The process of listing property through traditional methods can be a daunting and expensive experience for owners. With many brokers asking for commissions around 5-6% of the sale price in the Denver area, you may look for alternative options in liquidating your property such as finding a cash buyer and selling without enlisting the help of a listing agent. In this article, we’ll be exploring the option of doing a for sale by owner in Denver, including things to watch out for and the advantages of this method of selling your Real Estate.
When selling your property to a buyer who is seeking a loan to complete the sale, you have a much higher chance of the sale falling through. Many buyers choose certain contingencies that allow them to cancel the transaction without penalty, and leave you back at square one. These contingencies can include disclosure contingencies, inspection contingencies, appraisal contingencies, and loan contingencies.
Disclosure contingencies allow the buyer to walk away after receiving your disclosure forms. If there is a material fact that affects the value or enjoyment of the property; the buyer is within their right to cancel the purchase.
Inspection contingencies allow the buyer to cancel the contract if there is a material defect revealed by any of the inspection reports.
An appraisal contingency means if the property appraises for less than the purchase price in the contract, either you will need to lower the price, or the buyer needs to fund the difference in cash.
Loan contingencies can let the buyer out of the contract in the event that they are not about to get favorable terms from their lender.
As you can see, there are many ways the deal can fall apart when involving a bank, so avoiding this all together by working with a cash buyer can be a very attractive proposition for a seller.
Some real estate listings can sit for a long time with no offers. Upon receiving an offer, you must determine if you would like to accept or counter the offered price and terms. This process of waiting for the right offer, then negotiating the best price and most favorable terms can be a lengthy one.
Many times, after accepting a cash offer for your property, you can have cash in hand in a matter of days. Normal transactions involving a lender can take 30 or more days to put the proceeds of the sale in your account. Other times, it can be an emotional rollercoaster that culminates with a mad dash to the finish line to close on time.
Without using a listing agent, you will forego paying any commission. It’s common for sales commission to be about 5-6% of the total sales price of the property. As the seller, you are paying both the commission for the listing agent and the agent that brings you a buyer. This means that accepting a cash offer and selling the property on your own can be a smart financial decision even if the offered price is lower than an offer you are paying commission out of.
We mentioned inspection contingencies earlier in this article. The reports that come from these inspections, if shared with the lender, can cause the lender to require the seller to fix certain issues with the property before being able to fund the loan. In some loans, lenders don’t require to review the inspection reports; but in other loans such as VA loans, the lender will require you to share inspections reports. If these reports show an issue on the property, the issue would need to get fixed before the loan will get funded. This can not only delay the closing of the sale, but take money out of your pocket upfront to complete the sale.
Even if the lender doesn’t require repairs, buyers can still submit a request for repairs and have time to cancel the deal if you refuse to do the requested repairs.
While selling your property for sale by owner in Denver using a cash buyer can be a safe and effective way to sell your Real Estate, you will need to take precaution to ensure the safety of your property while properly vetting the buying party.
Paying an application fee, or any other upfront fee can be a good sign you are being scammed. It’s more appropriate for fees and payments to come from the proceeds of the sale, once the transaction gets completed.
If your buyer completes the purchase of your property sight-unseen, it may present a red flag. It’s preferable to schedule a tour of your property to allow the buyer party the ability to submit an offer that is in line with the condition and location of the property.
If you can only communicate with the buyer through e-mail, it can lead you to doubt the credibility of the buyer. Any serious bidder should be able to answer the phone and ultimately tour your property before submitting a legitimate offer on your house.
If you’re working with one of the many companies that submit cash offers on Real Estate, do your due diligence to ensure the legitimacy of the company. You can use online tools such as checking with the BBB (Better Business Bureau) and checking to see if there are negative reviews online regarding their service.
In conclusion, selling for sale by owner in the Denver area can be a great option for those looking to sell their property. With the many benefits of having your property purchased directly from you such as quicker turnaround time, and a higher probability of the property closing, it’s worth considering this method of selling. If you are looking for a cash buyer, contact Yellow Brick Road today!