Selling Your House for Cash? Look Out for These 5 Red Flags

Selling your home for cash should be pretty straightforward, right? An all-cash offer from a real estate investor can be a great option, especially if your house needs repairs but you lack the time or money to do it yourself. 

However, trouble could be on the horizon if you are not careful. Be on the lookout for these red flags disguised as attractive options:

  • Non-contingent offers
  • Low deposit amounts
  • Unusually high offers
  • Extensive inspection periods
  • Out-of-area buyers

When you understand why investors include these terms in their offers and know how to respond, you will be much more prepared to see the warning signs and negotiate like a pro.

Red Flag #1 – Non-contingent offers

In real estate lingo, contingencies are stipulations in the purchase agreement necessary to finalize the sale. Typically, buyers determine contingencies in the agreement, but sellers can add them into the contract, as well.

Especially if you are trying to sell your house fast, this kind of offer might sound great. However, you can not always be so sure! Sometimes, all-cash buyers making non-contingent offers have something up their sleeves.

Investors may claim they do not need options like an inspection period, the particular amount of time in which the buyer can walk through the property and perform inspections. However, they may be waiving this option to make their proposal appear stronger than others with reasonable contingencies.

After you accept their offer, investors have 72 hours to walk through your property and perform inspections.

If they find something they dislike, they have the opportunity to cancel their offer or try to re-negotiate for a price reduction. Meanwhile, you have wasted time and energy pursuing this non-contingent proposal and possibly missed out on better potential buyers.

Avoid this situation by having the investor submit a non-refundable deposit into escrow within 24 hours of your acceptance of the contract.

Speaking of deposits…

Red Flag #2 – Low deposit amounts

In real estate transactions, the buyer’s deposit is evidence of their commitment to closing the deal. However, it can also be a sign of something more devious. If an investor only offers a few hundred dollars as a deposit, consider it a huge red flag.

Rock-bottom deposits mean the buyer lacks capital or commitment (or both!), so do not let this kind of offer distract you from other, more promising propositions. 

Red Flag #3 – Unusually high offers

Low deposit amounts should raise your concern, but abnormally high offers could also be warning signs.

Fixer-uppers can generate lots of interest from real estate investors. If you receive several offers, keep an eye out for those that are substantially higher than average.

Investors placing unusually high offers are typically paying to tie up the property. During the contingency period, they will probably attempt to arrange a price reduction.

Here is what you need to know when a particularly pricey proposal is on the table:

Real estate investors all have access to the same database, which means they should come up with similar numbers and estimates. If an investor is making an abnormally lofty offer, it is probably too good to be true. 

Red Flag #4 – Extensive inspection periods

Inspection periods can last anywhere from 24 hours to 30 days, and both parties must agree to the time frame at the start of the transaction.

Generally, inspection periods with cash buyers should be substantially shorter than the 17 days a conventional buyer would request. In fact, for the typical fixer-upper, four to five days is plenty of time for investors to walk the property and have professionals conduct the proper observations. 

Proceed with caution when an all-cash buyer requests a long inspection period because they could be trying to monopolize the property to their advantage. 

Red Flag #5 – Out-of-area buyers

Think twice before accepting a cash offer from an out-of-town buyer. 

While local investors typically have a good handle on the community’s real estate market, other buyers probably are not as familiar with the area. 

Since they are not as established in the local market, these investors will most likely have to do more research during the contingency period to double-check their pricing. This means they are more likely to re-work their offer in escrow, leading to price negotiations.

When you sell your home with Simply, our local experts will save you time and money in the long run, since they have a better grasp on the local market than someone who is not as well-versed with the area.

Choose Simply and sell with confidence

When considering an all-cash offer, dealing with individuals and companies who are less-than-transparent about how they operate can be difficult.

However, there is a better way to sell your home for cash. At Simply, we buy as-is, off-market properties, ensuring the entire process is easy and straightforward.

We guarantee the highest offer possible! Just enter your address and we will let you know if we are interested in your home, no red flags.

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