You decide to move, put your house on the market, and generally hope for a quick sale with strong offers. And then all of the sudden, you receive a cash offer. Fortunately for you, accepting a cash offer provides several advantages over a traditional real estate transaction. So, what are the benefits of accepting a cash offer on a house?
What Is A Cash Offer?
Before we get ahead of ourselves, we should define what exactly a cash offer is, even though it may seem fairly self-explanatory. A cash offer is simply when a buyer has enough funds to purchase your home outright; without using any financing programs. They’re also able to provide proof of these funds.
As a seller, whether you receive a traditional offer involving financing, or a cash offer, it doesn’t always make a huge difference. At the end of the day, you’re still receiving your money.
Difference Between Cash Offers and Traditional Offers
The main difference is avoiding various contingencies that can be risky for the buyer and the seller. Cash offers are simpler, quicker, and require less steps when purchasing a home.
There’s no need for an appraisal since the buyer won’t need to be approved for a mortgage loan. The most common reason a contingent offer fails is because of financing. However, financing is not required with cash offers. So compared to a traditional offer involving financing, many obstacles are removed while purchasing a home.
Who Are The Buyers Offering Cash?
Although everyone’s financial situation is unique, the most common buyers offering cash are:
- Retirees who are using their savings.
- Investors who are holding homes as rental properties or flipping houses.
- People who are simply well-off financially.
- Homeowners who sold their home recently, and are using their proceeds from the sale.
- People who recently had a major shift in life events. These can include divorce, a lump sum of money being left to them after a loved one’s death, or even winning the lottery.
- iBuyers, who are instant online buyers in specific locations that purchase homes in certain conditions.
- Companies who specifically buy houses with cash without the need to do inspections, appraisals, or repairs.
Benefits of Accepting a Cash Offer
For the seller, there are many benefits of accepting a cash offer on a house. Here are 10 of the main ones:
- Quick closing. – Typically, it takes one to two months for a mortgage to be underwritten. Since there’s no mortgage, you are saving time.
- Ability to move quicker. – If you accepted a new job in a different city or state, need to move due to a breakup, or simply just ready to move on to the next chapter of your life, you can move faster thanks to the quick closing process with a cash offer.
- No appraisal required. – Appraisals are not necessary. This is because mortgage lenders do not need to be involved.
- Not as risky. – Again, thanks to eliminating financing, the seller knows they’ll get paid quicker. Usually, they don’t have to worry about any part of the deal falling through.
- Less paperwork. – Financing, inspections, contingencies, and appraisals all involve a lot of paperwork. You tend to avoid these as a benefit of accepting a cash offer.
- Skip inspections. – Cash buyers know that the home will typically have some flaws, and are generally okay with that, foregoing inspections.
- Save on repairs. – Inspections bring light to repairs that may be necessary. You generally sell the home as-is. This is because the home inspection is being skipped.
- Less stress. – Quick closings usually correlate with less stress for the sellers.
- Eliminates risk of a failed sale. – Since we mentioned financial reasons are why home sales usually fall through, cash offers avoid that completely.
- Minimal to no negotiating. – Instead of the back and forth between real estate agents representing the buyers/sellers, cash offers are typically strong and a buyer can accept them right away.
If you are selling your home, or buying a new one, you may want to consider working with an expert real estate agent. The agents at Trelora can help. They use a team approach with the latest technology, all while saving you money.