Selling Your House For Cash: The Complete Process

by | Dec 6, 2023

This blog is a follow-up to our last blog, How Long Does It Take To Close On A House With Cash?

Let’s dive deeper into the world of selling your house for cash. If we had to pick two words to describe cash home sales, they’d be streamlined and efficient. That’s not to say the traditional home sale process is streamlined, but there’s a TON involved.

  • People
  • Listing your home
  • Paperwork
  • Real estate, mortgage, and title companies
  • Attorneys
  • Etc.

Things that are sometimes involved in the cash-sale process, just… less.

If you’re unfamiliar with the cash sale process, this article will bring you up to speed.

What Does “Selling Your House For Cash” Mean?

A cash offer in real estate refers to an all-cash bid to purchase a property. Traditional homebuyers rely on a lender and mortgage financing to provide funds. An all-cash buyer has the funds readily available to complete the purchase. As a seller, you may prefer cash offers because deals can close faster and the cash is guaranteed.

“Cash-offer” is a misnomer. At the end of the day, all offers are “cash offers.” It really means that the offer is not subject to financing, which is one less way for the deal to fall apart.
Where do cash buyers get their money?

  • They received a large inheritance from a deceased relative
  • They sold a fully paid-off home they bought in California 30 years ago for an insane price and can buy anything with a roof in Middle America.
  • They arranged their own financing in advance, for example, a buyer who has secured a HELOC on a previous property.
  • They’re investors who secure funding from wealthy individuals and put that money into real estate properties.
  • They cashed out of a retirement fund to secure housing for retirement.

A cash offer isn’t official until the buyer can show proof of funds.

For a seller, a cash offer can mean a smoother transaction, fewer potential delays, and a higher likelihood of the sale closing successfully. Thus, even if the cash offer isn’t the highest bid, sellers might consider it more seriously due to its certainty and expedience.

Cash is king, baby!

Selling Your House For Cash: Is It A Good Idea?

  • Greater Level Of Certainty: Anything can happen between accepting an offer and cashing a nice fat check. If you’ve already lost a deal at the 11th hour or seen buyers lose interest for no apparent reason, a cash offer can be a reprieve.
  • Faster Approval: Cash offers close more quickly than typical mortgage loan deals. While mortgage deals take weeks, if not months, cash offers can close in as little as 3-4 days.
  • No Appraisals: Cash offers don’t require an appraisal since mortgage lenders are the ones who require them. They do this to ensure the home is worth their loan. If not, the buyer has to make up the difference between their offer and the appraised value.

We work with homeowners in Massachusetts who are going through a divorce, foreclosure, or an urgent relocation. Selling their home for cash is a way to quickly get a cash infusion if they need it and move on with their lives.

Steps To Selling Your House For Cash

1. Determine Your Home’s Value

The first step is determining your home’s value. Buyers will negotiate a price based on a few factors:

  • Market Conditions: The state of the real estate market heavily influences cash offers. In a seller’s market, you’re likely to receive higher offers due to increased demand. The reverse is true.
  • Location: The location of your property is a crucial factor. Homes in desirable neighborhoods, good school districts, or close to amenities often attract higher cash offers.
  • Property Condition: If your home is in poor condition, cash buyers will know this and adjust their offers. This is because typical buyers generally prefer move-in ready homes.
  • Recent Sales in the Area: Comparable sales in your neighborhood set a benchmark for the value of your home. Houses similar to yours in size, condition, and location that sold recently influence the cash offer you can expect.
  • Unique Features or Upgrades: Special features like a renovated kitchen, swimming pool, or sustainable energy systems can enhance your home’s appeal and increase cash offers.
  • Zoning and Future Development Plans: The zoning laws and potential for future development in your area can affect your home’s value. For instance, if your property is in an area slated for future development, it might attract higher offers.
  • Urgency to Sell: This is the big one for cash sales. Your need to sell quickly can influence the offer you receive. If buyers sense urgency, they might propose a lower cash offer, anticipating your willingness to accept a faster sale.

2. Find A Cash Buyer

Negotiating a cash offer for a house typically takes less time than a traditional home sale involving financing. A seller can respond quickly to a cash offer. This is because there’s no buyer’s loan approval. Often, in cash-sale situations, both parties are motivated and agreeable. Cash offers are more straightforward and appealing to sellers who desire a quick sale.

Tip: Things can get sketchy during a cash-sale process. Avoid scams. Never send money to anyone besides the title company. Be wary of buyers you can’t meet in person. Ask for references Do your due diligence when reviewing proof of funds. And trust your gut!

3. Verify Proof Of Funds & Review Written Offer

When a buyer makes a cash offer, they must provide evidence of their ability to complete the purchase. This includes the down payment, escrow, and closing costs. This can be in bank statements or a POF letter from your financial institution.

This letter will include:

  • Your bank’s name and address
  • An official bank statement
  • The balance of total funds or…
  • A statement from your bank saying you have exactly x amount of dollars available to complete the transaction
  • The signature of an authorized bank employee or notary
  • Verification of the date

The seller or agent reviews this documentation to ensure the buyer has sufficient funds to cover the purchase price. The verification process is generally straightforward and quick, involving reviewing readily available financial documents.

The speed and simplicity of this process are vital advantages of cash transactions, as they significantly reduce the time and complexity involved in the sale.

The home is officially under contract once the buyer signs the purchase agreement. Their immediate next step is to make an earnest money deposit. Earnest money is usually due within three days of a signed and accepted offer. The money is usually delivered to and held by the escrow company. Escrow companies act as a neutral third party to collect the required funds and documents.

In most parts of the country, title and escrow companies are the same. While holding your escrow, they’ll search for the home’s title. A title is the ownership record of a property. The house title shows ownership records of the property, who’s owned it, and any liens on it.

The title company needs to clear the title for you to sell the home.

5. Home Inspection

If you’re selling a property sight unseen, the buyer may forgo any inspection contingencies. However, this is rarely the case with cash offers. Most cash buyers still want to inspect the property.

6. Closing

At the closing appointment, you and the buyer will fulfill all the agreements made in the sale contract. The closing appointment will take anywhere from 30 minutes to two hours.

Here’s what to bring and what to be prepared for at closing as a seller:

  • Certificate Of Title: An official document that indicates ownership of property. When a property or vehicle is sold, the title is transferred from the seller to the buyer.
  • Title Deed: Shows a transfer of ownership when transferring title from one party to another. The transaction is closed when this is recorded at the local courthouse.
  • Loan Payoff Statement: A loan payoff statement is an official document from a lender that provides the exact amount required to pay off a loan as of a specific date fully. This will match the amount the escrow company will pay on your behalf.
  • Statement of Closing Costs: A document provided at the end of a real estate transaction. It itemizes all costs and fees paid by the buyer and seller during the closing process. Signing this indicates that you’re aware of all associated costs.
    Statement of Information: A document filled out by the seller providing personal details. This information assists the title company in distinguishing the seller from others with similar names to avoid title issues.
  • Access: House keys, garage door remotes, and codes to keyless entry and alarm systems.
  • Real Estate Commissions: Fees paid to real estate agents for facilitating the sale. Typically, this commission is six percent of the sale price, split between the seller’s and buyer’s agents. It’s deducted from the sale proceeds at closing.
  • Escrow & Title Fees: Sellers may pay fees for title insurance, escrow services, and potentially a portion of property taxes or homeowners association dues during the closing process.

How Long Does It Take To Sell A House For Cash?

You can close on a home in as little as 72 hours, but the process from offer to closing usually takes 2-3 weeks. Buyers don’t have to get pre-approved, which takes about 7-10 days. The sale can close just as quickly as the title company can clear any liens, provide insurance, and prepare paperwork.

Pro Tip: Attend the inspection to ensure the inspector does a thorough job. It should last 2-3 hours. Tell the inspector your plans for the property (move-in ready vs. fixer-upper) and read the full report. 

Massachusetts-Specific Home Requirements

  • Title 5 Inspection: Massachusetts requires a Title 5 inspection for properties with private septic systems. This inspection ensures the septic system meets state environmental standards and must be done before selling a property, expanding its footprint, or building additional bedrooms.
  • Lead Paint Law: Massachusetts requires homes built before 1978 to be inspected for lead paint. If lead is found, it must be disclosed, and landlords must remove or cover lead paint hazards if a child under six resides in the property.
  • Smoke & Carbon Monoxide Detector: Before a property can be sold, it must pass an inspection to ensure compliance with Massachusetts’ smoke and carbon monoxide detector regulations. Certificates from local fire departments are required at closing.
  • Transfer Tax (Stamp Tax): Massachusetts imposes a real estate transfer tax on property sales, commonly known as a stamp tax. The tax rate is $2.28 per $500 of the purchase price, paid by the seller at closing.

Step 8: Homeowners Insurance

Homeowners insurance is mandatory if you have a mortgage and must be in place before closing. This insurance covers various risks, including damage from fire, theft, and natural disasters, as well as liability for accidents on your property.

Standard policies often include dwelling coverage, personal property coverage, liability protection, and additional living expenses if your home becomes uninhabitable.

There are different levels of coverage, such as:

  • HO-1: Basic policy covering specific perils.
  • HO-2: Broad policy covering more perils than HO-1.
  • HO-3: Special policy that covers all perils except those explicitly excluded.
  • HO-5: Comprehensive policy offering the most extensive coverage.
  • HO-6: Condo insurance.
  • HO-7: Mobile home insurance.
  • HO-8: Older home insurance.

By comparing different policies and providers, you can ensure you get the best protection for your new home.

Step 9: Closing And Walkthrough

The final walk-through typically occurs on the closing day to ensure the property is in the agreed-upon condition. During this inspection, confirm that all personal items have been removed unless specified otherwise in the contract, and check for any new damages. Conduct the walk-through during daylight hours for better visibility. 

Be thorough:

  • Flip all switches
  • Turn on faucets to check for leaks
  • Run all appliances
  • Test the garage door opener
  • Open and close all doors
  • Flush toilets
  • Run the garbage disposal and exhaust fans
  • Inspect ceilings, walls, and floors.
  • Test the heating and air conditioning systems.

At The Closing Table

You will review your Closing Disclosure form at closing, which you should receive three business days before closing. Compare it with your Loan Estimate to check for major changes or inconsistencies. Some fees are legally restricted from increasing by more than 10%.

Consider having a real estate attorney review these documents if desired.

On closing day, meet at the title company. Being on time is crucial, as appointments are often scheduled back-to-back. Bring your photo ID, a cashier’s check (if required), Closing Disclosure, and any other requested documents. 

During the closing, you will sign several key documents:

  • Closing Disclosure: Details all the costs and fees associated with your mortgage, received at least three business days before closing for review and comparison with your Loan Estimate.
  • Promissory Note: A legal document where you agree to repay the loan amount over a specified period, including the interest rate and payment schedule; your promise to pay back the loan.
  • Mortgage (or Deed of Trust): Secures the promissory note and gives the lender a claim against your home if you default on the loan; outlines the mortgage terms, including the loan amount, interest rate, and repayment terms.
  • Deed: Transfers property ownership from the seller to you; includes a property description and is signed by the seller.
  • Settlement Statement (HUD-1 or ALTA): Provides a detailed list of all costs associated with the home’s sale, including buyer and seller costs; reviewed and signed by both parties.
  • Affidavits: Various affidavits may be required, such as confirming your identity, stating the property will be your primary residence, or ensuring no undisclosed liens or judgments.
  • Title Documents: Ensure you receive clear title to the property; may include documents related to title insurance, which protects you and the lender against potential legal issues with the property’s title.
  • Initial Escrow Disclosure: This document outlines the escrow account details, including the amount you need to deposit and what it will cover (e.g., property taxes and insurance).
  • Loan Application: Review and sign a final version of your loan application to confirm that all information is accurate and up to date.
  • IRS Form W-9: Used to provide your taxpayer identification number to the lender for reporting interest paid on the mortgage.
  • Homeowners Insurance Verification: Proof that you have secured homeowners insurance for the property, typically required by the lender.

Get One-on-One Guidance

Contact us below or call (978) 228-1068 to speak with us about selling your home fast.

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Elie Deglaoui - Author

Author

Elie Deglaoui

Elie is our office admin who handles all our day-to-day tasks and makes sure we always stay on track. He brings his love of music and sports into the office everyday to always liven up the environment. His outgoing personality makes it easy and fun for him to talk to homeowners, homebuyers, and everyone in between.

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