Selling your home? Chances are, in today’s seller’s market, you’ll likely receive at least one cash offer. In this market, more and more average home buyers are paying cash. But are cash offers better for sellers, or not? It depends on the offer, and the seller.
If you’re looking for a quick sale, minus contingencies, a cash offer may work out best. But if you want more time to find a new home, or maximize your profits, a mortgaged buyer could be best. It really boils down to the offer’s details… not where the funds are being sourced.
Cash buyers tend to be concentrated at lower/upper of the market. On the low end, you’ll see house flippers and investors buying homes that might not qualify for a mortgage for a variety of possible reasons. At the higher end, you’ll find buyers that don’t need a mortgage. Perhaps flush with equity from a home sale, a family gift or loan, or simply by virtue of being wealthy.
With housing inventory tight and buyer demand high, paying cash is one tactic some buyers are leveraging to win bidding wars. The cash buyer almost always outranks the financed buyer because there is a lower chance of the deal falling through, and typically, a cash buyer can close faster than a financed buyer. These are very attractive benefits, yet there’s more to a home offer than a finance contingency and the closing date.
Here are three things you should scrutinize before accepting a cash offer…
Other Contingencies
A cash offer contains no finance contingency, but that doesn’t mean the offer is contingency-free. Most buyers reserve the right to appraise and inspect the property before closing, and to withdraw from the contract if the inspection reveals any major repair issues.
The Bottom Line
Some cash buyers, especially investors, make a low cash offer because they are cash buyers. They effectively charge a premium because there is zero risk of the bank refusing the buyer’s loan. This does not represent the best deal for most sellers, especially those who need the sale proceeds to purchase a new home.
Weighing Your Options
If you get several offers on your home, and at least one of the offers is cash, check the “riskiness” of the best financed offers. What actions the prospective buyers taken? A financed buyer holding a quality pre-approval letter, offers a good down payment, and has reliably paid a mortgage in the past will likely get a loan. These qualities can make their offer as strong as the cash offer, especially if it’s a higher offer.
Whether you are buying or selling, Karen can help advise you on the best strategies to maximize your situation. Having the experience and expertise of a great agent can literally save you thousands of dollars. Contact Karen today and she will be happy to help!
