works when working with a cash buyer, the burning question in your mind is probably: “How Much Will They Pay For My House?”
Obviously, you want to get the most you can, and the buyer wants to pay as little as possible. Remember that the buyer needs to make a profit, and you may find the cash offer is lower than you had hoped.
Every buyer is different and home sellers get all kinds of different offers for their property. Remember that when he is working on your house, these are some of the things the buyer has to pay for:
- Interest On His “Hard Money Loan” To Get The Cash To Pay For Your Property – These mortgage rates can often be in excess of 10%, with several points (1% of Loan = 1 point) paid upfront.
- Monthly Utilities – He has to keep the heat, electricity and water on while remodeling and selling the property.
- Closing Costs To Escrow Company or Law Firm – These can be 2% of the price when he buys, and 2% (again!) when he sells.
- Excise Taxes – This is a sales tax Washington State requires on all home sales. It’s about 1-2% of the purchase price. This will need to be paid by you or the investor when buying and (again!) when selling.
- Real Estate Agent Commissions – Even if you are not using a realtor to sell your home and get a cash offer, chances are the seller will choose to a have a real estate broker market his home to get the best price. Imagine 6% for the commission rate here.Note: Looking at the numbers above, we’ve already incurred over 12% of the home price “JUST” in expenses, and the repairs haven’t been done and the profit hasn’t been made yet.
- Repairs – How much work does your home need to bring it into condition to be ready to rent or sell? The investor will have to budget for this. Labor has gotten very expensive and the supply chain has been slow to provide materials. This has lead to increased repair costs for many investors.
- Profit – Yes! The buyer has to make a profit! Sure he’s nice, but he’s not doing this out of the goodness of his heart, he has to make a living, too. Buying a house in Seattle is an expensive prospect, and as much as the want to help home sellers, your buyer has to be compensated for his time and risk.
The All Cash Offer Formula I Was Taught
Every buyer has his own formula, but one I have heard taught in various classes is to look at the “ARV” (After Repair Value). Subtract Repair Costs. Multiply by 70% to pay for expenses and cover profits. This is the Maximum Allowable Offer the cash buyer should make on your home.
Obviously not every buyer uses the same formula, but this should give you a good idea of what to expect.
Is It Always Important To Get The Most Money That You Can For The Property?
When you’re selling a house, most people want to get the most profit out of the property they can. But sometimes, when the home needs major repairs or the seller is in a difficult situation (facing divorce, death in the family, bankruptcy, medical bills, disability, or some kind of financial crisis) “maxing out” your profit is not the most important thing.
Sometimes you just want to get your problems taken care of so you can move on with your life.
How To Get More Money From The Sale Of Your Home
Rather than just simply working with a cash buyer, if you can get many buyers interested in your property and create a bidding war with different investors interested in purchasing your home, you should be able to get more money for it.
This is the type of thing that real estate agents are good at.
Even if you want to sell to an investor, a real estate agent can help you get the exposure you need to get dozens of buyers vying for your home, and ultimately bidding against each other to give you the best price possible.
As a real estate agent myself, as well as a cash home buyer, I am happy to present you with all your options, so you have control and choice and can choose amongst several options, to find the best offer for you.
Are Cash Buyers Honest?
Cash buyers are people, just like everyone else. Some are honest, and some are not. Anyone can copy and paste the logo from the “Better Business Bureau” on their website… this doesn’t necessarily mean they are an experienced or honest person.
At the end of the day, you have to trust your gut, and go with someone you feel you can trust to do right by you.
If you enter into a contract with them, most folks who buy houses will abide by the terms of the contract, so you should make sure you read your documents carefully and fully understand the selling process.
These are all questions you should ask yourself when you read the purchase agreement.
- Can the buyer back out of the deal?
- Who will pay for the closing costs?
- Has the buyer given you any cash upfront as earnest money? Is this refundable, or is it yours to keep?
- When and where will the closing take place?
- How was the cash sales price determined?
If you don’t understand what you’re signing, you can have a real estate friend or attorney review the paperwork with you. Sometimes a cash buyer will try to push you to take his offer right away because he doesn’t want you to “shop around” and see if you could get a higher price somewhere else. If you feel you want to compare prices, you can always solicit an all cash offer from multiple investors, or even talk to a real estate agent to find out the fair market price based on the local market.
Whatever you do, please be cautious. Often times people are tempted to sell all-cash because they are in a difficult situation. Real estate is generally a very valuable asset. Even if it is in poor condition, it can still be quite valuable. Don’t be rushed into something you’re not comfortable with. Consider asking a friend or spouse to join in your negotiations with the cash buyer, so you don’t end up feeling you were taken advantage of.
Is A Cash Sale The Best Route For You To Take In Selling Your House?
Closing Costs, Escrow Companies And How You’ll Get Paid
In a “standard” real estate transaction, completed with the help of a real estate attorney or escrow company, the buyer and the seller will usually split the closing costs, which should be 1-2% of the purchase price. These terms should be written into your contract with the home buyers, so if you don’t see it, be sure to ask.
A buyer would often have to pay for the closing costs as well as the Washington State required excise tax (about 1-2% of the home’s value), and any mortgage balance or liens against the property – all due at closing. So if you need to make sure you’re walking away with a certain amount of money in your pocket, try to clarify whether the buyer will be paying for these costs or you will!
The title company should prepare a document for you to review called a Settlement Statement. It’s typically delivered a few days in advance of closing. The settlement statement will show all the costs and how they will be broken out. That will be your chance to see who pays for what, but it may be TOO LATE TO NEGOTIATE if you have already signed a contract stipulating who will pay for what.
Frequently Asked Questions About How To Sell Your House For Cash
Let’s review some frequently asked questions – and their answers – so you can learn everything you need to know about working with a “We Buy Ugly Houses” type of cash investor.
How Does The “We Buy Houses Investor” Decide What To Pay For My Home?
Every investor has his own formula for determining what his cash offer will look like. Usually he will evaluate what price a local agent could sell the house for. Then he will subtract repairs needed, transaction costs and other fees, and his own profit. What’s left is what you may receive for the property.
Who Will Pay For The Closing Costs In The All Cash Sale Transaction?
In a “typical” transaction with a real estate agent, the default language in the contract says both the buyer and seller will split the closing costs. When you are working with a cash buyer and are un-represented by an agent… who knows what the contract may say! The buyer may try to get you to pay for all of it, or he could offer to pay it himself. Be sure to read the contract carefully and ask for help if you are confused.
When Will We Sign Closing Documents?
Closing documents are signed at the END of the sales process. This is when they give you the cash, and you sign over ownership, and hand them the keys. After you’ve signed the closing documents, you have no more right to the property, so make sure everything is going smoothly and your funds are secured in a neutral-third-party escrow account.
Depending on what you negotiate, closing could take place any time. Some buyers can close as fast as one week, and some make close in a more “standard” time period, like 20-30 days out.
Do We Need to Get A Mortgage Lender Involved?
The benefit of working with Cash Buyers is supposed to be that they don’t “need” a lender. However, many buyers do borrow some or all of their funds. Certain buyers do have funds available of their own – such as in their giant bank account or retirement fund.
Other buyers will borrow the money from a “hard money lender” who makes high-risk loans for high potential profits. (Kind of like a loan shark, but more legit… if the buyer doesn’t pay, he doesn’t get his kneecaps broken, but the lender might re-possess the house).
A Word Of Caution: Some so-called “cash buyers” do not really plan to close on your property at all. They might try to “flip” it, or “assign” the rights to buy it to another investor who they might not even have met before. They will try to control your property by getting it under contract, then advertise it and show it to potential buyers, much like a real estate agent would. But they might not be licensed as an agent, and not bound by an agent’s ethical constraints. Make sure you ask if the contract is “assignable” and whether the investor plans to flip the contract, or buy it himself. Remember, if the “cash buyer” is unsuccessful in finding another buyer to assign the contract to, he may fail to close and YOU will be left with the property and no cash in hand.
Can A Real Estate Agent Make An All Cash Offer?
Yes – Some real estate agents are investors. They might choose to represent YOU, if you hire them as your agent. Or they might represent themselves and be working as a principle in the transaction – in this case they would be working in their own best interest, not yours.
Realtors are held to a higher ethical standard. It’s fine if a real estate investor is also a licensed agent, but they SHOULD disclose this to you without your having to ask. Be clear on who they are there to serve (themselves or you). They should say something like, “Mr. and Mrs. Seller, I wanted to let you know that I am a licensed agent, but today I am not here as your agent, I am here as a buyer of your property!”
No matter what, a realtor should always deal with you with honesty and integrity, according to their professional code of ethics.
Does The Local Market Impact The Speed Or Price Of My Home Sale?
Yes – in hot markets, it will be easier to get your house sold whether to a cash investor or a regular home purchaser. The investor will feel confident he can get the house resold quickly and for a lot of money, so will be willing to compensate you more for the home.
On the flip side, if the market is slow and homes aren’t moving, the investor may be nervous he is taking on a lot of risk, and may be worried about over-paying for the property, or seeing it go down in value while he owns it.
By reading the news you will have an idea of the national average trends for home prices, but all real estate is local, so check in with a Seattle real estate agent for more accurate information.
When Should I List With A Real Estate Agent Instead Of Selling Through A Home Buyer?
Just like getting a “second opinion” from your doctor before embarking on a course of treatment, it can be a good idea to get a “second opinion” from a real estate agent about what your home will sell for in the open market before you decide to accept one of your all cash offers.
Since I, myself, am a real estate agent AND someone who buys investment property, I will tell you that the vast majority of people who start out thinking they want a cash offer for their home will end up preferring to list it on the open market and see if they can get multiple bids.
If the home needs a lot of work, realtors can price it low to attract multiple bids and you may find yourself in a multiple offers situation!
What If My Property Taxes Are In Arrears?
What Are Some Other Ways I Can Sell My Property?
Some investors have a variety of strategies for buying property, not just all cash offers. Here are a few other ideas.
1) Take Over Payments: They could take over your monthly payments while leaving your loan in place and give you a lump-sum payment for your equity. This is often structured as a “lease option,” “owner financing” or something called “subject to” the existing loan – it’s along the same lines as assuming your mortgage, but the debt would still be in your name.
2) Owner Financing: You could owner finance the property, and get payments for your equity over time. This is sometimes advantageous from a tax perspective – you pay less in income tax and you get a stream of monthly payments to augment your lifestyle.
3) Traditional Sale: You could sell the house to a traditional family who would get a mortgage and deliver you a cashier’s check at the end of 30 days’ time. Some families can also get a “rehab loan” and fix up the house by getting draws from the bank. You would still get all your money at closing, but it might take 30-60 days for the bank to close the loan.
4) For Sale By Owner: You could advertise your house on Craigslist, Facebook Marketplace or other sites to try to market for your own end-user.
5) Repair and Sell The House: If you want to pocket that profit the investor would likely make from fixing up your house you could do the repairs yourself and sell the house in better condition. If this is something you’re interested in, I have a program that will allow you to finance all the repairs, so you pay nothing upfront and the contractor is only paid AFTER the home is sold. This can be extremely profitable, and we will do the project management for you so it is a hands-off proposition.
Can I Get Multiple Offers On My Home?
Sometimes – if you can get more than one person interested in buying your house, you will be able to encourage a bidding process and see what the MOST you can sell your home for is. As long as you have not signed a sales contract with anyone, you can collect more bids from other buyers and see who can do the best for you. This is why it’s great to work with a real estate agent because they specialize in creating these types of scenarios in a safe, efficient, and legal manner.
When evaluating the offers, you may be tempted to see “how much they will give you.” Remember price is only one factor, though. Consider the other terms like whether you’re getting any earnest money upfront, how quickly they can close, and if the person you signed the contract with is really going to buy the property, or if he plans to assign the contract to someone else in a flip.
More Questions…? Write Yours In The Comments Box Below or send us a private message.
Who Handles The Closing Documents?
Should I Request Proof Of Funds? Is The Buyer Pre Approved With A Lender?
Is Selling Your House For Cash A Good Idea?
What happens when you sell your house to a cash buyer?
Are property cash buyers any good?
What is the most profitable way to sell my house?
Is cash offer on a house better?
How much less should you offer on a house when paying cash?
What does it mean to make a cash offer on a house?
How do you offer a cash offer on a house?
When you sell a house do you get all the money at once?
When you sell a house How fast do you get the money?
What do I do with a large amount of money from selling my house?
How do you handle a cash sale on a house?
Why is a cash offer better for seller?
What does a cash sale mean in real estate?