Happy spring and sunshine from Candice and me! For us this year, the date nights on the water at Tiki Lee’s and our family O’s games feel more welcomed than ever. I am grateful for your readership of this month’s blog – How to Sell Your Home for Cash.
Tyler and Candice Banks
For a multitude of reasons, we are experiencing an incredible housing market alongside the COVID-19 pandemic. Low supply and high demand are leading many homeowners to understandably consider selling, in an effort to strike while the iron is hot and maximize sales price and profit. In fact, a Wall Street Journal article released April 15th detailed a Freddie Mac analysis stating that the U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country’s demand!
In many circumstances, selling your property as-is to a cash buyer can be your best solution.
The following 10 steps are an experience-based outline of how to do this efficiently and effectively with the right buyer for your situation – the timing could be perfect!
If you have any questions before, during, or after reading this, the Charm City Builders team would love to consult with you. Click here to contact us – we may be the right buyer for you!
Step 1: You’re Ready to Sell – Time to Identify Cash Buyers
My first suggestion is to Google “sell my home in Baltimore for cash” and look at the websites of the top results. If you’re not in Baltimore, list the location of the property. The companies high on that first page not only do business locally, but they are also paying to be located prominently in the search results. Personally, I see that as an indication; they are large enough and savvy enough to have a marketing budget that is spent wisely.
Research the companies and how they operate and create a list of five companies you feel comfortable contacting about your property.
In addition, think about folks in your personal network who could help you. For example, an aunt who sold her home for cash, a friend who is a mortgage broker, or a cousin who is a successful contractor. People that are associated with the real estate industry may be able to connect you to potential buyers.
Step 2: Prepare the Property and Know the Details of Ownership
Before reaching out to potential buyers, make sure you have key information collected and documented so you are ready to answer questions that will impact buyer interest. Examples of the information will want to record include:
- Details about the property: For example, How many bedrooms and baths? What type of house are you selling (single-family detached, townhouse, condo, etc)? Size of the property and the lot? Some of this information, which is public knowledge, can be found on the Maryland Real Property Search website.
- Highlights: What are the characteristics of the house that will make it more appealing? For example, a new water heater, granite countertops, etc. This information will be worth sharing with buyers. Pictures of these highlights can be beneficial to have.
- Contents in the property: What is the plan with items in the home? Do you want to leave everything for the buyer to discard or will the property be delivered vacant? This information will impact a buyer’s offer.
- Ownership of the property: Did you inherit the property? Is money still owed? Is anyone else on the deed of the property? The more information on this subject you can gather, the better.
Step 3: Homework Time! Do Some Market Research
Sites like Zillow and Realtor.com can give you recent sale information in your neighborhood. Spend time looking at “comps” – homes that are located near your property, similar in size, and have the same architectural type. Remember to keep in mind the condition of your property in comparison to what you are seeing online.
Step 4: Create Competition and Schedule Appointments
Begin contacting your list of potential buyers. First impressions are key, so pay attention to the responsiveness, attitude, and process that the cash buyers use to acquire properties. Share appropriate information and if you have the summary above typed out, offer to send it to them as a follow-up to the initial conversation. Be sure to let them know that you are talking to multiple buyers and plan to schedule personalized tours of the property with each of them.
With each buyer from who you get a good impression, set up a day and time to meet with them to tour the property.
Step 5: Tour the Property with Selected Buyers Using Staggered Appointments
Meet with each of the potential buyers and tour the property with them. They may want to bring a contractor with them for the tour, which will help them generate a budget for the property to enable them to make their offer. Meet with each buyer individually – avoid having multiple investors at the property at the same time.
With each buyer, ask them the following questions:
- When can you expect an offer for the property?
- What are their intentions for the property?
- This is important because many cash buyers are participating in wholesaling, which means they are not actually going to close on the property and take possession. Instead, they will assign the contract to purchase the property to someone else, who will actually take ownership of the home. This is a common practice, but one you should be aware of prior to engaging in a business transaction with them. If the buyer is going to take possession, they will most likely plan on rehabbing it for resale, or hold onto it and rent it out.
Step 6: Reviewing Offers & Negotiating – Ask Questions and Take Notes!
After touring the properties with the buyers, you should be ready to review their Purchase Sale Agreement/Offer/Contract (PSA). This is the written document you receive from a buyer detailing their interest in purchasing your property, and the terms associated with the sale (also known as contingencies). It should be straightforward and tend to be less than 5 pages long for cash, as-is offers.
Key areas to note:
- Purchase price: Perhaps the most important part of the contract is the purchase price, which is usually listed in the first or second paragraph of the PSA.
- Any language pertaining to assigning or marketing the property – this indicates that the investor may assign the contract, or wholesale it, as detailed in the previous step.
- Property Contents: if you prefer to leave any of the contents in the house to ease the transition, be sure there is language addressing this in the purchase sale agreement.
- Selling as-is: Be sure that the PSA states that the property is being purchased as-is and that there will be no inspections.
- Settlement date: The PSA will note the proposed settlement date for the property. For a cash sale, this can be as soon as 14 days following contract ratification, which is the date when both the seller and buyer have signed the PSA.
- Deposit/Title Company: How much of a deposit will the buyer make? This number should be 1% of the purchase price, or more. The deposit will be held by a title company chosen by the buyer. In Maryland, the buyer has the legal right to select the title company to handle the transfer of ownership.
- Access/Lockbox/Key while under contract: The PSA should detail the agreed-upon access of the property by the buyer during the time between ratification and closing. If you agree to a lockbox, here are some recommendations:
- Make sure you have a backup key prior to leaving one in the lockbox
- Be sure you have the combination
- Require, in writing, that you will be informed of anytime someone will be entering the property.
- Require, in writing, that nothing will be brought into/removed/altered in the property.
- Transfer/Recordation Taxes: There should be language in the PSA addressing transfer and recordation taxes and how they are being paid. It is very standard in Maryland to split these expenses at closing, with the buyer paying half and the seller paying half. Learn more about Maryland transfer and recordation taxes here.
When you receive a PSA, be sure to acknowledge receipt and that you will get back to them no later than 3 days after the offer is made, as you are expecting multiple offers.
Step 7: Negotiate with Chosen Buyer and Ratify Purchase Sale Agreement
First and foremost, this is a great time in this post to remind you that throughout any of this process, consider legal counsel to advise you through any of this process – especially when it comes to the contract. Doing so will add expenses to the transaction, as well as time, but worth considering in all situations.
As you review offers, price is going to be perhaps the largest influencer of your decision. If you have had a positive experience with the investor who sends a clean, simple offer with the highest offer amount, your decision is an easy one!
That said, if there are multiple offers with the same or very similar offers, you will want to look at the differences between them – i.e. deposit amount, days till close, contingencies, etc.
And this is easier said than done, but trust your gut and put emphasis on the communication skills and transparency of the buyer you are considering. When ready, initial each page and sign, print, and add date where prompted. Take pictures or make copies of the PSA prior to returning the contract to buyer.
Step 8. Contract to Close!
Once you have ratified the PSA, sent it to the buyer, and confirmed receipt, you will want to do the following to be ready to complete the home stretch of selling your property.
- Ask the buyer to send you the contact information for the title representative and get in touch with them. That said, there is a good chance they will reach out to you first, as they will need certain information from you to get the property prepared to close. When you talk with them, confirm/ask the following:
- That they have received the deposit on the property
- Estimated seller proceeds for the sale
- Their closing date matches what you have on the ratified PSA
- When they will be able to send you the closing disclosure, which details the financials of the transaction, be sent to you prior to closing
- Location of closing – you will need to sign in person
- How you will receive the proceeds from the sale – certified check or wire.
- Monitor the Property. As best you can, keep an eye on the property while it is under contract. If you see something, say something to the buyer!
- Check In, Check In, Check In – Communicate with the buyer and title agent to make sure all is going smoothly. You have the right to know.
Step 9: SOLD
On settlement day, you will meet with the title agent at the agreed-upon location to sign the documents needed to complete the transaction. Bring the additional keys you have for the property, and be ready to congratulate yourself on navigating the waters of selling your property!
Step 10: Let’s Talk
I loved sharing the above information with you because I feel it is reflective of how I do business – honestly and with a win-win mentality. If you read this blog and want to discuss your options, we would welcome the opportunity to talk about your situation and how we can help. Contact us anytime by clicking here! At Charm City Builders, we take pride in the way we treat people right.