In the current real estate market, a cash offer on a home can be a great way to stand out. It’s not uncommon for cash buyers to win bidding wars or beat out competing bids.
In fact, a recent report found that all cash offers made up 29% of single-family homes and condo sales in 2017. While many people may assume that only millionaires have enough cash to make an offer on a home in this manner, it’s not necessarily true.
Besides being an excellent way to beat out competitors, cash offers have a few other benefits for sellers and buyers alike. In particular, they tend to close much faster than a financed sale and are often non-contingent, which means that they don’t have to worry about a loan falling through.
All-cash buyers don’t have to go through the mortgage underwriting process, which can be drawn out and a lot of work for both parties. They also don’t have to wait for approvals or appraisals, which can add a significant amount of time to the transaction. Also read https://www.bigtexbuyshouses.com/sell-my-house-fast-pasadena/
They also won’t have to deal with the numerous paperwork requirements that a financed sale usually includes, like zoning survey certification, water certification, and association documents if buying a condo. This is especially helpful for buyers who are planning to move in quickly.
The downside to a cash offer is that it can be difficult for a buyer to prove that they have enough money for the purchase of a home. In some cases, a seller may ask for a bigger earnest deposit or ask to see more documentation that you have the funds to complete the purchase.
While all-cash buyers are more reputable than buyers who use financing, it’s still important to understand their financial situation and ensure that they have the liquid assets to cover the cost of a home. This is because a cash-only purchase can put you at risk of not having the cash to cover unexpected repairs and expenses that may arise during the home ownership process.
A financed sale can take months to close, and there are a host of contingencies that can get in the way of the transaction. These include home inspections, appraisals, and mortgage financing, among others.
These can all cause a seller to lose interest in a property, which isn’t something a cash buyer wants to happen. This is why many home sellers prefer to receive all cash offers over a comparable bid that includes financing.
All-cash buyers will often want to purchase a house before the market heats up, so that they can get in on the action while prices are low. A hot seller’s market is ideal for cash buyers because they won’t be impacted by rising mortgage rates.
In addition, a financed sale is more likely to require contingencies that can slow down the transaction. This is because a buyer who needs financing may have to wait for their application to be approved, or they might find out that they won’t qualify. Alternatively, a buyer might request a loan contingency that would give the seller the option to walk away from the sale if they don’t secure financing. This can be a waste of both time and effort for both parties.