What is a cash offer?
A cash offer is an offer on your home where the buyer agrees to pay the entire cost of the house without another financing option, such as a mortgage. While you’ll receive the agreed-upon amount of money after closing with both types of offers, a cash offer allows you to avoid many of the contingencies that could slow, or even dissolve, a home sale.
While you may receive a cash offer from nearly anyone, certain types of buyers will typically offer cash for your home, including:
- Previous homeowners using the proceeds from the sale of their property
- Investors looking to flip properties
- Retirees looking to avoid mortgage costs
While a buyer making a cash offer won’t be working with a mortgage lender, they will need proof they can follow through on the offer by providing a bank statement or a certified financial statement.
Benefits of a cash sale
Here are just a few benefits to receiving a cash offer when selling your home.
When a buyer works with a mortgage lender, the lender needs to confirm that the home is worth the loan amount, which often requires an appraisal. If the appraisal comes in lower than the sale price, this may cause the lender not to finance the sale. With a cash sale, there is no need to have an appraisal done.
Additionally, an appraisal may find home repairs that the seller will need to fix to proceed, or they may need to lower the sale price. However, some cash sales will be as-is, and, even if a cash buyer requests an inspection, they may be less stringent about the results than a mortgage lender.
Most home sales involving a mortgage lender will typically take several weeks to complete the underwriting process, and it may take up to forty-five days from accepting the offer to closing. A lot can happen in that time frame, from a buyer losing their job to the lender deciding to stop the loan for an unexpected reason. There’s no need for underwriting with a cash sale, which saves the buyer and seller time. A faster closing also benefits a seller in that they will not have to worry about paying for the mortgage and upkeep for the home for an extended period of time. The closing timeline for cash sales could be as little as seven days up to a month or longer, depending on the seller’s and buyer’s needs.
Lower stress can be a significant motivator to accept a cash offer. It means you won’t have to worry about staging or keeping your house clean between showings, and you may not need to cover repairs found during a home inspection. The faster closing time means you’re able to move promptly, and you’ll avoid any negotiations that may cause the sale of the home to fizzle.
Cons of a cash sale
Despite having several perks, a cash sale has one common drawback: the offer may be lower than other offers you receive. As the seller, you’ll need to weigh how having a quick sale and lower costs in other areas compares to receiving a lower amount of money for your home.
Selling your home is an experience filled with unique challenges. Check out this list of ten mistakes to avoid for a seamless and successful home sale process.