Selling Your House For Cash? Here’s How To Do It Fast!
Making The Right Choices With Your Property
Most people who sell property don’t do it for cash. Have you ever heard of a 1031 exchange? This is where the sale of a house is turned right into a new property as a means of avoiding excess taxation. There’s no cash involved here, and that’s the case with most property sales.
Sometimes funds are transferred digitally, there are checks involved, and there can be many different arrangements. But cash is a rare thing. Getting your full property value through a cash transaction is extremely unlikely. It’s not impossible, but generally, such a transaction will not take place through traditional channels.
Contending With “The Catch” In fact, probably just the opposite will happen. Many seeking to sell fast go through one of those companies that advertises that they purchase houses for cash. The thing is, with any “deal”, there’s going to be a “catch”. For an in-depth examination of those “we buy ugly houses for cash” companies, be sure to read this blog article from ISoldMyHouse.com.
Essentially, there are formula groups that buy homes fast for cash and are apt to use. It looks like this: the value of a home after it’s been repaired, minus costs for renovation, costs for holding, and costs for selling. Lastly, the expected “profit” is subtracted. The sum that’s left over is what they’ll offer you “on the spot”, as the TV would have you believe.
A Process Requiring Time
The process is a bit more involved than something which can be done in an afternoon. It’ll take a few days or weeks. Most home buyers are quite satisfied with a sale that takes place in under three months. But just to give you an idea of what this looks like in practice, let’s examine a hypothetical scenario.
If after repair value of your property is $200k, and it cost $25k to get it to that level, while the costs for holding are as much as $1k a month (for a year that’s $12k), and selling costs average around $20k with a $30k desired profit, such a hypothetical property will get a cash pitch of $113k.
Doing It Yourself
Contrarily, spend $25k of your resources and $12k in holding fees, and you should see about $75k total value expansion for a $50k profit—basically, do it right and you’ll profit about 67% over what you spend. Spend $33, get $100, subtract renovation costs and your profit was $67. Now expand that out for a $125k property, and don’t forget closing costs.
If the home’s baseline value were $125k, and you spent $37k between renovation and holding fees, you’re looking at $162k total you’ll need to make before profit. Sell at $200k, and you make $38k in profit. Subtract $20k in closing costs, and you’re looking at $18k—or $1,500 a month for your efforts. Do you have the time for so little money? This is all assuming a DIY approach.
Common Difficulties In Home Improvement
If you can’t afford contractors, you’ll have to do the job yourself. This will be more cost-effective, but it will be more labor-intensive, and the end result may not be as qualitative as that which a contractor could produce. That said, you might have acumen enough to do a better job, too. All situations differ.
The bottom line is: that you can sell your house for cash fast through traditional “we buy houses for cash” channels. However, you will see a significant reduction in overall profit. So what you save in “closing costs”, you lose in terms of an adjusted pitch for your property.
Without Angel Investors, Fast Cash Buyers May Be the Best
Another means of selling fast for cash is finding sellers who have resources on them directly, and the ability to pick up a home the day they see it. As you may have guessed, this is extremely rare. However, it’s not without the bounds of possibility—especially in communities where there are foreign investors. Checking with the chamber of commerce can be wise.
If you’re in a pinch and need to move property quickly, you can; but unless some “angel investor” comes out of the blue, you’ll have to use a fast-cash agency, and that means you’ll sell your property for less than you could get in the fullness of time. Even so, motivated sellers do so regularly, and this could be your best option. It all depends on the situation.
