Understanding Cash Offers and Why Sellers Should Consider Them

For sellers, attracting prospective buyers and securing a deal as quickly as possible is ideal. Unfortunately, this doesn't always happen. But, this doesn't mean that you can't increase the likelihood of attracting buyers to your home who are ready to make an offer.

One way to improve your odds is by accepting cash offers. Cash offers don't just expand your home's market, it gives prospective buyers more purchasing options. Today, we're going to discuss what a cash offer is in real estate and whether you should consider it.

What is a Cash Offer?

When it comes to the home buying process, most people are aware of traditional financing. Traditional financing refers to a loan or line of credit secured through a financial institution under conventional terms. While traditional financing is a common home buying option, cash offers also have a considerable share of the market.

A cash offer refers to a purchase paid in cash without financing. Buyers who make a cash offer likely want to avoid a mortgage or other types of financing. These types of offers can also be attractive to sellers as there is generally no risk of the deal falling through and there is usually a faster closing time compared to buyers who use traditional methods.

When is a Cash Offer Most Likely?

There are many situations in which a prospective buyer would want to use cash to purchase their home. Here are 4 common scenarios that sellers should know.

Investors

Investors who are interested in purchasing property often use cash as it poses many benefits for them. For instance, paying cash for a home allows for complete ownership of the property and mitigates the risk of foreclosure. Another reason cash payments are attractive to investors is that they can avoid interest charges, which means they can get the most out of their investment. 

iBuyers

These are instant buyers who use technology to turn over a large volume of homes. They rely on automated valuation models to offer up to 98% of the fair market value. iBuyers generally use cash to purchase your home as-is and make the necessary repairs.

Proceeds from Previous Property

A prospective buyer can use the proceeds from selling their previous property to put down on a new property. Depending on how much money they make from the home, the buyer might be in a position to put down a cash offer for your offer price.

Competitive Market

If there is a lot of competition for a particular home, a prospective buyer might bid with cash in order to be more attractive to a seller.

Advantages of Cash Offers for Sellers

Cash offers are attractive as they can potentially lead to quicker sales. At the same time, moving away from traditional methods of home selling can come with some uncertainty for sellers. 

If you're interested in accepting cash offers for your home, it's important to think about the advantages.

Fast Closing

Selling a home generally isn't a quick process. However, accepting cash offers can speed up the process by minimizing steps that are usually required when buyers rely on financing to purchase a home. One concern for many sellers is whether the prospective buyer will actually get the financing they need to make a purchase. This is because the buyer must first get their loan approved.

There is always a possibility that a lender will decide not to finance that prospective buyer. A cash offer means that sellers can accept the offer, initiate the paperwork, and close on a sale, all in a relatively short period of time.

Sale Less Likely to Fall Through

No seller wants to lose out on a sale, but it does happen. As stated previously, a lender can decide not to finance a buyer and this is one of the main reasons why cash offers are beneficial to sellers. With a cash offer, there are fewer hoops to jump through, which increases the likelihood of a successful sale.

No Need for Renovations

For sellers that are in a hurry to sell their property or don't have the cash flow to maximize the home's value, you might find cash offers to be more attractive. Most cash offers will mean that the home is purchased "as-is". However, it's important to note that you are still required to disclose any issues with the home. 

Avoid Contingencies 

Contingencies can easily become the thing that stands in the way of someone selling their home. Generally, a contingency will result from an issue discovered during a home inspection. A prospective buyer could also want a mortgage, appraisal, and even a sales contingency. These different contingency opportunities could delay the sale of your home and possibly lead to no sale at all.

With cash offers, there are no contingencies. This means that sellers won't just minimize time but alleviate some stress associated with trying to get their home sold.

Should Sellers Consider Cash Offers?

Ultimately, the decision to accept cash offers will depend on the needs of the seller. A cash offer is certainly a great way to attract the attention of more prospects. In addition to this, cash offers can be an excellent option for sellers who want to minimize steps and sell their homes as quickly as possible.

If you're interested in a cash offer on your property, request an offer from us here at FlashHouse. We make cash offers on your home using a simple, streamlined process. Reach out to us today to learn more about how we can help you get your home sold.

Selling a home is stressful. FlashHouse makes it simple.