The traditional process of selling a house is often regarded as one of the most stressful tasks a person will ever do. It is an understandably busy period in a person’s life, with the hassle of selling their existing home coupled with relocating, buying, and establishing a life somewhere else.

So stressful is this process, that 36% of past home sellers say they were reduced to tears. One-fifth of these people even admit to crying five or more times during the process.

If you are planning on selling a house with tenants, you may be wondering exactly how much more stressful that fact will make the entire process. Fear not, however, as in this blog post we will highlight how you can sell your house for cash without any stress, even if has renters in it.

We will share practical information on selling a rental property with tenants and give a full run-down on the benefits and process of selling a house for cash to iBuyer. Let’s get started.

Selling a House With Tenants In It

The first thing to note here is that you absolutely can sell your property if it has existing tenants. The reality is that landlords have every right to sell a property they own while they still have tenants living in it. 

There are a number of different ways to sell a property with renters, based on the rental agreement. The most flexible rental agreement is a month-to-month lease, meaning that there will not be a long notice period required. Even in the case of a fixed-term lease, you should still be able to kick-start the selling process before the lease ends (it’s good to keep renters in the loop).

In some cases, disgruntled tenants may attempt to make things more difficult. In this case, options include selling the property directly to the tenant (if they make a fair offer), selling to an investor, and paying your tenant to leave earlier than stipulated in the rental agreement.

The most important thing is to be respectful and informative to your tenants about your intention to sell. Informing them in person is best, rather than a quick text message. You should also take the time to answer any questions they may have about the process, what their rights are, and their lease agreement details.

Selling your house for cash, even if it has existing tenants, is a quick, straightforward, and easy process. Below, we will highlight the steps you need to take to sell your house to iBuyer for cash.

Hassle-Free House Sales for Landlords

We have devised a three-step process that allows landlords to quickly sell their rental property without any hassle or stress. The first step in this process is to enter the address of your property on our website. Using our data systems, we will be able to give you an accurate and instant estimate of the value of your house.

For the next step, we will connect you with iBuyers across the country who buy properties ‘sight unseen’. This means you will be able to get an offer price for your house as soon as today. 

You will then be able to make a decision on your no-obligation cash offer and, if you are happy to proceed, can choose a closing date that suits you. For sellers in a hurry, we are able to complete the closing process much faster than if you were to sell on the traditional, open market.

Best of all, you won’t be faced with any unseen and unexpected closing fees. Put simply, the price you are quoted for your house is the amount you will receive in cash.

How Long Does It Take to Sell Your House for Cash?

When selling your house through iBuyer, even if it has tenants, you can close in as little as 14 days. There are many different reasons for people to sell their existing properties and, in a lot of cases, people are dependent on finalizing the sale before starting a new chapter in their lives. Some common reasons to sell your house for cash include:

• Relocating to a new area
• Tenant-related issues
• Property inheritance
• Divorce
• Delinquent taxes

Even if your property is in need of repairs, you will be able to sell it for cash. iBuyer purchases a wide range of houses, including everything from single-family houses to larger complexes.

In some cases, home sellers find it incredibly difficult to sell via the open market. This can increase the stress felt during the process and put a hold on plans. When selling for cash, the process will be completed in a short amount of time, allowing you and your family to focus on the next exciting chapter in your lives.

How Does This Compare to the Open Market?

If you choose to sell your house for cash, even if it has tenants, there are far fewer variable factors to consider. For example, selling your house for cash can be done at any time of the year and, as you can choose your preferred closing date, you have total flexibility. This is not the case for homeowners who plan to sell on the open market.

For example, it is better to sell a house on the open market in the summer months rather than in the wintertime. The exact amount of time it takes for the property to be sold, including the amount of time it stays on the market and the additional closing process, can also vary greatly.

According to the National Association of Realtors, the average amount of time a property was on the market in 2020 was 24 days. Add in the average 46 days that the closing process typically takes and the total length of time to sell a property is approximately 70 days. This is a big difference from the 14 days when selling your property for cash through iBuyer.

As noted above, selling an ‘ugly’ house, one that has tenants, or is in need of significant repairs can greatly increase the amount of time a property remains listed for sale on the market.

The Benefits of Selling Your House for Cash

Here, we will highlight the undoubted benefits of selling your rental property for cash.

There Is Less Hassle Involved

Selling on the open market involves a greater number of steps compared to selling for cash. For example, selling privately typically requires a marketing plan so that prospective buyers are aware of the available property. Common marketing options include advertising in local newspapers, online, or with physical signs.

This can be a time-consuming process. With so many other homes for sale on the private market, that are actively competing against each other, it is usually advised that sellers hire a professional photographer/videographer to take high-quality photos/videos of the property.

There are also a number of risks involved when selling privately. For example, buyers may be interested initially but end up pulling out of the deal due to cold feet. Alternatively, they may be unable to proceed if they are denied a mortgage, which would put the seller right back to square one again.

Selling to iBuyer means that you will avoid all of this potential stress and hassle.

It Is Much Faster

There is an approximate difference of two months between selling a house on the open market and selling it for cash. For properties with tenants in situ or where significant repairs are required, this difference may be even greater.

Many homeowners choose to carry out renovations before listing their property, in the belief that this will increase the property value and sale price. While this may occur, it is not a guarantee, and homeowners risk spending money that they may not recoup. Of course, overseeing renovations is also a stressful and time-consuming process.

When selling your house for cash, you can cut down the timeframe for each step in the process. With regard to the closing process, homeowners who sell for cash won’t have to deal with the often complex nature of finalizing paperwork.

Avoid Hidden Fees

Most sellers who go through the open market will employ the services of a real estate agent. While they may be able to simplify the process of selling and taking care of the paperwork, this does come at a steep cost. In the United States, the typical commission paid to real estate agents is 6% of the sale price.

Many cities in the US also assess transfer taxes. The average transfer tax is $742, based on a tax rate of 0.38%, though it may be significantly higher in certain cities.

Preparing a house for staging is another cost that should be factored in when selling on the open market. Homeowners often feel the need to paint their property, both the interior and exterior, a cost that can run in the thousands of dollars when materials and labor are factored in. Even general house cleaning, such as garden maintenance and carpet cleaning, will stand to reduce the overall profit after the sale is agreed upon and closed.

These fees and taxes can quickly add up and make the actual sale price rather disappointing. By selling for cash, you can avoid all of these hidden charges. The cash offer you are quoted will be the exact amount you receive and there are no hidden fees.

No Need for Home Repairs

Research shows that homeowners spend, on average, more than $15,000 in extra costs associated with selling their homes. 80% of home sellers say that they make improvements to their properties before listing. As we have noted, there is no guarantee that the amount spent will significantly increase the sale price.

In some cases, landlords may be keen to sell a property due to mistreatment by careless tenants. Many landlords are shocked by the condition of their properties when leased to tenants who do not treat them with respect. A landlord trying to cut their losses by selling may find that initial home repairs are required before the property can be put on the market.

No Need for Home Showings

It’s understandable that many homeowners are reluctant to open their homes to prospective buyers. This process may be made even more difficult if the property in question is currently occupied by tenants. Many people are simply unable to organize showings that fit in with their or their tenants’ schedules.

When you sell your property for cash through iBuyer, you won’t have to worry about home showings. You will be connected to iBuyers who buy homes sight unseen, quickly and conveniently.

How to Sell Your Home With Tenants

The bottom line is that selling a house with tenants is absolutely possible. There are a number of steps you can take, which depend on factors such as the lease agreement and the future plans of the landlord. Many home sellers do not want to delay the process of selling a property and would rather focus their attention on the next chapter of their lives.

Of course, it is important that you be considerate of tenants when selling. The most straightforward way to sell a property with tenants is to sell it for cash through iBuyer. Our easy three-step process will allow you to sell your property without any stress and within as little as 14 days.

iBuyers makes the process incredibly easy. To get started, simply create your seller profile today and enter your home address. It’s 100% free and you can get an offer price for your home as soon as today.

The post Can I Sell a House With Renters In It? appeared first on iBuyer Blog.

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Buying a home is an exciting yet very detailed process that involves a lot of people, paperwork, and money. According to a survey conducted by the National Association of Realtors, 34% of all home buyers are first-time buyers. 

Whether you’re buying a home for the first time, selling your current home, or looking to purchase a new home, it’s important to understand the ins and outs of a good faith deposit.

Read on to learn more about what earnest money is along with some helpful good faith deposit tips so you’ll be able to buy or sell your home in confidence.

What is a Good Earnest Money Deposit?

So, what is a good faith deposit, and what does it mean? The term which is also called an earnest money deposit is a set amount of money that is given to a seller to show them that the buyer is making an offer on the property in “good faith.”

Offering earnest money protects both the buyer and seller since it gives each party some extra time to do important tasks like title searches, secure mortgage loan financing, and get the final property appraisal. Once an earnest money deposit is provided, the final steps of the home-buying process can begin.

Most of the time, the good faith deposit is delivered when the sales contract or the home’s purchase agreement is signed by both parties. However, it can also be attached when the buyer makes an offer, which shows the seller that they’re serious about purchasing the home. 

Once the money is deposited, the funds are held in an escrow account until the date of closing. Once the closing is complete, the earnest money is used to pay for part of the buyer’s closing costs or down payment. 

While a purchase contract doesn’t legally bind or require the buyer to purchase a home, it does allow the property to be taken off the market. Once the home is inspected and appraised, the buyer and seller can move into the closing phase. However, if the inspection reveals costly problems or the home doesn’t appraise at a good number, the buyer has the option to back out of the deal.

How Much Should a Good Faith Deposit Be?

All earnest money or good faith deposits are negotiable. In most cases, the amount will range between one and two percent of the home’s purchase price. If the local housing market is hot, earnest money deposits may be as high as between five and 10 percent of the sale price. 

Most sellers prefer to get a fixed amount like $3,000 or $8,000. If a buyer is very serious about purchasing a specific home, they’ll usually offer a higher amount to show the seller that they’re interested in following through with the transaction.

Offering a good faith deposit is part of a buyer showing good due diligence. If the closing process is prolonged, some sellers may ask for continuing earnest money deposits until the date of closing. If the buyer fails to make these additional deposits, the seller could decide to return the property back to the market.

If you’re ever in doubt about how much your good faith deposit should be, talk to your real estate agent. They will work with the seller’s agent to come up with a reasonable number.

Good Faith Deposit Tips

When you pay your earnest money deposit, it will go into an escrow account or a trust under a third party, like a real estate attorney’s office. The good faith deposit may also go to a real estate broker or directly to the title company so that it’s in good hands.

Earnest money may be paid via personal check, wire transfer, or certified check. You cannot use a credit card to pay for a good faith deposit. Make sure that you get a copy of the sales contract and that it clearly shows the amount of earnest money you paid.

Your agent should also give you a copy of the check or wire transfer for your records so you have proof of payment. Remember that the funds will stay in the escrow account or trust until closing.  

Good Faith Deposit Guide: Refunds

There may be times when a deal is canceled and your earnest money will be refunded. If the seller cancels the sale without a valid reason, you will get your money back in full.

If your home inspection reveals serious or very expensive defects, you also have the right to cancel the sale and get a refund. In cases where the appraisal amount is lower than the sales price and the seller won’t negotiate, you’re also off the hook.

Sometimes, home buyers run into issues securing financing. If you can’t get a mortgage loan approved, then you should be able to get your good faith deposit back.

The buyer may be unable to sell their home before they can close on their new one. In cases where this specific contingency was already agreed upon, unfortunately, the deal might not go through and you’ll also get a refund. 

Always go over the fine print and all contingencies of your contract with your real estate agent. An experienced real estate attorney can also help you understand the terms and conditions to make sure that you’re protected. 

If something happens that isn’t specifically listed in your contract, then you may lose out on your good faith deposit. Things like simply changing your mind about the home at the last minute aren’t grounds for a refund in most cases. You could also lose your earnest money if you fail to adhere to timelines, such as failing to get the inspection in a timely manner.

Protecting Your Good Faith Deposit

Earnest money protects the seller from losing out if a buyer backs out of a potential sale. However, there are things you can do as a buyer to protect your good faith deposit, too.

Always make sure that there are contingencies in place for things like home inspections and financing in the contract. If they aren’t there, then the buyer may get their money back and the seller will lose out.

Get all contract terms and any contract amendments in writing and never sign anything until you fully understand what you’re reading. This applies to buyers and sellers. Consult with your real estate agent or an attorney if you need help clarifying what the different terms mean for you.

Make sure that you always abide by the terms of your contract. This means you must get the appraisal or home inspection done by the date listed and meet all of the contract terms or you could risk losing your good faith deposit. 

Never send your good faith deposit directly to the seller. Always use an escrow account or a trust to hold the funds. The money will be released to the seller during the closing, or back to you if a refund is warranted.

Your good faith deposit should be made to a reputable third party like the title company, a real estate brokerage, or a real estate legal firm. Never write a check or wire transfer directly to the seller. You should also always make sure that you get a receipt so that you have a record of the transaction in case an issue arises.

Good Faith Deposit Explained: An Example

Here’s an example that may help with understanding a good faith deposit and how it might work. Let’s say John wants to buy a home from Susan that’s worth $150,000. John’s broker arranges a good faith deposit of $15,000 that will go into an escrow account.

Both the buyer and seller sign a sales agreement and it states that Susan, who is now living in the home, must be completely moved out within three months. Susan realizes later that she can’t find a new home before the date of closing. In this case, John is allowed to cancel the sales offer and will get his good faith deposit refunded back to him.

The deposit has earned a bit of interest during this period. As long as the interest amount is under $600, John can keep the total amount without having to file a form with the IRS. 

Start the Home Buying Process Today

Offering sellers a good faith deposit is a good way to get the home you’ve always dreamed of. Remember to keep these tips in mind so that your money is protected and so you can seal the deal on closing day.

If you’re a seller interested in getting a cash offer on your home, find out how much your home is worth today by creating an account on iBuyer.com and getting a no-obligation cash offer.

The post What Is a Good Earnest Money Deposit? appeared first on iBuyer Blog.

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