When a homeowner is looking to sell their home, especially in a sellers market, they may get multiple offers, including those involving cash offers. While many buyers are financing their home with a conventional loan, a few may be able to make an offer in cash. What does this mean for the seller? Is a cash offer a better route than working with buyers financing with a lender? These are only a few questions that pop up when getting such an offer for the first time. Understand more about what happens when accepting a cash offer on a home.
What Is a Cash Offer?
A cash offer is an attractive option for many sellers. In fact some will accept a lower cash offer over a higher offer made with financing. An all-cash offer is one in which a buyer does not have to go through the approval process with a lending institution. Rather, the buyer has the means to finance the purchase out of their own pocket. Sellers may appreciate this alternative more as they do not have to be concerned to whether the potential buyer will be approved for a home loan. A buyer would do well to inquire about proof of funds for a buyer making a cash offer. Seeing such documentation can help a seller feel more confident about going through with the transaction.
Pre-approval for a loan, while helpful, does not guarantee that a buyer will be approved for home loan. When a buyer is not approved for a home loan, a seller has to go back and find another potential buyer. This translates to additional time, money and energy spent to show a home, find qualified buyers and finally close with a qualified party.
How a Cash Offer May Benefit a Seller
A cash offer can be an advantage for a seller. An appraisal contingency is useful but instances have occurred in which a home is found not to appraise for the specified purchase price. This can cause a delay as then the seller has to lower the price or a buyer that is financing with a loan requiring a sizeable down payment needs to come up with additional cash. A potential delay is not the only problem that may develop. A low appraisal can also result in the cancellation of a contract. One benefit of cash offers in eliminating the need for the appraisal contingency.
This is not the only contingency that will not have to be a concern when a buyer pays in cash. Unfortunately, there are times when a lender will deny a loan as an applicant's qualifications change. The loan funding contingency can be skipped for buyers paying in cash and is one less potential hurdle for all involved.
Buyers who do not have to obtain a loan can meet the remaining contingencies rather quickly. A seller looking to move quickly may like a cash offer because it may only take seven days to close. A motivated buyer and seller can expediently meet the remaining demands and finish the transaction.
Selling a Home
Sellers working with a Queensridge home buyer making a cash offer may need to allow a few days to get the necessary proof of funds. Some choose to wait for this letter from the lender and others may be satisfied to see a bank statement wherein the balance is enough to cover the purchase price of a home. Speak with an agent to learn more about proceeding with a cash offer.
Debbie Drummond is a Full Time Realtor with over ten years experience in the Las Vegas Real Estate Market. She and her team of Real Estate Pros offer the highest level of service. If you’re buying or selling a Las Vegas home, call (702)354-6900 or email Debbie@LVHomePro.com. They’ll be happy to assist you in your move.