How to Determine a Fair Cash Offer for your Home
How to Determine a Fair Cash Offer for Your Home
When planning to sell your home, there are different options you can consider. You can sell your house through an agent or sell the house as the owner to an investor or any other interested party for cash. Selling the house through an agent can be expensive as you have to pay agent fees, which lowers the revenue you would get after the sale.
Selling your house as the owner has many benefits. It gives you complete control over the entire process. Eliminating agents or brokers can also allow you to get more money from the sale. Additionally, you can devote full attention to the sale, ensuring the house is sold quickly at a better price. When you sell your own house, you better sell it for cash.
What Does Selling House for Cash Mean?
Selling a house for cash means that you (owner) sell your house to interested buyers. The buyers offer cash offers which you can accept, reject or negotiate. The offers you get will depend on your house’s location, the house’s condition, and the cost of remodelling or renovation. If the house is in a prime area, the house will attract high cash offers from interested buyers. If the house is in poor condition and requires more money to renovate, the house will likely attract very low cash offers.
What is a Cash Offer?
A cash offer is an all-cash bid, meaning a homebuyer wants to purchase the property without a mortgage loan or other financing. These offers are often more attractive to sellers, as they mean no buyer financing fall-through risk and, usually, a faster closing time. (1)
When selling your house for cash, you will get cash offers from interested homebuyers. A cash offer is an all-cash bid, meaning the interested homebuyers want to buy the house without a mortgage loan or other financing. Note that these cash offers are more attractive to sellers because they mean no buyer financing fall-through risk and, usually, a faster closing time.
So when selling a house, you should get many cash offers from interested homebuyers. You can sell to the one offering a fair price, but you have room to negotiate for a better price. This will ensure you get better revenue for the home, regardless of its location and condition.
Factors That Determiner Cash Offer
Many factors will affect the cash offers you get for your home. Here are some factors:
- Location of your house – If your house is located in a healthy economic place, expect the house to get better prices. Additionally, if the house is located in a prime, secure location with schools, hospitals, and other amenities, expect the house to attract the best offers. We buy houses in Hernando County and other areas, so we know the location of a house is very important in determining the cash offer.
- Condition of the house – The actual state of the house will also determine the value of the home and cash offers you will get from buyers. A well-maintained house will attract many buyers, and they will be willing to offer better cash offers. On the other hand, a house with damaged flooring, old-fashioned cabinets, leaking pipes, and overall poor condition will get very low cash offers. Why? Because the buyer will spend more money and time renovating the house. And because we buy houses Pasco and renovate them before listing them, we know it can be costly to renovate some houses.
- Size of the house – Typically, a three-bedroom house will be more expensive than a two-bedroom house. This happens if the two houses are located in the same locality and are in the same condition. So expect your three-bedroom house to get higher cash offers than your neighbour’s two-bedroom house.
Determining a Fair Cash Offer
There are different methods of determining a fair cash offer. This method will help you do your calculations and sell your house at a fair price. Here is a commonly used way:
The 70% Rule
Selling your property for cash is the easiest way to turn your investment property into cash. However, you need to know that selling your house for cash means you will not get the maximum market value for the property. A buyer will buy the house as it is and use their money to repair and improve it so they can get a new buyer quickly. If the buyer wants to live in the house, they must also repair it using their finances.
So in the 70% rule, you will calculate the cash offer by multiplying the estimated sale price of the house by 70% and subtracting rehab or repair costs.
Estimated Sales Price X 70% – Rehab or Repair Costs = Maximum Cash Offer
Typically, the buyer or investor will hold at least 30% of the cost, which will go to insurance, holding costs, and other related expenses. So, in the end, they will typically make a profit of around 9-15% after renovations and handling all other expenses.
Let’s do an example to understand this better. If your house requires $50,000 in rehab to sell for $200,000, the maximum fair cash offer would be:
200,000 X 70% – 50,000 = $90,000
You wound end up getting a $90,000 cash offer for your house. This may seem unfair, but remember, the buyer will spend more than $50,000 in rehab and other expenses.
The Secret to Getting Better Cash Offers for Your House
The main thing you can do to ensure the house gets better cash offers is to repair and remodel it. You should invest some money to fix damaged equipment, flooring, and cabinets, replacing damaged fixtures and other home structures. Repainting the house can also go a long way in increasing the value of your house. Once you remodel the house and ensure it is perfect, you can look for cash buyers.
Remodelling and improvements can also make the house sell quickly, leading to faster closing times. Typically, a well-designed house will attract many buyers, increasing the chances of the house finding a buyer soon. You will get fair cash offers, and it will be upon you to choose which one to accept.
If you want to sell your house for cash quickly, Home Options got you covered. We buy houses in Hernando County, Pasco, and other areas. Contact us today, and we will be happy to do business with you.