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Tips for Selling to an Investor or Cash Buyer

You should be looking for someone truly invested in purchasing your home. At Alamo City Housebuyer, we stand behind our word. No gimmicks, no maybes. Whether or not you choose to sell to us, we want you to be well informed so you can make the best decision for you and your family. If you encounter these situations when selling your home, you should consider it a red flag. 

Make Sure the Buyer Deposits at Least 1% of the Earnest Money

A real estate contract usually requires an earnest money deposit to be valid. The earnest money is deposited with the title insurance company after the contract is signed. The amount of the deposit is negotiable, but the typical amount is 1% of the purchase price. If a cash buyer offers you a very low earnest money deposit (think $10- $100), that is all they are risking and they are not truly invested in buying your home. Alamo City Housebuyer typically offers a $5,000-$10,000 deposit. 

Pay Attention to the Option Period

Many buyers want an option period to decide if they want to buy your house. During the option period, they can cancel the contract for any reason and get their earnest money deposit back. However, you can negotiate the length of the option period, and what the Buyer will pay per day. Five days is usual for a cash buyer, for at least $10 per day. Alamo City Housebuyer doesn’t typically ask for an option period.  

Use a Standard Real Estate Contract 

The Texas Real Estate Commission (TREC) has standard contracts available on their website. These contracts offer basic protections for the Seller and the Buyer. Be sure any contract you sign is professional and protects your interests. Don’t let anyone pressure you into signing a non-standard contract without a review by your attorney. Alamo City Housebuyer always uses TREC contracts. 

Check the Buyer’s Name

The first page of a TREC contract asks for the names of both the Buyer and Seller. Make sure the name of the Buyer matches the person or company you are dealing with. If the Buyer adds “and/or assigns” following their name, the Buyer can then assign the contract to somebody else for a fee. This is legal and not uncommon. However, it could signal the person signing the contract doesn’t intend to buy your house unless they  find another Buyer to assign the contract to. You could wait weeks for a closing, only to find out you have to start over. Alamo City Housebuyer will never assign your contract to another buyer.  

Ask For Proof of Funds

When you are selling to a cash buyer, you want to make sure they actually have the money to buy your house. Their proof will be in the form of a statement or letter from a reputable, recognizable bank. If a Buyer cannot provide proof of funds, it’s another signal they could be wasting your time. Alamo City Housebuyer provides our proof of funds through Frost Bank. 

Ask for References

Hopefully your investor or cash buyer has experience and can offer you a list of references to contact. Ask past clients how the transaction went, if they paid the price that was offered, if they closed on time, and if they would recommend the buyer.  Alamo City Housebuyer has a list of testimonials we are happy to share with you.