What is a Cash Offer?
If you’re considering a cash offer on your house, you might be wondering exactly what the term means. Is a cash home buyer going to walk in and literally hand you six figures in cold, hard cash, all wrapped up in bundles and socked away in a briefcase like you’ve seen in a thousand movies? Read on to get the real scoop on cash offers.
What is a Cash Offer in Real Estate?
A cash offer doesn’t necessarily mean that the buyer will pay for the home in actual cash. In fact, conducting a real estate transaction in that fashion could result in undue legal scrutiny. Referring to an offer on your home as a ‘cash offer’ really just means that the buyer has the funds to pay for the home and closing costs without securing financing. It means the buyer doesn’t need to get a loan to pay for the property. They already poses the assets they’ll need to cover the cost. The buyer will also be able to offer proof of funds.
Advantages to Accepting a Cash Offer
There are several good reasons you might consider selling a house to a cash buyer instead of a traditional home sale.
You Can Close Faster
With a cash offer, you don’t have to wait so long to close on the home. An appraisal isn’t legally necessary so you don’t have to wait on one to be scheduled, performed, and then wait for the results. A mortgage company doesn’t have to go through the underwriting process in order to approve financing for the buyer. When your buyer is paying in cash, you can close on the home in as little as a week per the laws in many states.
Closing faster is one thing. You’re also able to get access to the money from the sale faster in many cases. That makes a cash offer ideal for someone who needs money quickly. It’s great for homeowners who are being threatened with foreclosure due to nonpayment, people who need to relocate quickly, or those who have other large expenses they need to cover in a hurry.
Cuts Out Contingencies and Hang Ups
There’s a lot that can go wrong in a real estate transaction. Say you’ve accepted an offer from an FHA home buyer. They’re preapproved and everything looks good on the surface, but you’ve got a minimum of 30 days to go until you can actually close. They could lose their job, slip up and miss some payments, or have an account go to collections, all of which could lead to their mortgage application being ultimately denied. The appraisal may not go as planned and the house may not qualify for an FHA home buyer, as well. Either scenario would leave them with no way to pay for the house, meaning the deal is essentially off.
When you’re looking at a cash offer, the chances of something going wrong and either stopping or holding up the sale of the home are slimmer.
A Cash Offer May Be Key to As-Is Sale
Selling a home can come with a lot of hardships including squeezing repairs into the budget to satisfy potential buyers. However, most cash offers are as-is. An as-is offer is one that doesn’t ask the seller to fix anything or cover the costs of any repairs. They’ll pay the amount offered, no strings attached. You don’t need to repaint or landscape or replace a broken light fixture.
It’s important to remember that as-is cash offers on a house tend to be lower to account for these things. You save money on the repairs that would normally be necessary to sell your home, but those savings will likely reflect in the selling price of the home.
The Final Word on Cash Offers
An accepted cash offer is the real estate version of a bird in the hand being worth two in the bush. It can cut down on the stress and time that typically comes with selling a home, and that’s the reason that many sellers are happy to accept a slightly lower cash offer over a pumped-up offer that’s contingent on the buyer securing financing.