What is better about a cash offer?

More closing confidence Sellers who have had a lot of potential buyers who have crossed their threshold will have more confidence in a cash offer. Unlike buyers who need to obtain financing, with a cash offer, you know that the buyer has the funds available and that the deal can be carried out if that is what both parties want. In most cases, a cash offer is a stronger offer. This is especially true in a seller's market or in a market where there aren't many homes for sale when buyers compete with each other for limited inventory.

Buyers who pay in cash have an advantage over buyers who must obtain financing. For example, homes below a certain price are more likely to be financed with mortgage loans, while more expensive properties may attract more cash offers. Cash offers allow buyers to evade a lender's valuation, advises luxury real estate authority Bonnie Heatzig, making them much more attractive to sellers, especially in markets where homes are regularly sold for a higher market value than estimated. As Dugan says: “The seller has a better guarantee that the transaction will actually be closed with cash.

Other companies simply guarantee to pay the seller in cash on the closing day, charging them a fee for the service, but allow them to work with the agent or lender of their choice. Sellers often make concessions for cash that wouldn't be on the table with traditional mortgage-based offerings. Real estate agent and investor Aaron Steeves suggests that the best thing after a cash offer is a loan commitment from a lender, “which goes beyond prior approval. Speed is one of the reasons real estate investor Craig Stevens chose a cash offer over other comparable funded offerings when selling a property in New York earlier this year.

In addition to the increase in bargaining power, there are several benefits buyers can expect from making a cash offer. To give mortgage borrowers an advantage, a new wave of startups, including Knock, Orchard, Opendoor and Reali, have launched cash-backed offering programs that convert traditional borrowers into cash buyers. If you work with Better Mortgage and Better Real Estate, the Better Cash Offer program has a standard transaction fee equivalent to 1.25% of the purchase price. Even if you don't have the cash to buy a home directly and don't want the additional fees and restrictions that come with a cash-backed offering program, you can still make a competitive offer.

Depending on where you live and current market conditions, cash offers account for between 20 and 40 percent of all sales of individual homes and condominiums. A cash offer is simply a sale in which the buyer offers the seller the full cost of the home without using financing, such as a mortgage loan. In real estate, an offer is considered cash when the buyer doesn't need to borrow money to pay for the house.

Anita Caluya
Anita Caluya

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