Should I accept a cash offer for my house?
If you're planning to put your house on the market, you may find yourself fielding a variety of different offers from buyers, including some cash offers. This might have you wondering, "Should I accept a cash offer for my house?”.
What does an all-cash offer mean?
- As the name suggests, an all-cash offer is an offer from a buyer who's ready to purchase a house without any financing or the need to apply for a mortgage. Typically, they would pay an agreed-upon price for a house with a wire transfer or a check.
Benefits of accepting an all-cash offer on a house
All-cash offers have been on the rise in the current landscape, with nearly a third of all residential property purchases made in cash.
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Possibly faster and easier process:
Generally, a home purchase financed with a mortgage involves more paperwork and approvals, which may extend the time needed before closing. On average, it may take about two months to buy a house with a loan. By contrast, an all-cash deal could take as little as a couple of weeks.
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Less risk of the deal falling through due to financing:
As a seller, you may not be aware that even if a buyer was preapproved for the mortgage, it doesn’t guarantee they’ll end up qualifying for the loan. Generally, if the buyer proposes an all-cash deal, it likely indicates that they have the funds ready to go.
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Fewer contingencies:
An all-cash offer allows parties to bypass a mortgage contingency. There's also a higher chance of being able to forgo some other contingencies that lenders usually require for mortgage approval, such as inspection and appraisal contingencies (if the buyer agrees).
Accepting a Cash Offer: What to be Aware Of
While accepting a cash offer for a house does have its advantages for sellers, it may help to also consider some of the drawbacks that might come with it. For example:
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Potentially Lower Price:
Buyers who are ready to pay in cash tend to offer less for a property than those who aim to finance a purchase with a loan. This happens because buyers are usually aware that sellers may prefer cash offers for the reasons mentioned above.
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Rapid Selling Process:
A scenario in which a seller might be inclined to pass on the cash offer is if they're trying to buy a new house while selling. In this situation, a longer process could possibly be helpful, as it may provide more time to find the next home.
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