The real estate market has seen a surge in companies offering cash for homes, promising quick sales without the hassle. But what's behind these offers? This comprehensive guide will uncover the truth and provide valuable insights, tips, and warnings for sellers.

How Cash Offers Work

  1. Share Property Details: Provide essential information to the cash buyer company.
  2. Review the Preliminary Offer: Usually 30% to 70% of the home’s fair market value.
  3. Home Inspection: 🚨New Jersey Home Inspectors will perform an inspection if you accept the initial offer. After adjusting repair expenses and holding costs, the cash house-buying company will send a final offer.
  4. Finalize the Deal: Accept the final offer and close on your timeline.

Pros of Selling to Cash Buyers

✅ Fast Cash Sale: Get an offer within 24-48 hours. ✅ Flexible Closing: No need to wait for mortgage pre-approvals. ✅ Often No Service Fees or Upfront Costs: Homes are often purchased as-is.

Cons of Selling to Cash Buyers

❌ Lowball Offers: Expect 50% to 70% of the home's fair market value. ❌ Non-Negotiable Deals: When dealing with “cash for houses” companies, the deal is usually take-it-or-leave-it. You can try to negotiate if the company overlooked something important, but most cash companies will not budge on price. ❌ Potential Closing Costs: Read the terms carefully.

Tips and Warnings for Sellers

The 70% ARV Rule

Cash buyers often use the 70% ARV rule, meaning they will rarely pay more than 70% of the property’s fair market value minus repair costs.

iBuyer Statistics

According to the National Association of Realtors, in 2022, only 1% of sellers sold to an iBuyer. Contracts typically closed in 30 days, with 5% terminated and 13% delayed.

Traditional Selling vs. Cash Offers