Agent vs Cash Buyer: The Ultimate Guide [2021]

San Diego cash house buyer vs agent

Should I Sell To A “We Buy Houses” Company?

Welcome to the ultimate guide on deciding whether to sell your house with an agent vs a cash buyer.

In this guide, you’ll learn everything you need to know about realtors, cash buyers, and any other options you as a seller might have.

If your looking to get the absolute most for your house, or just want to skip repairs and sell quickly, then this guide is for you.

Ready to learn more?

Let’s get started.

Introduction

With fewer houses on the market and buyers becoming more competitive, it’s more important than ever to know the different ways to sell your home. In fact, according to the National Association Of Realtors Report over 8% of all house sales are still done without an agent.

So the question is, which way of selling makes the most sense for you and your current situation? Well, that’s where this guide comes in.

1. Know Your Situation

The first step is to figure out what kind of selling position you are in. Does your house need a lot of repairs? Do you need to sell quicker than what a normal transaction usually takes? What kind of repairs if any need to be done?

While most of the time you’ll get more when selling with an agent, houses that need major repairs usually end up sitting on the MLS for quite some time. This can result in long selling times, frustration, and multiple price reductions. Add this to the fact that major mortgage lenders won’t approve loans on houses that need basic repairs (such as a broken water heater) and you can see why it may take a long time to find a buyer for your distressed home.

Here are a couple of questions to ask yourself when getting ready to list your home:


  1. Am I willing to make any necessary repairs before listing my house?
  2. Will I need permits to fix issues such as foundation or structural issues?
  3. Will buyers be able to use conventional financing when making an offer on my house? (here’s a list of lender requirements)
  4. What is the time frame for selling my home? (most MLS transactions take at least 4-5 weeks to get to the closing table)
  5. Are there any issues with the title?
  6. What will my net proceeds be?

2. The Home Selling Equation

Below I’ve listed a breakdown of what the net proceeds would look like from selling with an agent vs going with a “we buy houses” company.

In the example below, we have a house that sold with an agent for $480,000 after being on the market for 2 months. We also have a breakdown of the same house sold to a cash house buyer.

Selling With An Agent

Time On Market2 months3 months4 months
The house sold for$480,000
6% Agent Commission-$28,800
2% Closing Costs-$9,600
Your holding costs
$2,000 /month
(+ 30 day escrow)
-$6,000-$8,000-$10,000
Total Profit$435,600$433,600$431,600

As you can see, the longer the house sits on the market the more you pay in holding costs (mortgage, insurance, taxes, utilities). This may not be a big deal if you are currently living in the house, but if the house is empty these costs can quickly add up.

Cash Offer With “We Buy Houses” Company

Now, let’s take a look at what an all-cash offer would look like. Since we cannot speak for other house buying companies, we will have to give your our equation. While this may be a bit biased it will still give you a good idea of how the process works.

Cash Home Buyer Equation

What we can sell the
house for after fixing it up
$600,000
Rehab Costs (how much
work needs to be done)
-$80,000
Fixed Costs (costs to hold
and resell the house.)
-$60,000
Our Minimum Profit -$40,000

Your Cash Offer

$420,000

So as you can see from the breakdown, the difference in net proceeds between selling with an agent and a “we buy houses” company is a total of $15,600. ($435,600 – $420,000 = $15,600)

So while this is a considerable amount of money, only you can choose which is right for you (selling your house in 14 days for cash without repairs or listing with an agent and getting top dollar).

3. What’s More Important? Time, Money, Or Easy Peasy?

Now it’s time to look in the mirror and ask yourself: what’s most important to me and my situation? Do I want to hold out and get every single dollar I can? If so we recommend using a real estate agent to sell your house.

Or are you looking to skip out on all the repairs and the hassles of cleaning, yardwork, packing, and open houses?

If you answered yes then it may be time to get an offer from a reputable cash home buyer.

4. The Interview Process

Now that we know what our situation is and how everything works, it’s time to make our decision!

The first step is to get multiple quotes from trusted real estate agents or local cash house buyers. Shop multiple companies and don’t always just go with the best quote. Follow your gut here – If someone sounds too good to be true they probably are. Remember, the more informed you are the better.

In-Person Interview

So you have an agent or a cash buyer at your house… well now what?

The first step is to be honest about yourself and your situation. Are you going through a divorce? Did you just inherit a property and have no idea what to do with it? Are you just looking to sell your long-time home?

Make sure that the person there to help you knows what they are doing. Ask them how much the repairs around your house will likely cost, and ask for some numbers to back it up. Make sure they are transparent with their offers. If it’s a real estate agent ask to see what a net sellers proceeds sheet will look like.

Tell them you are having a General Contractor come to give you a quote soon (you can tell a white lie about this if you need to). Let them know why this sale is important to you (see chapter 3), and see what they recommend. Remember, getting multiple quotes will pressure people into being on their best behavior.

After you have received a few quotes make sure to look at reviews about the company and check out their website. Is it professionally done? Do they take pride in themselves as a company? Are they legit? did the representative seem like they actually cared about you? Remember to always follow your gut.

Pro Tip: You also need to make sure that any contract you sign with a cash house buyer isn’t assignable. This just means that your buyers aren’t actually buying the house but instead will “assign” the contract to another buyer. In short, they aren’t actually flipping the house but instead are playing middle man for a sweet profit. This is why we flip the houses ourselves; which in turn allows us to make better offers to homeowners.

5. Making A Selection

Now it’s time to choose! If you’ve followed the steps up to this point it should be pretty obvious what you should do. While selling your home is a huge decision and is never easy, you are now armed with the knowledge to make the right decision! Trust yourself, you got this!

6. Conclusion

Real Estate Agent

  • Agents are great for getting top dollar for your house
  • Better for those who don’t have major repairs
  • Agents understand California real estate law
  • Agents Will negotiate on your behalf

Cash House Buyer

  • Sell your house quickly (less than 14 days)
  • You can avoid making any repairs
  • No cleaning necessary
  • Don’t have to worry about bank appraisals or inspections

So how do you know when to use a real estate agent vs when to use the services of an all-cash offer? While the choice should seem like an easy one, this isn’t always the case. Whichever you choose, make sure to do your homework and pick the option that benefits you most!

Ready to make this decision for your house? Make sure to leave a comment below and let us know your choice between going with an agent vs cash buyer.

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