If you are thinking about selling a house and you want to do it fast, then you might have noticed little yellow signs on the side of the road. Or perhaps the big billboards along I-70 downtown. Or even ads on the internet all proclaiming that “We Buy Houses for Cash!” Or perhaps “Sell Your House Fast for Cash!”

There are a lot of people out there claiming to do what we do. And if you talk to them they might even sound 100 % legitimate. Most are.

We offer a fast and flexible closing on your schedule. We buy the houses as is, so you don’t have to make any repairs. And the most appealing and where many of our competitors fall flat on their face, the offer of an “All Cash” offer.

Before you accept that “All Cash” offer, ask for them to prove it. Some can’t really do so.

How do these “We Buy Houses for Cash Companies Work?

Those that can actually do what they say, have money in the bank ready to go. Or they have relationships with private individuals with the cash. Or they have lines of credit at a local lender. That way when we make an offer on your house, we have the cash to actually purchase your house.

The Different Kind’s of Cash Buyers for Houses

There are 5 Basic Types of Cash Buyers for houses, maybe 6 . . . lets see.

Home Owner

While it does not happen a lot, there are people looking for a house to live in that have cash. They will enter into a contract and buy your house.

IBuyer

These are rather new to the market, popping up in about 2019. These were traditionally instant buyers that made an offer to you often sight unseen. Then once it was under contract they take a look and adjusted the price or back out. Some of the original iBuyers, like Zillow, went out of business. Others that are still around have partnered up with local real estate agents and cash investor buyers and everyone wants their piece of the profits.

Buy and Hold Investor

These are cash buyers of houses, looking for homes and multi family properties to purchase and rent. Their whole goal is to make money first from getting a good deal. Then by adding value by making repairs. Then by earning rental cash flow from a tenant. And last they are banking on the property to appreciate over time.

The Fix and Flip Investor

This is primarily where kcmoHomeBuyer falls in the whole scheme of things. We are purchasing properties, that need minor or even major repairs. Then we spend a few months and several thousand or thousands of dollars getting it all repaired. Then we flip or sell it for a profit.

How Cash Buyers Might Buy

But not all cash buyers operate the same. Some are rather new to the game and they just don’t have the cash, the relationships or the backing needed to have the “cash”. Instead, they are contracting to buy your house, in hopes of finding an end cash buyer before they actually have to close. There are three ways they do this:

Assignment of Contract:

This is where they get your house under contract to purchase. After everything is signed and sent to the title company, you start packing. The buyer on the other hand starts marketing that contract for sale to the highest bidder. If a high bidder is found, they are assigned the buyers position in your contract for a fee, the closing happens as planned. You get your money, the investor gets an assignment fee, and everyone’s happy . . . mostly.

Double Close

This one is where after the buyer gets it under contract to purchase, he starts marketing the house for sale while you pack. Again the plan is to find an end buyer, only in this case the cash buyer will find a way to borrow funds for a few minutes as they buy it. Then they will close and sell it for more a bit later. Again, as all goes to plan, everyone’s happy . . . mostly.

Novation

I don’t even pretend to understand this one and I’m not 100% sure its even legal. But the way I understand it, the cash buyer does the same as the above . . . only he uses some fancy legal mumbo jumbo = a novation form. This replaces the cash buyer in the contract with another buyer.

Actually Buy The House

The best way for an cash buyer to operate is to actually buy the house. With their cash or lender cash. They don’t assign their interest, they don’t double close, they don’t novate, they actually buy the house. This is how we do deals.

Pros and Cons of Working with A Cash Buyer

There are quite a few pros as well as cons when working with a cash home buyer.

Pros of Working with a Cash Home Buyer

Assuming the buyer actually has access to the cash, the following are some reasons to consider.

Quick and straightforward sale process 

Many sellers are attracted to We Buy Houses for Cash companies because they offer a fast and hassle-free sale. This can be particularly beneficial for homeowners facing foreclosure, as selling quickly to a cash buyer can help them avoid a foreclosure mark on their credit report.

Rapid closing times 

Another major advantage is the speed of closing. As of June 2024, ICE Mortgage Technology reports that it takes an average of 43 days to close on a home purchase loan with a traditional mortgage-backed buyer. In contrast, a cash offer can often close within one to two weeks.

Purchase of property in its current condition

 If your home needs significant repairs, We Buy Houses for Cash companies are often willing to buy it “as-is.” They typically plan to renovate the property themselves, so you don’t need to worry about making costly repairs. However, keep in mind that the cost of these repairs will be reflected in the offer price.

No need for showings or preparations

These companies buy properties in their existing state, so you won’t need to worry about showings, staging, or landscaping. While the condition of your home may influence the offer price, you won’t need to invest time or money in making it more appealing.

Guaranteed closing 

Traditional home sales often come with contingencies and inspections that can delay or derail the process. With We Buy Houses for Cash companies, the sale is typically guaranteed since they purchase the property “as-is,” eliminating the risk of a contingent offer falling through.

While the prospect of moving within weeks rather than the months it might take to sell your home on the market with an agent may sound appealing, there are some drawbacks to consider when working with cash-for-homes companies.

Cons of Working with a Cash Home Buyer

Homes often sell below market value 

Cash buyers are typically very knowledgeable about property values and aim to make a profit. They incorporate their expected profits into their offers. For example, a home with an estimated market value of $300,000 might receive a cash offer of $229,000, leaving the homeowner $56,000 short after accounting for a 5% agent commission. The company might spend about $30,000 on renovations and later list the house for $350,000, resulting in a significant profit.

Here at kcmoHomeBuyer, we do expect to make a profit. But remember we are stepping into the sellers shows. We are taking on all the holding costs like taxes, insurance, and upkeep during the renovation process. We are spending our own time and money on making $20,000, $30,000 even $100,000 plus in repairs to the house. And at the end of 2, 3, 4 months, at considerable risk, we do hope to make a modest $20,000 profit.

Potential hidden fees 

It’s crucial to read any sales agreement carefully. Many iBuyers charge a service fee of 5% to 6%, so verify if there are any additional fees. Fix-and-flip investors might not charge a fee but could offer a lower price to cover their costs.

This is why if you get a cash buyer pressuring you to sign the contract right away should send up red flags. Your buyer should provide you with a written contract and time to have it looked over by a trusted advisor.

Risk of scams To avoid scams, be cautious of unsolicited offers via email, a common tactic for fraudsters. If you’re considering a We Buy Houses for Cash company, don’t hesitate to call or video chat to verify their legitimacy. Check their reviews and ratings on trusted sites like the Better Business Bureau (BBB) or Consumer Affairs.

Here at kcmoHome Buyer we have been listed on the Better Business Bureau Website for 20 years and we currently have 2 Five Star Reviews and Zero Complaints

How Much Will A “We Buy Houses for Cash” Company Pay?

The traditional formula here in our office looks something like this:

What can we sell it for when it is all pretty, like the houses on HGTV?

Minus how much it will cost us to make it look that way.

Minus holding costs for the time that we own it.

Minus costs to sell it.

Minus the cost of our money.

Generally, if we can take that first number at the top and multiply that by 70%, then subtract out repairs, we have a good rough estimate of a number.

Now if the house is in better shape and will not take months and months to make repairs we can pay more.

Or if the seller wanted to partner with us by seller financing the transaction, we can pay more.

We have a more detailed explanation on our How It Works Page

Can’t I get More If I List it with a Realtor?

Absolutely. Listing your house with a local real estate agent will often generate 10% to 15% more in sales price. But that comes at the trade off of the traditional real estate listing with cleaning, staging, repairs, marketing, open houses, appraisals and the whole 9 yards. All of this traditional stuff takes time and effort that some sellers just don’t have.

Can we tell you a little secret? Here at kcmoHomeBuyer, the Tuckers are Realtors with Realty Resource. So if you wanted to see what we would offer you cash closing fast vs what we think you could list it for and net when its all said and done, we’ve got you covered. We can give you two options and you can decide.

Is Selling to a We Buy Houses Cash Company Right for You?

Well, only you can answer that. But we can make it easy for you. Just fill in one of the forms here on the website and start the conversation. We can answer any and all questions you might have.