Selling a house for cash can be quite tempting.
No mortgage lender involved.
No mandatory appraisal.
And a shorter time to close the sale.
But cash isn’t always king when selling a home.
Here’s why…
Homebuyers who do not need to obtain financing to purchase a property have leverage.
And they know how to use this against you.
This is why many homeowners who are enticed by a cash offer end up selling for much lower than market value.
Or why they encounter unforeseen setbacks throughout the process of selling a house for cash.
How can you prevent this?
You need to know what cash buyers don’t want you to know.
In other words, use their leverage against them –– so that you know how to sell a home for cash if that’s what you opt to do.
That’s what we’re going to explore.
Here are seven critical tips you need to know about selling a house for cash.
1. Understand the cash buyer pool
Understanding your potential buyers is always important when selling your house.
But it’s especially important when considering an all-cash offer.
Why?
Because stepping into the shoes of a non-financed buyer tips you off about the other party’s motivation in a real estate transaction.
And knowing a potential buyer’s motivation can give you an advantage when negotiating.
So, who are these cash buyers?
House flippers: A cash buyer who flips properties can be a local real estate investor or a company such as We Buy Ugly Houses. Both look for a good deal on fixer-uppers where they can invest capital for a good return in a short period of time. This is why they typically only buy houses that need repairs or renovation.
Buy-and-hold investors: These real estate investors purchase properties to hold them for a long period, typically to generate rental income. They benefit from both the steady cash flow and potential property appreciation.
Real estate wholesalers: Wholesalers put a property under contract and then sell the buying rights to another real estate investor without ever actually owning the property. This is typically done very quickly, with little to no money down. These cash homebuyers must secure an appealing deal to ensure quick interest from other investors.
Traditional homebuyers: These buyers are “traditional” in the sense that they are purchasing a home as a primary residence for them or someone else. But buying a house for cash is anything but conventional. They’ve been savvy with money — and they know that gives them a leg up.
Do you know what these cash buyers have in common?
They all want to use their cash offer to avoid competition from other potential buyers.
The problem?
Competition is exactly what you want when you sell your house.
Because having competing offers increases the chances of selling for fair market value.
This means you and the cash buyer have very different motives.
But that doesn’t mean selling a house for cash can’t work for you.
You just need to be aware of your buyer’s motivation so you can use it to your advantage.
Especially if you’re selling your house to an investor.
2. Calculate the true cost of selling for cash
Many sellers are attracted to cash offers due to the appeal of a quick sale and potential cost savings.
Cash buyers are well aware of this.
This is why you see those TV and radio ads that say something like…
“Sell your house as-is for cash — without paying a real estate commission!”
These buyers offer to purchase a home with cash to acquire it off-market (not putting the listing on the MLS).
They typically target properties in need of updates or homeowners who must sell quickly due to urgent circumstances.
Which is why they use “as-is” and “no closing costs” as part of their pitch.
This is how many sellers get lured into deals that result in substantial equity loss in their homes.
They focus solely on their own benefits, not those of the cash buyers.
Sure, selling a home as-is for cash can be beneficial.
But you need to do some math to be sure you’re not getting taken advantage of.
Comparative breakdown: selling for cash off-market vs. selling on-market
Say you get a $500,000 cash offer for your home as-is — with no closing costs or commissions.
You paid $350,000 for the property, so that represents a $150,000 profit.
Sounds pretty good, doesn’t it?
Let’s compare it to what you could make by listing your home on the market.
An off-market cash buyer who targets properties in as-is condition is typically going to offer at least 20% below market value (sometimes lower).
So let’s assume you’d get $600,000 selling a house as-is from a traditional buyer with financing.
You’d have a few sale-related expenses deducted from your proceeds at closing (note that these vary by market):
- Real estate agent commissions (5%): $30,000
- Closing costs (~1%): $6,000
- Carrying costs for extra time on the market (~60 days): Two months of mortgage, property taxes, and insurance — roughly $6,000.
That leaves your net proceeds at $558,000 — almost 12% more than you’d have made by selling your home to the cash buyer.
Now, is that 12% worth the extra time and hassle?
Only you can answer that question.
What’s important is that you don’t accept an offer from a cash buyer prematurely.
You need to make sure you have the right information to accurately assess your options.
Which comes down to understanding what your home is worth.
3. Verify your home’s value before selling
You never want to enter the process blind when selling your house for cash.
A big part of avoiding that is knowing the true value of your home.
I’m not talking about what a real estate investor or an online estimate says your house is worth.
I’m talking about the potential price you could get if you put your home on the market (no matter the condition).
Because here’s the thing…
Selling a home for cash without knowing its value is like playing poker without seeing your hand.
You risk making a mistake that could be much costlier than you think.
To prevent this, you need to obtain an estimate of your home’s potential open market value so you can compare it with an all-cash offer.
There are two ways you can do that.
Order an appraisal
An appraisal is a formal process that yields an appraiser’s opinion on your home’s value.
A licensed appraiser determines this value by analyzing recent comparable sales in your area and applying specific formulas to adjust for any differences.
Then, individual features of your home are assessed based on their similarities to or differences from these comparables.
But…
Appraisers are required to stay within certain parameters when making these home value price adjustments.
For example…
Let’s say you’re thinking about selling your house for cash because your property needs a lot of work.
The interior and exterior of the property is in original condition or close to it.
An appraiser is limited to applying a downward price adjustment based on a specific percentage of the property’s value, which may be less than what a buyer would consider.
This is why your appraised value can differ significantly from the actual market price when you list your home.
Also, appraisals are primarily designed to confirm the sale price for lenders in non-cash real estate transactions.
They’re not really meant for sellers evaluating cash offers.
There’s a more effective method that will allow you to accurately assess an offer for your home from a cash buyer.
Get a comparative market analysis
A comparative market analysis (CMA) is usually a much better way to gauge a home’s estimated value.
This method relies on the market expertise of a listing agent — and it’s completely free.
With this type of real estate market analysis, your realtor also compares your home to recent comparable sales.
But they aren’t restricted to certain parameters when making price adjustments between your property and the comps.
They can apply the same price adjustments that prospective buyers might consider.
This is why a good real estate agent can arrive at an accurate assessed value.
You can use this value as your estimated on-market asking price when comparing it to any cash offer.
Most real estate agents will provide this to you after initially viewing your property.
But the key is making sure you get this analysis from an experienced agent who won’t intentionally misguide you on price (more on this shortly).
4. Watch out for the agent/investor trap
Sometimes, a real estate agent will inform a seller that they have an all-cash buyer interested in their home.
But that cash buyer who suddenly appears, ready to purchase your home in as-is condition?
They often turn out to be an investor — and that’s a major red flag.
Why?
Because this little trick allows an agent to triple their commission.
And it enables the real estate investor to earn a substantial profit that should have been yours.
Here’s how it works…
Let’s say your house needs updating and you’re worried buyers won’t be interested.
An unscrupulous agent will exploit this situation, amplifying your fears to make you worry that you won’t receive a fair offer.
Then they’ll swoop in with a “rescue” offer: sell your home as-is for cash.
It may sound like a way to liquidate your house fast and move on.
But you should think twice –– because the agent has a clear conflict of interest here.
This is a classic dual agency scenario, with a twist.
They’ll end up with not one, but three commissions:
- The seller’s commission in the immediate sale
- The investor’s commission in the immediate sale
- The investor’s commission again when they sell the property later.
If both the real estate investor and realtor are profiting, I can guarantee that you are not.
So don’t take the bait when you get this type of offer to buy your house for cash.
This is a clear warning not to sign a listing agreement with the agent — or to terminate your agent if you have already done so.
Here’s why…
An agent who has a history of representing both the seller and buyer in the same transaction is someone who prioritizes their commission above a seller’s best interests.
So steer clear of the agent-investor trap if you sell your property for cash.
And find a new realtor who does not have a history of acting as a dual agent.
5. Be aware of a contingent offer
Real estate contingencies often get overlooked when selling a house for cash.
You’re probably thinking…
“But wait, I thought one of the big benefits of selling my house for cash was that I could avoid contingencies!”
In some cases, you can.
Cash offers don’t involve a mortgage lender –– so they won’t have a financing contingency –– and most do not have an appraisal contingency.
But some cash buyers will dupe sellers by including an inspection contingency in their offer.
This gives the buyer a certain number of days after the all-cash offer is accepted to conduct a home inspection.
Here’s the problem…
A contingency is a clause in the real estate purchase contract that allows a buyer to back out of the sale and get their earnest money deposit back.
And cash buyers use this to their advantage.
They use the report from the home inspector as leverage to negotiate the offer price in the purchase agreement.
Their goal?
To get the final sale price down as low as they can.
The majority of all-cash buyers are successful at doing this.
Why?
Because many sellers feel like they have no choice but to accept a lower sale price.
This bait-and-switch is especially common for sellers who don’t have a real estate agent to help them navigate the nuances of an inspection clause.
What should you do if you get an all-cash offer that’s contingent?
Negotiate with the buyer and tell them you’ll only accept a non-contingent offer.
And stick to your guns.
If they’re adamant on making their cash offer contingent, then let them know that you don’t plan on reducing the price.
This will reduce haggling with the cash buyer.
6. Assess the cash buyer’s proof of funds
Some cash buyers talk out of both sides of their mouth.
How?
By submitting an offer to pay cash for a home but then applying for financing once the seller accepts their offer.
This camouflaged cash transaction can happen whether you sell a house on- or off-market.
The buyer’s goal is to make their offer look better to the seller.
But switching mid-transaction from all-cash to financing can cause major headaches for home sellers.
Because now there’s a mortgage lender involved.
Which means an appraisal is required and the buyer must meet all of their lender’s conditions.
Those extra hurdles can slow down the selling process and — in the worst case — even derail the sale entirely.
This is especially common among new real estate investors, who often make cash offers but then pursue hard money loans.
This type of mortgage financing is harder to qualify for and comes with higher interest rates.
This is one reason why it’s always important to verify the buyer’s funds when selling a home for cash.
A good real estate agent will typically handle this process.
But you should know exactly what to look for, whether you sell with an agent or on your own.
Valid proof of funds can be any recent bank statements of liquid assets, such as checking, savings, or certificate of deposit accounts.
Stock accounts are also valid as long as they’re easy to access quickly.
Here’s what you want to look for on the buyer’s financial statements when you sell your house for cash:
- Name that matches the buyer’s name
- Date within last ~30 days
- Total liquidable dollar amount.
Doing your due diligence to verify that your buyer has the funds available for a cash sale at the time of their offer is critical.
Because if you don’t?
You risk unnecessary delays and allow other cash buyers to leverage the failed sale to their advantage.
7. Negotiate a free rent-back
There’s something important to remember about a cash buyer:
They won’t have a mortgage — something you can use to your advantage.
Here’s how…
Negotiate a free extended stay in your property after the cash sale is final.
Many sellers need a little extra time after a home sale closes — so this isn’t an unusual ask.
This type of agreement essentially sets up your buyer as a landlord and you as a tenant.
However, it typically comes with a cost: The tenant (seller) pays rent.
But your buyer’s unique mortgage-free position gives you leverage to ask for a free stay.
The free “rent-back” allows you to remain in your home for an additional period without paying rent, giving you more time to prepare for your move.
This isn’t a handshake agreement though.
It needs to be outlined in a one-page addendum to your purchase contract.
This is commonly referred to as a rent-back or lease-back addendum.
The document specifies the terms of your extended stay, including:
- Time frame — usually 30 days
- Cost — free
- Definitions of roles, with the buyer as landlord and you as tenant for the duration of the contract.
It’s a fairly simple addendum, one that’s easy enough to add to the purchase agreement.
But…
Don’t lead with this request.
Ask for the free rent-back just as you finalize the negotiations for the cash sale of your home.
Because asking before this will give the cash buyer something to use against you.
How expert advice can add value to selling your home for cash
Selling a home for cash can be beneficial.
By bypassing the appraisal and lender paperwork, you can achieve a quicker close with less hassle.
But you might unwittingly surrender tens of thousands of dollars to the cash buyer — money that is rightfully yours.
The right real estate agent can help you avoid that.
How?
By helping you carefully consider whether it’s advantageous for you to find a cash buyer for your house.
They can offer expert feedback to help you make the right decision for your situation.
And they can do this without requiring a formal hiring commitment.
Thinking of selling a house for cash without a realtor?
Selling on the market, even to non-cash buyers, can be simpler than expected—even if your home requires significant work.
But…
Finding a real estate professional you can trust is easier said than done.
SoldNest simplifies your search by connecting you with a top local agent who has a proven track record of putting their sellers first.
Learn more about how we take care of the agent vetting process for you so you can sell your house with confidence.
