Cash buyers often, but not always, offer a home below the sale price or market value of the home. Many see this as a “discount for cash buyers”. Many sellers will consider this lower offer to be an acceptable “payment” in exchange for the faster and safer home sale that homebuyers typically offer in cash. If you receive a cash offer from a buyer that is more or less common, you may fare better than if you are working with a cash buyer for the first time.
Tasks such as drafting a purchase contract and obtaining title insurance are nothing new to them. Most of these offers will need to be financed by a mortgage, which means that the buyer borrows money from a lender to pay the seller. A home bought with cash can change hands in less than two weeks, making it much more attractive to sellers who are willing to move and move on. Mortgage buyers only need to contribute 10% (or even less) of the final amount of the sale in order to pay a deposit.
With a cash offer, explains Rinal Patel, a real estate investor based in Philadelphia, “there is no need to wait for a loan to be approved before the sale closes or the possibility that the transaction will fail due to a financing problem. Also remember that, in some cases, you may even be able to obtain full market value with a cash buyer. With some types of mortgages, such as FHA or USDA loans, buyers are restricted to certain types of homes in certain locations or under certain conditions. Traditional buyers can also pay in cash if they are downsizing, moving to a less expensive area with capital from a previous home, or using cash from savings, investments, or family members.
Property Solvers can make an initial cash offer on your property worth up to 75% of its fair market value. Discover the benefits of cash offers and learn how you can make this bidding strategy work in your favor, even if you don't have much money at your disposal. Compared to offers that rely on buyer funding, cash offers involve much less bureaucracy. Another important reason is that, since they have access to a limited amount, many buyers will want to keep everything they can for any renewal or unexpected cost.
Cash offers allow buyers to evade a lender's appraisal, reports luxury real estate authority Bonnie Heatzig, making them much more attractive to sellers, especially in markets where homes typically sell above the estimated market value. While the loan still depends on the lender's appraisal, the buyer can choose to forego it, which means that they will have to invest extra money if the appraisal is low. While cash offers tend to have fewer strings attached, most homebuyers will want to get an inspection. A cash offer is when a homebuyer offers a seller the full cost of the home, with no mortgage or any other type of financing involved.
Mortgage approval can significantly delay the closing process, as the lender's decision depends both on a thorough review of the buyer's finances and on an independent appraisal to ensure that the sale price is in line with the real value of the property.
