You’ve seen the signs, you’ve seen the Facebook ads (like this one), you’ve seen the websites. So what exactly does it mean when someone offers to buy your house for cash?
Do we back a dump truck up to your house and unload the cash? No.
Do we bring a bunch of suitcases to you and open them up to prove they are full of money like in the movies? No.
Is this some sneaky, under the table, hush-hush type of deal? No.
Well then what is a “cash buyer” and how does it even work to buy your house “cash”?
The reality is when we buy a house for cash its pretty much the exact same as if we we’re to buy a house the normal way! The sale of the house still goes through lawyers on both sides (we have a lawyer and so will you). The lawyers are the most important part – they make sure everything is done legally, they hold the deposit in trust, transfer the funds on possession date, take care of title transfer, etc.
So buying a house cash is like any regular, old house sale except for one thing: no mortgage is required.
In a typical house sale, the buyer will get a mortgage from a bank to come up with the funds to pay for the house. In a 2020 report, Mortgage Professionals of Canada association reported that 64% of houses have mortgages or secured line-of-credit on them. In order to obtain a mortgage, the buyer will have to pass the banks qualifying process. Buyers may or may not get pre-qualified for a mortgage before they make an offer on the house. Either way, after the offer is accepted by the seller, the buyer will go to the bank for final approval on the mortgage. At this stage, they may or may not get approved. And if they don’t get approved the sale will fall through, causing the house to have to go back on the market.
A cash buyer does not require a mortgage. They already have the full amount required to buy the house available. This might be through their own savings, or through private investors. With mortgage rules tightening up seemingly every other day, not having to obtain a mortgage is a big step to knowing that the sale of the house will go through.
Additionally, the bank qualifying process and advancement of funds can take 2-4 weeks. A person who has the funds available, ie: a cash buyer, can skip the process and complete a house sale in a shorter timeline.
And so there you have it. This is the main reason people will advertise that they pay “cash for houses” or “we have cash buyers” or “fast cash today”. It is simply a reassurance to you that the sale of the house will complete in a shorter timeframe. And the fact that each party (buyer and seller) still have their own lawyer means they get the same protections and proper legal proceedings as a normal house sale with a mortgage on it.
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