The closing process is usually faster. Generally, there won't be an appraisal. Why is a cash offer for a seller better? One of the main reasons is the amount of time and effort they save during the closing process. Working with lenders involves a lot of additional paperwork and hoops.
Things get much easier when lenders don't participate, especially at closing time. Charles Chandler, from My Tennessee Home Solution, adds that shortening the inspection period (the time you have to void a pending offer without losing the security deposit), making the security deposit non-refundable, and providing proof of funds to cover any valuation gaps can also help make your offer attractive to sellers. As Dugan says: “The seller has a better guarantee that the transaction will actually be closed in cash. Cash buyers should take care of hiring a title and escrow company, and have an experienced purchasing agent (and possibly a real estate lawyer) to ensure that the documentation is complete and correct.
Regardless of the type of buyer who makes you a cash offer, you must ensure that they have access to cash to meet the requirements. If your cash buyer continues to choose to have an inspection performed during the due diligence process, the process will normally be much less demanding for the seller. This type of financing helps to streamline the closing process and makes it as competitive as a cash buyer who is ready to move quickly and who knows they can afford to buy the house. If your offer is on par financially with that of another potential buyer, a cash offer makes you the obvious choice because of the benefits the seller gets when the buyer pays in cash.
Orchard allows buyers to unlock up to 90% of the value of their home before they even list it, allowing them to make a cash offer on a new home before selling the one they already have. In addition to the possibility of saving money by accepting a lower offer, obtaining a mortgage involves additional expenses. According to an Opendoor survey, 75% of sellers say that a funded offer would have to be approximately 10% higher than a cash offer to win a bidding war. Skipping appraisals also gives the seller the opportunity to set a price higher than the appraised price, since the buyer may be willing to pay more and has the cash available to do so.
When you hear about buying a home with cash, it doesn't really mean you're going to the closing with a briefcase full of money. While cash offers tend to have fewer strings attached, most homebuyers will want to get an inspection. With cash, the buyer either has the money or he doesn't. If you've verified the proof of funds, you know you'll be able to close.