What Every Seller Should Know About Cash Offers

You see “we buy houses for cash” on billboards, the radio and your social feeds. In the video above, my teammate Zach and I break down the different kinds of cash offers, the pros and cons, and how to make sure one works for you instead of against you.

Three kinds of cash offers

From lowest price to highest, and simplest to most steps:

1. As-is, take what you want. You leave whatever you don’t want, hand over the keys and walk away. One check. This is usually the lowest offer, since the buyer cleans everything out.
2. As-is, broom-swept. The house must be completely empty and swept, but typically no repairs unless something drastic is obvious. Usually the middle price.
3. The two-closing program. Usually the highest total. Say the total is $300,000: at the first closing you get about 65%, the investor fixes up and resells the home, and when it sells you get the rest. If it sells for more, you typically get a large share of the extra (often around 90%); if it sells for less, you get less. One catch: that first 65% has to cover what you owe.

What comes out of the price

The title transfers, and any liens must be paid at closing: mechanics’ liens, utility liens, medical liens, child support or alimony. Liens recorded with the county will be found no matter what, so be upfront with whoever you’re working with, so you know your true net and don’t get surprised.

The pros

• Speed. Some close in as little as about seven days.
• No repairs and few or no showings.
• Leave what you want, with the right investor.

The cons

Investors are businesses, and they’re in it to make money. Depending on the investor, offers can be 25% to 30% below what the home could bring on the open market, because they need room for repairs and profit, plus fees and closing costs. Occasionally an investor’s number lands close to market value, and then it can make sense.

Who cash offers fit

• Someone who inherited a home, often out of state, and doesn’t have time to deal with it.
• Homes in disrepair with deferred maintenance, where the owner doesn’t want repairs, cleanup or showings.

Who they usually don’t fit

Zach’s favorite question: on a scale of 1 to 10, how would you grade your home, without saying 7? If you’d say six to eight or higher, you’ll likely net more on the open market. Under five, a cash offer may make sense. If you’ve taken good care of your home and you’re not in a hurry, a traditional sale usually nets the most.

Protect yourself

• Use the standard Minnesota purchase agreement forms. We’ve seen some wild custom contracts.
• Ask for proof of funds, or work with someone who has vetted the investor.
• Watch for red flags: offers “subject to board approval,” investors who can cancel any time, or deals that leave the title in your name while they do work.
• Have an attorney review anything non-standard, especially if you don’t have an agent.

Get options, not a sales pitch

We’d rather be your advisor than push one outcome. We get offers from vetted local and national investors (usually three or four is plenty) and compare them side by side with what your home would bring on the open market, as-is or after a little fixing up. Then you choose.

Got a cash offer, or wondering if you’d get one? Request a cash offer from our investor network, talk with our team, check your home’s estimated value, or read Wall Street is buying Twin Cities homes.