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Selling a home can be intimidating, especially if you’re unfamiliar with the home selling process. People are naturally worried that they’ll get taken advantage of, which can sometimes make them leery of working with a cash home buyer in Florida.
Often, home sellers find that it’s less intimidating to go through traditional channels like real estate agents. However, a legitimate cash buyer is nothing to be afraid of. The key is understanding what a cash home buyer is and then making sure you protect yourself throughout the process.
You don’t have to be afraid of a cash home sale!
The traditional real estate process
Let’s start out by laying out the traditional real estate process.
Usually, a home buyer goes to a bank or a mortgage company to get pre-approved for a loan. The reason is that they don’t have the money to actually buy the house, but rather they have worked hard on their credit and saved a deposit. The bank will actually give the existing owner most of the money for the house, and the borrower will agree to pay it back over a number of years.
A win for the bank
In order for the bank to do all of this, they have to believe that the new owner is going to pay everything back. With a house in Florida, the bank can be fairly certain that they’ll get their money back, whether it’s through payments or by taking back the property through foreclosure if the borrower can’t pay. It’s a win-win for the bank.
To make sure that the house is worth the amount of money they’re going to loan to the potential homeowner, the bank requires the property to have an inspection and an appraisal. These not only cost money in addition to closing costs, but they also slow down the home sale. However, they do provide a safeguard for the bank in case there should be some kind of damage to the home that would reduce its value.
A win for the homeowner
For the new homeowner, they can afford the purchase price without having to have the cash on hand. This lets them get into a home and enjoy living there while they pay along the way. Its a winning situation for lots of homeowners, as they can then build equity in the home by making payments. Though the loan costs money, appreciation on the property covers the loan costs, in theory at least.
What is a cash home investor?
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Cash home buyers and buy houses companies buy houses by circumventing the traditional mortgage process. They don’t work with banks to back their real estate transactions.
When we say cash, that’s actually what we mean – they have enough cash in the bank to cover the entire price of the house in Florida. That money is sitting in an account somewhere, so no, you won’t get a suitcase full of neatly bundled bills at the closing. In fact, it’s against the law in the United States, Florida included, to complete a real estate transaction with physical bills. A cash home sale is still done with banks.
Where does the cash in a cash home sale come from?
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It’s absolutely shady and scary to think about doing business with someone who is using cash in a duffel bag to buy your house. That kind of scenario invokes visions of Palm Beach drug dealers or Miami crime lords doing business in an abandoned warehouse. Though you might want to avoid foreclosure, you want to do it legally.
Cash home buyers who offer fair prices without realtor commissions can do this because they are running a business. In fact, the best cash home buyers are registered with the Better Business Bureau and have a strong reputation. They can buy houses in Florida with cash because they’ve worked with investors or have raised their own capital as a part of a business model.
Often, these kinds of real estate investors started off buying property in a more traditional way. It takes a while to build up the kind of capital required to buy houses in Florida for cash, though some cash investors started off with an inheritance or the sale of another business.
After that first cash home buy, investors have the capital to do it again and again.
The business of cash home buyers
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Make no mistake – cash home buyers are able to make this a fast and easy process because they are running a business. Where an individual buyer might want to buy a home to make money, they have an emotional motivation for you to sell your house in Florida to them.
Home investors buy houses with cash because they can offer a faster turnaround on the property, in addition to other benefits. There are no realtor fees with cash offers and the smooth transaction means the company makes more money.
In Florida, a cash buyer might take a distressed property and fix it up, then sell it for a higher price. They might also sell the house as-is to another investor or to a traditional home buyer who wants to move in and create a childhood home for their family.
How Florida homeowners benefit from cash buyers
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Working with a cash buyer in Sunny Isles Beach or South Florida means you avoid paying fees and that you get a hassle free sale. There are no bank hurdles to overcome and fewer concerns about whether a sale will fall through at the last minute.
For someone who is in a time sensitive situation, working with an investor who will buy houses for cash might be the perfect solution. This is especially true for situations like:
- homeowners in danger of foreclosure
- inherited property
- vacant house
- distressed property/hoarder homes
- divorce or other life changes
- selling a rental property
- fast relocation needs
In all of these scenarios, the timeline of a traditional home sale might be too long. If a homeowner in Fort Lauderdale or Tampa needs to sell fast, they can benefit from working with a cash buyer to get their home sale done quickly.
The fear of getting too little
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Selling your house for a fair market value in Florida is certainly important. Often, homeowners are concerned that they won’t get a fair price by accepting buyers’ offers for cash.
It’s important to keep in mind here that closing costs are significant in a traditional home sale. Closing will cost as much as eight to ten percent of the home’s sale price when working with a real estate agent. Homeowners in Florida pay that right off the top of any profit that they make on the home.
It’s not uncommon for people to find out near the end of the deal that the homeowner pays closing costs in a traditional real estate transaction. On top of that, when you sell quickly you save on the mortgage interest or potential foreclosure fees if you have a delinquent mortgage.
A cash offer will almost certainly be lower than the offer on a Florida house through the usual process, but when you add in repair value, savings from the speed of the transaction with a buy houses company, and the savings on real estate commission and closing costs, a cash sale is more aligned with fair market value than many people realize.
Is cash a low risk option for selling a home in Florida?
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When a real estate investor makes a no obligation cash offer for a house, it should come with no strings. A fair cash offer will likely be less than the price a real estate agent can get after weeks or months on the market, but given the fast closing date and the lower amount of closing costs, it becomes less of an inequity.
While the cash offer from a house company won’t come with a suitcase full of cash, it absolutely should come with a proof of funds letter from the seller’s bank. Think of this as the part in the movie when the person steps forward and opens the case to show the stacks of bills to prove that it’s real. In this case, it’s not stacks of benjamins but a guarantee from the bank that the money is real.
Working with a cash homebuyer or investor is a low risk option for selling in Florida fast. Closing will still happen with the help of a real estate attorney, and homeowners should always consult with an attorney before signing any paperwork on a home.
With any transaction, it’s important to look out for red flags and to make sure that your fair cash offer is coming from someone reputable.
Less likely to fall through
A cash home sale is actually less likely to fall through than a traditional home sale. Often, home sales fail at the last minute because the buyer isn’t able to get the mortgage company to sign on. That might be because of needed repairs that come up during the inspection or some life circumstance change. The mortgage process is anything but hassle free.
This isn’t the case with cash offers, where you sell your house in Florida fast and the home investor uses their own cash to fund the deal.
Not only does a cash deal make it possible to sell your house in Florida quickly, it also moves that closing date up sooner. After the initial cash offer, closing can happen in as little as seven days and usually no more than a few weeks with buy houses companies.
Steps to make sure you’re getting the best cash deal for your house
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Taking charge of the selling process is part of what makes a Florida cash home sale so appealing, and taking control means exercising autonomy. Here are some steps you can take to exercise the autonomy you want when navigating a sale to Florida cash home buyers.
1 – Consider as-is vs making repairs
Though real estate investors will often buy a house as-is, making necessary repairs will always increase the price you can get for a home. Depending on your timeline, a long repair process might not be worth the return you’d get on the property. In this case, you might consider lowering the price you expect to get for the home in order to sell fast as-is.
2 – Find trusted cash home buyers
Selling a Florida property to a cash investor involves researching who you’re selling to so that you know you’re working with a buy houses company that will create you well. Look online for reviews, check with the Better Business Bureau, and make sure that you watch out for red flags for real estate scams.
A buy house company should have an online presence with reviews and also be able to offer referrals. Look for companies that have registered with the BBB, as these buy houses companies will have third party accountability.
3 – Verify the cash in the bank
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Working with a buy houses company or a real estate investor who is ready to buy houses for cash as-is means trusting that they’ll come to closing with the money agreed on. You shouldn’t just trust the company with this kind of transaction though, you have to verify that it exists.
Always make sure that Florida cash home buyers provide a proof of funds document that shows that they have the money in the bank to pay for the transaction. Home sellers can even verify that information further with a phone call to the bank. There’s no need to blindly assume that the person you’re working with is being honest, and it’s worth the peace of mind.
4 – Get a contract before you commit
Don’t have faith in anything without a written contract. In the state of Florida, a home sale isn’t complete until the closing table – up until that point, the deal can fall through. Though who pays closing costs is negotiable and closing costs are lower with a Florida cash sale, nevertheless there is still going to be a closing with any real estate transaction.
At the closing date, the contract is final. Everything in the contract should reflect what you and the cash home buyers have talked about, without exception. It’s always a good idea to have a real estate attorney look over the cash offer, and always make sure that you work with a Florida cash investor who is willing to have someone else look over the paperwork.
Never sign anything without consulting a third party.
5 – Know what you home is worth
Even if you are selling your house quickly, don’t go into it without knowing what your Florida home is worth. Whether you’re in Palm Beach or Jacksonville, have someone evaluate your home if you feel like you can’t adequately evaluate it yourself.
If your house has title problems or has liens against it, it’s possible that a cash home investor will offer you less than you expected or even less than the home is valued. This is because they’ll have to cover the cost to get those issues taken care of. Those fees will come out of the Florida cash home buyer’s profit, so it has to come out of the sale price.
Knowing what your Florida home is worth means knowing all of the things that can bring the cost down. This will help you to get a realistic price for you house while also giving you the confidence to negotiate for a higher one if you deal with an investor who doesn’t want to give you the price you deserve for your Florida property.
6 – Be honest with the buyer
Finally, it’s so important that you are honest with buy houses companies and Florida cash home buyers. In fact, Florida law requires that you disclose any problems with the property that you are aware of.
For example, if there’s a termite problem with the home that you know about and you don’t disclose it during the sales process, that’s a violation of Florida law. However, if there’s a termite problem that you don’t know about because it’s under the house where it’s not visible or in the attic where you can’t see it, then you aren’t liable if you didn’t know it was there.
Sometimes, a cash buyer will forego the inspection or the appraisal of the home to get the sales process to go faster. Expect this to lower the price, but always be honest.
The worst case scenario if there is something seriously wrong with the house that you know about is that the buyer can come back and sue you. That’s something that no one wants to deal with!
Working with a cash buyer can be rewarding
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When you want to sell your Florida house, looking outside the box to innovative real estate methods can make all the difference in getting you the best deal.
Buying houses doesn’t have to be scary. In fact, working with a cash investor to sell your house fast can get your a fair price while also getting your house quickly sold. All the paperwork and closing elements for someone to buy property in Florida can be taken care of quickly with a cash sale.
Florida cash home buyers aren’t scary! In fact, the might be the best bet for you to get your home sold and for you to move on with your next life steps.