Must Be the Money: the Almighty All-Cash Offer

Cash offers are infamous for winning bidding wars and swaying sellers, because as we all know: money talks.

Obviously cash offers aren’t for everyone, because most buyers can’t really afford to buy their home outright. But in the event that you are able to put down some green for a home you love, here’s why it’s a win-win situation for everyone.

Why Cash Offers Are Good For Sellers

A seller is going to be getting paid either way, so why would sellers prefer cash offers? Cash offers leave out a very tricky third party: the lender. Without the uncertainties and contingencies of loan amounts and approvals, the home sale is a lot easier. There’s no waiting to see if the house appraises for above or below the loan amount. There’s no waiting for paperwork from the lender in order to close. There are no surprises when the loan suddenly falls through, and with it, the sale.

Cash makes the home sale secure, smooth, and quick. Sellers know that cash sales are more likely to close and close quickly, and because of this, some sellers take cash offers over higher bids that come with financing attached! This is why all-cash offers are the ultimate competitive edge in a low inventory housing market.

Why Cash Offers Are Good For Buyers

Cash offers are great for buyers… if they can afford to put the money down! No monthly mortgage payment. No loan origination fees. No necessary credit score to qualify for a loan. No worrying if the deal will fall through if the house appraises for too much. No waiting to “totally own” the home. No worries about interest rate fluctuations.

Still, a buyer shouldn’t throw all caution to the wind. First and foremost, you need to think about whether you can really afford to put down a cash offer. Just because you have the money in your bank account doesn’t mean it’s a stellar idea. What do the next few years look like for you? How much do you have tucked away in savings for a rainy day? A lot of people leverage their homes to refinance and free up extra cash, especially if times are tough. Can you get by without having this option?

In addition to less available credit, there are no tax breaks. But then again, if you can afford to pay in cash, you’re probably not too worried about that!

As always, talk to your local real estate agent about what’s best for you, and if you’re really unsure, talk with a financial professional. If you can afford to make a cash offer, make sure you do your homework to place a competitive bid on a home for sale. Just because you have cash doesn’t mean you’ll automatically win it, but you will have a good chance!

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Sarah Louise Green lives in the San Francisco Bay Area and writes about national real estate trends, home financing, advice for buyers, and DIY projects for the home and garden. Follow Sarah on Twitter:@slouisegreen

 

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