What is a cash offer?
A cash offer is when a home buyer offers a seller the entire cost of the house, with no mortgage or any other type of financing involved. Buyers prefer cash offers, even if they’re lower than an offer from a buyer getting a bank loan. Cash offers are probably more common than you think. According to ATTOM Data Solutions, cash sales nationally accounted for just over a quarter of all single-family home and condo sales in 2018
Why is a cash offer better than a financed offer?
- You don’t need an appraisal. banks require an appraisal because the house is going to be the security for the loan for 30 years. The bank needs to know the value of the house will protect the loan should things go south for the homeowner. Cash offers do not require an appraisal.
- Faster. Bank approvals take 30-60 days even after a pre-approval. Cash offers need only the time to get the title search back.
- Cash offers are stronger offers. A seller may choose a cash offer over mortgage offer even if a financed buyer offers more. Because the seller will close sooner (meaning they’ll get paid sooner), and without the mortgage underwriting and appraisal process there’s less of a risk that the deal will fall through.
- Cash buyers show a proof of funds (POF). There is no doubt that the cash offer is genuine.
- Lower closing costs. Closing costs can be much lower when buying with cash. In a financed sale there are a lot of bank-related fees during closing, including credit check costs and origination and processing fees.
- Cash offers can be used to buy any house. FHA or USDA loans are restricted to certain kinds of houses in certain locations or in a certain condition. But cash is always welcome anywhere.
- Few or no contingencies. There are usually fewer contingencies with cash sales. Buyers don’t need the financing contingency (that’s for mortgage loans), and there may be no need for a sale contingency either
When are cash offers used the most?
Typically, cash offers tend to be more common in these scenarios:
- An investor (or investment company) is interested in the property
- The buyer has just sold their previous home and has sale proceeds to pull from
- The seller has approached an iBuyer about buying the house
- There’s lots of competition and a buyer wants to stand out
- The property is in need of repairs or renovations and is attractive as a fix-and-flip home
Where we come in
So the next time a we buy houses company makes you a cash offer for your house just remember the benefits you get as a seller for that offer. The deal is nearly done when you accept a cash offer from a we buy houses firm like Rapid Home Deals 352-480-0955.