Not so long ago, it was easy to get out of a financial jam by selling your home. Houses in any condition were flying off the market within days of being listed.
Now, with most homes in California remaining unsold for 43 days or more, buyers are turning their noses up at homes needing repair.
Where does that leave you if you want to sell your home as-is? Are you wondering if selling your home to an investor is a good option for you but need to figure out how it works?
Keep reading to discover what happens the week before closing on a house during a cash sale.
How Do Cash Home Sales Work?
Most people think of cash home sales in terms of investment companies that buy your home to resell it or rent it out.
However, individual investors dominate this market. Over 25% of homes have sold for cash so far in 2023, and individual buyers made up 18% of that total. For most sellers, it’s a lot easier to approach a cash home-buying company than to wait for an individual investor to come to them.
A cash homebuyer doesn’t require a home loan as they have money available in a savings account or a trust, and the seller benefits from this in several ways.
When a home buyer needs to apply for a loan, they must wait to receive mortgage approval from their bank. This process involves several time-consuming steps.
A mortgage lender always insists on a property valuation when determining the value of a home loan. They will also require a home inspection to protect their client and investment.
Once an inspector concludes their assessment, the seller must make any necessary repairs so that the buyer can get the mortgage they need.
Since an investor isn’t using a traditional mortgage, a cash sale can close in three to ten days. Additionally, homeowners don’t have to worry about the expense of closing costs that could reduce their proceeds from the sale of the home. Cash buyers will typically cover all the closing costs associated with the transaction.
What Happens the Week Before Closing on a House?
In the case of a traditional sale, very little happens in the week before closing on the deal, but with a cash sale, everything can happen in those seven days. Here’s a day-by-day account of the process:
Day One: Accept the Offer
The first step when buying a house is always a mutual agreement on a price. With a cash sale, once the seller has accepted the buyer’s offer, they should take steps to verify that the buyer has the available funds.
Most buyers will provide proof of funds when they make their offer or at the seller’s request. This is a simple matter of calling their bank for a letter or statement of verification.
If you’re selling to a reputable cash home-buying company, they will usually provide you with a firm offer once they’ve carried out a routine walkthrough of your house.
These kinds of cash home buyers most often estimate the cost of repairs before submitting their final value. They will deduct this from the after-repair value of your home to arrive at a fair price.
When you sell your home to a reputable company, you know they have the funds available.
Day Two: Secure an Earnest Money Deposit
When you sell your home to a cash-for-houses company, you can investigate their credibility using online reviews. If you’re selling to a private individual, it’s best to request an earnest money deposit to secure the deal.
This could be a percentage of the sales price or a mutually agreed-upon amount.
In most cases, it will take at least one day for the earnest money deposit to reflect in the escrow company’s bank account.
Day Three to Six: Title Search
Even with a cash deal, the buyer must verify whether there are no encumbrances to the home sale. These may include liens or competing heirs in the case of an inherited property.
A title search looks into the home’s history to check for these issues and make sure they don’t cause any legal or financial problems later on.
This part of the process can take three days or more to finalize.
Closing Day
With a cash sale, you skip the lengthy inspections, valuations, repairs, and final walkthroughs involved in traditional sales. As soon as the property’s title is cleared, you can proceed straight to the closing table.
With no mortgage paperwork to complete and no closing costs to finalize, the closing process shouldn’t take more than two hours.
As soon as you’ve signed the sales agreement, you’ll receive the money for your home, and you can hand over the keys to the new owner.
Why Can Cash Homebuyers Act so Fast?
Apart from mortgage approvals, home inspections, and repairs, several things can slow the process with conventional home sales and some cash sales. These are:
No Seller's Disclosure
If you’re selling your home as-is, it’s important to be upfront with your buyer. If they discover additional issues after the fact, they’ll need to revise their offer.
Rather, explain any issues at the outset if you want to expedite the sale.
Option Periods
Lengthy option periods give the buyer more opportunity to back out of the sale. Cash home-buying companies usually proceed with the sale immediately, without any option period.
Low Appraisals
Some cash buyers may request an appraisal to put their minds at ease. If the appraisal value is less than the sales price, they may want to negotiate a better price.
This can lead to a crashed sale unless you’re willing to negotiate and could result in the seller losing the earnest money deposit, too.
An Inherited Property
If the title deed has a deceased person’s name on it, the buyer may require additional verification.
The type of mortgage involved in the home may also impact the speed of the sale. In most cases, a cash homebuyer knows how to work with these issues to ensure a speedy sale.
Sell Your House Quickly and Easily
Choose Premier Property Buyers to experience the joys of an efficient home sale if you’re selling a distressed property, run-down home, or unwanted inherited house.
When you work with us, you’ll discover that what happens the week before closing on a house always works in your favor. Thanks to our years of experience in the realm of cash home sales, we can navigate any home sale complexities with ease.
Get in touch if you want to sell your Southern California home as quickly as possible.
