Selling your home for cash can be a great way to avoid expensive underwriting and quickly sell your home without the risk of the sale falling through. However, as with any financial decision, there are pitfalls to be aware of.

Not Evaluating Your Fair Market Value (FMV)

Fair market value (FMV) is the price a home is estimated to sell for in an open market. Before selling your home, evaluate the worth of your home to avoid lowball offers or the reverse, asking for too much. Evaluating your fair market value can be done through a few avenues:

• Appraisals – The costliest but most accurate method. It requires hiring a professional appraiser and done when selling a home through a lender. Note: This is usually required in the traditional home-buying market, but not for cash sales.
• Comparative Market Analysis (CMA) – A balance between cost and accuracy. This is an analysis of similar homes in your area and their sell value. This can be done by hiring a professional.
• Online Estimates – Free, but not the most accurate. Online sites such as Zillow and Realtor.com can offer a quick estimate for your home. Looking at similar estimates in your area, their sell history, and sell rate, can help you grasp your home’s estimated value by yourself.

Taking Lowball Offers

Regarding lowball offers, selling for cash will restrict the number of buyers competing for your home, so a lower offer than the FMV estimate is not necessarily out of the ordinary. It is important to note that there is no one rule for what you should expect from a cash sale in any given market. For instance:

• High vs. Low Demand Areas – Expect higher or lower cash offers depending on the particular area your home is located in. Pristine waterfront property can sometimes sell for higher than the FMV. Homes in more rural locations or abandoned neighborhoods are likely to receive much lower cash offers than expected.
• Damaged vs. Well-Maintained Homes – Well-maintained homes will require less work for the buyer, which can get you closer to the FMV of your home. Conversely, damaged property in need of many repairs will dissuade many cash buyers.

For average homes, however, you should be skeptical of any offer that is significantly less than the FMV of your home.

Asking for Too Much

One of the main benefits of selling your home for cash is that you can avoid many of the headaches of the traditional home-buying market, such as prepping your home, hiring a real estate agent, marketing and showing the house, and so much more. Yet in that market, if you are asking for too much for your home, you will end up finding yourself waiting for buyers for quite a while, unable to move. In this case, selling through a cash home-buying company would have been a better choice to maximize your time and money.

However, if you are selling your home for cash unless you are in a particularly exceptional situation, you should rarely expect to receive the full FMV of your home.

Selling to an Unscrupulous Buyer

When selling your home for cash, you should take the time to research the buyer making your offer. Less reputable and established buyers carry a degree of risk with them. At worst, they could write a contract that leaves you worse off, use shady social manipulation to convince you your house is worth less than it is or try to pressure you into accepting a lowball offer.

Before selling your home, you should take the time to research the buyer. If this is a company, it can be as simple as a quick Google search to confirm the existence of the business. Google reviews can also show a glimpse of what others have experienced when working with the company. Keen sellers should also review how long the company has existed. New companies are often riskier and have had less time in the market than ones that have been around for decades.

For individual buyers such as house flippers, this research process may be more time-consuming. It can be best to search through their social media, but this is not always enlightening. Unfortunately, house flippers can be especially difficult to vet.

Navigating these pitfalls can be particularly intimidating, as it’s not often that you will find yourself selling a home. Thankfully, a great place to start is WCC Properties. We have been purchasing homes in Northeast Indiana for the past 17 years and will offer the best cash offer price for your home within 24 hours of viewing your home and close within 48 hours. We are here to help you sell your home more easily without the extra steps of a realtor or extravagant closing costs.