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Whether you sell to a cash buyer or choose a traditional home sale, it’s best to know your home’s value so you can evaluate offers wisely. Get a preliminary estimate of how much your home might be worth today with HomeLight’s Home Value Estimator.
Answer a few questions about the home you’d like to sell, and we’ll use local housing market data to give you a ballpark value estimate in less than two minutes. A top real estate agent can also be a helpful resource in making your decision.
How much do cash home buyers pay?
Various house-buying companies and investors will offer different amounts for a home. Depending on the condition, price point, and location, your house will be more desirable to certain cash buyers than others.
Most investors have a specific “buy box” they use with parameters as to which types of properties are most valuable to them. That means what your home is worth will vary, even among buyers who can pay instantly.
Flippers often use the 70% rule. According to this guideline, a flipper won’t pay more than 70% of the “after-repair value” (ARV) of a home, which accounts for deductions to make repairs and renovations.
iBuyers tend to pay closer to market value because they target newer homes in good condition. But they charge a service fee, about 5% of the sale price.
In addition, you’ll likely have to pay closing costs of between 1% and 2% for escrow fees, title fees, and transfer taxes. After you accept the iBuyer’s offer, the company then inspects the home and subtracts the estimated cost of repairs from the final price.
Buy-and-hold investors fall somewhere between flippers and iBuyers. They typically pay more than flippers but less than iBuyers and aim to make between 8% and 12% on their investment when they sell or 4% to 10% from rental income while they hold.
“The discounted price someone should expect for a cash sale varies significantly,” Van Soest says. “The cleaner the house, the better the neighborhood, and the fewer issues a house has, the more likely you’ll get an offer that’s closer to market value. The more problems the buyer has to deal with, the lower the offer will be.”
Are cash-for-homes companies legit?
The short answer is yes. There are many legitimate companies out there that purchase homes for cash, provide you with a great experience, and are good on their word. However, we always recommend that you do your due diligence on any buyer before you provide sensitive information or sign a contract.
“Check that the house-buying company has a good track record of homes purchased,” Holly advises. He suggests looking at properties that the firm bought and sold in your neighborhood and examining public records to review its transaction history.
In addition, request references from other home sellers who have sold to the investor or house-buying company. Call them to ask about their experiences.
Abdel cautions sellers to be wary of scams where house-buying companies promise a certain price but then hit you with hidden fees that substantially slash your profit. Other steps to help ensure a company is legitimate include:
- Check their Better Business Bureau (BBB) rating: No matter what type of house-buying company you decide to work with, make sure it’s an accredited BBB member. Check for positive reviews and timely responses to complaints. HomeLight, which provides a cash offer for homes through our Simple Sale platform, has been BBB accredited since 2019 and currently maintains an A+ rating.
- Ask for proof of funds and adequate earnest money: “Ask for proof of funds such as a bank letter to make sure they have the money in their account,” Holly advises. An official proof of funds (POF) from the buyer’s bank verifies that they have adequate liquid assets to cover the purchase price and closing costs and provide sufficient earnest money, the deposit that represents a buyer’s commitment to a sale.
Should I still use a real estate agent?
An established real estate agent will likely have the inside track on who’s who in the local cash-buyer market and can also help you avoid getting lowballed.
“A lot of agents that are experienced and have been in the business have a Rolodex of people [who] they’ve worked with over time [and] are investors,” Abdel says, commenting on how top agents can help find cash buyers by pitching properties to their networks.
“There are a lot of investors reaching out directly to homeowners to try and buy their property with cash,” notes Brian Breeckner, a top-selling real estate agent based in Columbus, Ohio, who has helped investors build their portfolios.
“To make sure a buyer is legitimate, or that they’re making a good offer based on the value of your home, you can always speak to an experienced local real estate agent and get their opinion,” he advises.
HomeLight can connect you to top-performing agents in your area who sell homes faster and for more money. We analyze more than 27 million transactions and thousands of reviews to determine which agents will best meet your needs.
Whether you’re seeking a quick cash sale or aiming to reach more buyers by listing your home on the market, you’ll receive your agent recommendations in just two minutes.
How long does it take for a cash buyer to close?
Getting over that final hurdle to close a traditional sale — making sure a buyer’s financing is in order — can be an ordeal. With the time to close a purchase loan averaging 42 days in today’s market, that’s about a month and a half of waiting.
Cash buyers, on the other hand, are a lot more agile. Typically, a company that buys homes for cash will show you proof of funds for the amount they’re willing to offer and can close in as little as a week to 10 days.
