Cash offers on your house, explained from first call to closing

A cash offer is a purchase with no lender in the middle. The buyer has the money, or a line of credit that works like money, so there is no appraisal contingency, no loan approval to wait on, and no financing that falls through the week before closing. That certainty is what you are paid in, and the discount is what you pay for it.

Three kinds of buyer make these offers. Local investors buy to fix and resell or to rent, and tend to pay the least because their margin has to cover the repairs and the resale. iBuyers are large companies that price from a model, pay closer to market, and charge a service fee instead. Wholesalers do not buy at all: they put the house under contract, then sell that contract to an investor for a fee, which is why an offer from one can change or vanish before closing.

In every case the house goes as it stands. No repairs, no staging, no showings, no weekends keeping the kitchen clean. The buyer walks through once, or looks at photos, and prices in the work. If the house needs a roof, the roof comes out of the offer, not out of your weekend.

The money you walk away with is the offer minus whatever is still owed on the house, minus closing costs. Your mortgage, and any home equity line or home equity investment on the title, is paid from the proceeds at closing. The title company handles it. You get what is left.

The cash offer is for people who need speed, certainty, or an exit from a house they cannot or will not fix. If you have time and the house would show well, the discount is money you are leaving on the table.

If you are not sure which side you fall on, when a cash offer is the right call walks the decision, and cash offer against a listing puts the net numbers side by side.

Most cash sales close in 7 to 21 days. A title problem, a tenant, or a lien that takes time to pay off can stretch that to 30 or 45. The steps are the same with any buyer; what changes is how carefully each one is done.

1. 1

   Request and first numbers

   Day 1

   You give the address, the condition in your own words, and when you want to be out. Most buyers come back within a day with a range or a preliminary number. It is built from public records and comparable sales, not from seeing the house, so it will move.

2. 2

   Walkthrough or photos

   Day 1 to 5

   An investor or an inspector visits for 30 to 60 minutes and looks at the roof, the systems, the foundation and the finishes. iBuyers often start from photos and send someone later. This visit is where the preliminary number becomes a real one.

3. 3

   The written offer

   Day 2 to 7

   The offer arrives as a purchase contract. Read the price, the closing date, the earnest money, the inspection period and any clause that lets the buyer assign the contract to someone else. All of those are negotiable, and all of them matter more than the headline number.

4. 4

   Inspection and repair credits

   Day 3 to 14

   Even as-is buyers keep an inspection period, usually 5 to 10 days. If they find something the walkthrough missed, they ask for a credit, which is a lower price by another name. A buyer who prices carefully up front asks for little here. One who priced high to win the signature asks for a lot.

5. 5

   Title and escrow

   Day 5 to 18

   A title company searches the record for every lien on the house, orders payoff statements from your mortgage servicer and any second lienholder, and prepares the settlement statement. An old lien that was paid but never released, or an unpaid tax bill, surfaces here and has to be cleared before closing.

6. 6

   Closing

   Day 7 to 21

   You sign the deed and the settlement statement, usually in under an hour, at the title office or with a mobile notary. The buyer's funds are already in escrow. Proceeds are wired to you the same day or the next business day.

7. 7

   Liens paid, keys handed over

   Closing day

   The title company pays the mortgage, any home equity line, any home equity investment, back taxes and HOA dues from the sale price, then sends you the rest. Possession usually passes at closing, though some buyers allow a few days or weeks of leaseback if you ask for it in the contract.

For a closer look at what slows each stretch down, read the cash offer timeline.

There is no commission on most cash sales. The cost is the gap between what the buyer pays and what the house would bring on the open market, plus whatever comes off the price after inspection.

On a house that would list for $400,000, an offer at 85% is $340,000. Subtract 2% in closing costs and a $5,000 repair credit, and the proceeds before paying off the mortgage land near $328,000. A listing at full price minus 5% in commissions, $8,000 in repairs and concessions, and two months of carrying costs might net $370,000 to $375,000, 60 to 90 days later and with no certainty until the buyer's loan funds.

That gap, somewhere between $30,000 and $50,000 on a house at this price, is the whole decision. How cash offers are priced shows how buyers arrive at their number, so you can tell a careful offer from a lowball.

Selling is the only path here that ends with you no longer owning the house. Every other path costs you something to keep it. That makes the comparison a question of whether you want the house, not just the money.

If the reason you are selling is a debt you cannot carry, read using equity for card debt and debt resolution first. There may be a way to clear the balance that leaves you in the house.

A cash buyer can move as fast as the paperwork lets them. Having these in hand is the difference between closing in a week and closing in a month.

• Your most recent mortgage statement, and a payoff statement from the servicer, which you can request by phone and usually get within a few days
• The payoff figure for any home equity line, home equity loan, or home equity investment on the title
• Anything you know about title: a past divorce, a deceased co-owner, an estate that was never probated, a solar lease, a contractor who was never paid
• The HOA contact and a current statement, if there is one
• Property tax status, including any bill that is past due
• Keys, codes, and a way to get an inspector in if you live elsewhere
• A listing estimate from a local agent, even if you have no plan to list, so you know what the discount is

That last item is the one most people skip. An agent will give a price opinion in a day, for nothing, and it is the only way to know what the speed is costing you.

1. 01Taking the first offer. Two or three cash buyers looking at the same house routinely come in $20,000 to $40,000 apart. Getting a second number costs a phone call.
2. 02Skipping the listing estimate. Without a market number, you cannot tell an 85% offer from a 70% one. Ask an agent before you sign anything.
3. 03Signing a contract the buyer can assign. An assignment clause means the person who made the offer may not be the one who closes, and the closing may not happen at all. Strike it, or ask for a large non-refundable deposit in exchange.
4. 04Agreeing to a long inspection period. Ten days is plenty for a cash buyer. Thirty days is an option on your house that costs them nothing.
5. 05Accepting small earnest money. A $500 deposit on a $350,000 house means the buyer loses almost nothing by walking. Ask for 1 to 2%, and for it to go non-refundable once inspection ends.
6. 06Not reading the renegotiation terms. Some contracts let the buyer lower the price after inspection for any reason. Others cap it. Know which one you signed.
7. 07Moving out before the money is in your account. Possession passes at funding, not at signing. Keep the keys until the wire clears.

The warning signs that separate a serious buyer from a problem are collected in cash offer red flags.