Cash buyer or listing agent: what each one really costs you

The short answer

If the house is in good condition and you can wait, listing usually puts more money in your pocket. A cash sale makes sense when the house needs work you cannot pay for, when you need a firm date, or when months of showings are not realistic for your situation.

What a listing costs

• Agent commission. It is negotiable — ask for the total in writing before you sign a listing agreement.
• Repairs a buyer's inspector asks for, which are negotiated after you are already under contract.
• Carrying costs for every month on the market: mortgage, taxes, insurance, utilities, and upkeep.
• Prep work: cleaning, paint, yard, and sometimes staging.
• The risk that a buyer's financing or appraisal falls through and you start over.

What a cash sale costs

The price. A cash buyer pays less than a fully repaired house would sell for, because the buyer is taking on the repairs, the holding costs, the resale costs, and the risk. What you get in return is no repairs, no showings, no commission, and a closing date you pick.

Ask any cash buyer to show you those pieces. A buyer who will not explain their number is asking you to trust it blindly.

Run the numbers yourself

Here is an illustrative example, not a quote. Say a house could sell for $250,000 once it gets $20,000 of repairs, a 6% commission, and four months on the market at about $1,500 a month in carrying costs.

$250,000 − $15,000 commission − $20,000 repairs − $6,000 carrying costs = about $209,000, before your normal closing costs. That is what the listing really nets.

Now compare a cash offer to that figure, not to $250,000. If the cash number is close, the certainty may be worth the difference. If it is far below, listing probably makes more sense.

Five questions to ask yourself before you decide

• How soon do I actually need to be out, and is that date fixed?
• Can I pay for repairs up front, and do I want to manage contractors?
• Can I keep the house clean and ready to show for several months?
• What happens to my plans if the first buyer's financing falls through?
• How much is a guaranteed closing date worth to me?

Costs people forget

• Utilities, lawn care, and upkeep on a house nobody lives in.
• Insurance on a vacant house, which can cost more or be harder to keep.
• HOA dues and property taxes that keep coming every month it does not sell.
• Trips back and forth if you live out of town.