What is a Cash Offer on a House?

A cash offer on a house doesn’t mean the buyer will be handing you a briefcase full of money. These types of offers usually indicate that the buyer has the money and is ready to purchase the property. They do not depend on financing or mortgage loans to close the deal.

Cash offers are much more attractive than traditional ones as they are quicker, risk-free, and less stressful.

Who Buys a House With Cash?

Cash buyers typically concentrate at the top of the housing market. On the low end, you’ll see investors and house flippers purchasing properties that might not be eligible for a mortgage due to price, condition, or both. There will always be buyers at the highest end who don’t require a mortgage. That can be because they have a lot of equity from the sale of a property or just because they are wealthy.

But in the current market, a growing number of typical homebuyers are making cash payments. Paying cash is one strategy some buyers are using to win bids because there is a limited supply of homes for sale and there is a high demand from purchasers.

If you are accepting a cash offer, bear in mind that it will go smoother if you take it from a buyer with previous experience. They are more likely to have experience with drafting the purchase contract and obtaining title insurance.

Financed Offers vs. All Cash Offers

Financing is frequently much slower and more complicated than all-cash offers.

Working with a bank can be time-consuming. As an example, of the pre-approval procedure, the bank will require an inspector and appraiser. The seller is not required to perform an initial house inspection. However, to find any potential structural issues, they are allowed a 10 day inspection period and will typically pay for a prior home inspection.

The owner will normally be responsible for making the necessary repairs if requested by the buyer after the inspection. Such fixes could take a long time.

You can sell your home as-is, if you receive cash offers. Homeowners can sell their properties to a company that buys these types of houses even if they have structural issues, such as damage from a flood or fire.

Of course, a house with structural issues won’t sell for the same amount as one without. However, there are no upfront costs for fees or repairs. Instead, you can sell your house quickly for a reasonable price and get cash in hand.

Cash offers are processed much more quickly. This is so that cash buyers don’t have to wait for an appraisal of the property.

Why is a Cash Offer Better than a Financed One

If you receive a cash offer, you could fantasize about jumping into a pool of money, but keep in mind that, unless you own your property outright, a significant portion of that money would be used to pay down your mortgage. However, there are several reasons why real estate sellers prefer cash offers.

Confidence in the success of the transaction

With cash, the buyer either has the money or they don’t; once the evidence of funds has been checked, you are confident you can close. Although statistics from the National Association of Realtors show that the majority of sales proceed as planned, just 5% of contracts were cancelled as of April 2021. According to the same survey, closing delays affected 22% of deals during the preceding three months, making them significantly more frequent.

Quicker process

Even pre-approved home buyers need to go through underwriting after receiving a real mortgage approval. This could require 45 to 60 days. A cash transaction can be completed in as little as a few days.

Fewer contingencies

Cash buyers are typically less likely to demand an inspection, appraisal, or other contingencies.

Faster closing process

Cash buyers should make the effort to choose a title and escrow company on their own and work with a knowledgeable buyer’s agent (and potentially a real estate attorney) to ensure all the necessary documentation is accurate and complete. Even yet, there is far less paperwork to analyze and approve to close the deal without a lender.

No need to worry about the appraisal

In traditional sales, the buyer usually collaborates with a mortgage lender. The lender must assess that the house they are being requested to finance is worth at least as much as the loan so that financial risk can be avoided. However, for the cash offers no appraisal is needed, as the worth of the house is whatever the buyer is ready to pay.

Why a Financed Offer May Be Better Than a Cash Offer

You may assume cash offers always prevail given everything above. However, money is only one aspect of placing an offer on a house. A few aspects to think about:

Whichever suits your timeline best

A quick closing sounds fantastic if you need to sell a vacant property or move into a new one right away. However, you might have more time if you’re trying to buy and sell at the same time. The best offer for you will depend on how the projected closing dates and schedules differ amongst bids.

How much money you might be spending?

From 1980 to 2017, sellers typically accepted cash offers that were 12% less than financed offers. Even if you want a quick closing, consider the money you might be leaving on the table against all those advantages.

The buyers you are working with.

Working with an experienced cash buyer will increase the likelihood that all of the aforementioned statements about how cash transactions are typically quicker and easier are true. You might still have difficulties with a first-time cash buyer. The sale may become more difficult if the buyer isn’t dealing with a real estate agent. A listing agent with experience working with cash sellers can be a huge asset in this situation.

Should You Accept an All-Cash Offer?

Everyone’s circumstances are different, so you’ll need to determine what matters most to you. This should be rather obvious by this point. It makes sense to wait for the appropriate offer to come up in a market where you can expect to receive multiple offers, whether you decide to take a cash offer or choose a financed one.

How a Cash Buyer Can Help Sell your House

There are many benefits of using a cash home buyer when selling your house. The most obvious benefit is that you will receive cash for your house. This can be helpful if you need to move quickly or if you are behind on payments and need to catch up. Another benefit is that you will not have to go through the hassle of showings and open houses. This can be a time-consuming process, especially if you have already moved out of your house. Finally, cash home buyers typically do not require repairs or renovations before they purchase your house. This means that you can sell your house as-is, which can save you time and money.

Cash home buyers like Fair Property Buyers buy homes directly from sellers, which saves time. This option can be a good choice if you need to sell your home quickly.  Although the amount of time it takes to sell your home on your own may vary, working with a cash buyer is a fast process. You can close and have cash in hand from Fair Property Buyers in as little as 3 days, depending on the situation. This allows you to move on from your old house and start fresh without having to wait for months or even years to find a qualified buyer. If you are looking for a fast and easy way to sell your house, then selling to a cash home buyer may be the best option for you.

Greg Bilbro

Greg Bilbro

Greg Bilbro is the CEO and founder of Fair Property Buyers. After 20 years as a residential Realtor, Greg founded Fair Property Buyers, a nationwide group of local real estate professionals and cash buyers committed to helping homeowners that want to sell their home without a realtor. Fair Property Buyers helps local homeowners get cash for homes without any hassles.

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