What Is a Cash Home Buyer and How Does It Work?

The Straightforward Guide to Cash Home Buyers

You've seen the signs: "We Buy Houses for Cash." You've heard the radio ads. Maybe you've even received a postcard in the mail. But what exactly is a cash home buyer, and how does the process work?

Here's a transparent, no-hype breakdown.

What Is a Cash Home Buyer?

A cash home buyer is a person or company that purchases residential properties directly from homeowners using their own funds — no mortgage, no bank approval, no financing contingencies.

Cash buyers typically fall into three categories:

• **Local investment companies** (like Fellow Homes) — buy, renovate, and either resell or rent the property
• **National iBuyers** (Opendoor, Offerpad) — tech platforms that use algorithms to make instant offers
• **Individual investors** — private buyers looking for below-market deals

How the Cash Sale Process Works

Step 1: Initial Contact You reach out to the cash buyer by phone, form, or email. You describe your property — location, condition, situation, and timeline.

Step 2: Property Evaluation The buyer evaluates your home. This might include: - Reviewing public records and comparable sales - A brief walkthrough or drive-by (not a formal inspection) - Assessing repair needs and market conditions

Step 3: Cash Offer The buyer presents a written offer, typically within 24-48 hours. A legitimate cash buyer's offer will include: - The purchase price - Closing timeline (usually 14-30 days) - Who pays closing costs (reputable buyers cover these) - Any contingencies (good cash buyers have few or none)

Step 4: You Decide There's no obligation. You can accept, counter, or decline. Take time to compare with other options.

Step 5: Escrow and Title Once you accept, a title company opens escrow. They conduct a title search, prepare closing documents, and coordinate the transfer.

Step 6: Closing You sign the paperwork, hand over the keys, and receive your funds — typically via wire transfer on closing day.

How Cash Buyers Determine Their Offer

Most cash buyers use a formula based on:

After Repair Value (ARV) x 70-85% - Estimated Repair Costs = Offer

For example: - Your home's ARV (after renovation): $500,000 - Buyer purchases at 80%: $400,000 - Estimated repairs: $50,000 - Cash offer: $350,000

The exact percentage depends on the buyer, property condition, location, and local market conditions. Fellow Homes typically offers 75-85% of market value for homes in fair condition.

Red Flags: How to Spot a Bad Cash Buyer

Not all cash buyers are created equal. Watch out for:

• **Pressure to sign immediately** — legitimate buyers give you time
• **No proof of funds** — ask for a bank statement or letter
• **Excessive earnest money requests** — you shouldn't have to pay anything upfront
• **Contracts with hidden fees** — read everything carefully
• **No physical address or online presence** — research the company
• **Verbal offers only** — always get it in writing
• **No reviews or references** — check Google, BBB, and Yelp

How to Choose a Reputable Cash Buyer

Ask these questions before accepting any offer:

1. **How long have you been buying homes in this area?**
2. **Can you provide proof of funds?**
3. **Who pays closing costs?**
4. **Are there any fees or commissions?**
5. **What is your closing timeline?**
6. **Can I speak with previous sellers you've worked with?**
7. **Are you a member of the BBB or local real estate investors association?**

Why Fellow Homes Is Different

We're not a faceless corporation or an algorithm. Fellow Homes is a local Southern California company that has been buying homes for years. Every seller works directly with a real person who understands their situation.

• **Zero fees or commissions** — the offer is what you receive
• **We pay all closing costs** — title, escrow, everything
• **As-is purchases** — no repairs, no cleaning, no staging
• **14-day closing** — or longer if you need more time
• **No obligation** — get an offer, compare your options, decide on your terms

Ready to Sell Your Home?

Get a free, no-obligation cash offer from Fellow Homes. Call 310-845-6551 or fill out our quick form. We respond within 24 hours.