What Gives?! How Your Cash Offer Was Calculated

In 2021 selling your home has never been easier! However, understanding the offers and the different potential isn’t always easy for those that aren’t professionals. With companies like Zillow, OfferPad, & the numerous other investors both small and large there are plenty of people in the North Carolina market who would love to give you a CASH OFFER! 

The word CASH often gets consumers extremely happy, happy at the thought of less red tape to go through which should lead to a quicker and easier process. However many sellers become irritated at the cash offers not understanding the difference between what they believe the house is worth and the actual offer.

The first thing we need to acknowledge is that usually, cash buyers are investors. That word is key… “Investor” in this case simply means they are looking to purchase with the intention of making a profit, meaning they are NOT looking to pay retail value for your home… Unless something a bit more creative can be structured.

Now that you know the offer isn’t going to be a retail one you may ask yourself… Why would anyone take an offer for less than what the home is worth? It is a great question. The answer is… most shouldn’t however the ones that do usually do so for the following reasons

  • Speed & Convenience

  • Avoiding Expensive Repairs

  • Ability to be discreet 

  • Limiting the number of people coming through the home.

If you are someone who needs these benefits working with a cash buyer like myself or one from eXp Express Offers you should definitely consider a cash offer. If you have the time to wait and the resources to handle all that comes with selling, allowing me or a partner to list your property is likely in your best interest.

Another key to figuring out if a cash offer is right for you is by comparing a net sheet. A net sheet shows you what you will walk away from the transaction with all said and done… all fees paid, all commissions, liens, etc! It's important because traditional sales and cash offers have different costs associated with will for sure affect your net. In other words, it is NOT all about the actual sales price of the home. Two of the main differences in cost are commissions & estimated repairs. Generally speaking with a cash investor you are likely to pay 0-3% in commissions whereas with a traditional listing you can expect 4-6%. Another major thing to think about is the time that it will take to close the sale. The longer you are in possession of the house typically the more your holding cost will be. Typical sales will take 45-90days while working with an investor you can get closed in as soon as 14 days.

Comps

iBuyers are using the recent sale of properties comparable to your subject but at its best condition. Determining what the house will sell for after it is fixed is the foundation of every offer. When looking for comps they are using recent sales with usually a half-mile to a mile away from your property. The homes should be similar in size, build year, lot size, but we are looking for the updated projects here. This method is much more data-driven, it removes the thought of sentiment. Investors have to use data to draw conclusions not emotions. 

The difference between the comps I would look at as a realtor vs the ones I would look at as an investor is as a realtor I‘m comparing property that is in a similar condition and as an investor, I’m likely comparing the home to what I can reasonably expect the home to be. This part of the process is essential in determining the fair market price of a standard listing and is an important part of developing our offers when buying houses in North Carolina.

Estimated Repairs

When my team meets with prospective sellers to discuss the different options to sell a home in North Carolina there will ALWAYS be an estimate for the repair cost. Who’s making those repairs and what those repairs will cost can change. Professional buyers like the ones on Express Offers will cost each expense in detail in order to come up with a CASH OFFER. Depending on the age and condition of a home, there may be unseen issues that factor into the risks a professional buyer may be taking upon themselves and could affect the offer made as well. These factors will be explained in detail to fully understand the underlying financial risk involved in our buying your home. Something else to understand is that rehab costs are generally going to cost an investor less than what it will cost you due to them usually being volume clients. The professional buyers also have a much better grasp on other variables that affect cost such as shortages or disruptions in distribution channels.

HOLD TIME

The same way that you as a seller need to consider and carefully calculate your hold time before deciding how to sell your home be it listed on the market with me or sell it for cash to an investor like the ones we have in our Express Offers platform. An investor is looking at the same thing but for their anticipated holding time and calculating it as an expense. Generally speaking, the goal is to be in and out of a flip in 60-90 days. The amount they expect to spend over that course of time will be factored into the cash offers you receive.

 There won’t be a disappointing last-minute call from your agent about your buyer failing to qualify for the loan because we buy homes for cash. I am here and happy to answer any questions or concerns about any situation or scenario you may have. My team and I will walk you through the different ways your home is valued. Once you have seen the different projections you will be able to select which solution works best for you.

Send me an email or call me at (336)907-7068 today to learn more about how my team and I can help you sell your home


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