Cash Home Buyers and Other Kinds of Property Buyers You’ll Encounter as a Homeowner in San Diego
The concept of a cash home buyer is becoming more and more common in a city with heavy investor activity, like our sweet San Diego. But, cash buyers don’t come out just to buy distressed properties. There are cash buyers out there placing offers on all kinds of properties. But, who are these people? How do they have the cash to purchase your home? In some cases, yes, these cash home buyers are institutional investors or companies who seek properties as a part of their business and to grow their portfolio (or to fix and sell for a profit). In other cases, the cash home buyer you received an offer from is a normal person who has a larger cash reserve than others. This includes baby boomers, wealthy families buying a vacation home for the family, or empty nesters who profited on the sale of their previous, larger home. Right now, homes sold to cash buyers in San Diego account for about 30% of all transactions recorded each year.
Typical Home Buyer Categories:
As with any sale, there are different kinds of customers or buyers. Some buyers are incredibly flexible and are overall easier to please, while others come with multiple demands and strict parameters. Here is a breakdown of some of the typical characteristics that can be found in a property buyer:
- The runner-up – An offer is an offer, but not all are created equal. Some offers will come in that just don’t hold some same “guarantee to work out” that others do. Prospective buyers that fall into this category usually include folks who have less to put down on a house, and potenitally only qualify for an FHA Loan. This can mean good and bad things for you, the seller. An FHA approved buyer can run into more potential problems in qualifying for your home if there are repairs needed. Because of the stricter requirements, you may find yourself spending a lot to fix the home or pay more for closing costs when working with this category of buyer. On the plus side, these buyers usually know that their loan and situation overall may not be your absolute best solution (making them the “underdog”), so they tend to be more flexible throughout the transaction. Usually, if you need a later move-out date or have other specific needs, this kind of buyer will be more happy to accommodate if it means they get the house in the end.
- The family you connect with –The most rewarding thing for a lot of sellers is to pass off their home to a new family who will love and cherish the place as much as they did while it was their home. These buyers will typically submit an offer on your house and include a long, emotionally-driven letter about what the home will mean to their family (and maybe even some photos of their children etc.). It’s good to follow your heart during a big decision/transaction like this, but don’t forget that it is also a business transaction. At the end of the day, ensure that your heartstrings aren’t being tugged at your own expense.
- Looky-Loo’s– Some buyers are really in it for the window shopping. While they may want to buy a house “one day,” they’re not committed to doing so right now and find themselves at open houses every weekend. Be cautious of these buyers and weed them out in an effort to hopefully spare you some wasted time by asking how many homes they’re looking at and inquiring about how soon they’d want to move in. When it comes down to the nitty-gritty, these buyers will flake and not ever fully commit to moving forward in a transaction.
- Confident cash buyers– Then, there’s the confident all-cash home buyer. All cash buyers may come off as a bit stuffy or entitled, which in some ways is warranted, but keep in mind what your priorities are. A cash buyer knows that their offer is safe and secure, and the transaction can typically move much quicker than a normal sale. All of these things are good for you as the seller, but don’t be surprised if the cash buyer does intend to pay a lower offer price than those buyers with a conventional loan.
The Benefits of Selling to Cash Home Buyers
The benefits of selling to a cash buyer are numerous. As mentioned above, you may run into certain cash buyers who will be needier than other buyers because they feel their offer holds more worth. This could potentially mean more repairs, a lower price at the end of the day, delays, and extended negotiations (depending on the buyer’s goal). But, a cash buyer can also mean less hassle and less to worry about during the transaction. You won’t have to deal with buyer financing nightmares or delays. You don’t have to concern yourself with the appraisal and whether repairs needed will impact the buyer’s ability to secure a loan. All of these things can make the transaction run much smoother.
Keep in mind- not all cash buyers are created equal. Some buyers are more “picky” than others and will use their upper hand to their advantage throughout negotiations. The good thing about working with a cash buyer who invests in properties that need work is you don’t have to worry about any repairs at all prior to selling. Yes, negotiations will still occur in regards to the purchase price, but the investor buyer won’t ask that you fix or touch a thing. In this case, you have control and the investor cash buyer is willing to be flexible for you.
Which kind of property buyer is for you? That’s up to you to decide!