
If sellers get paid at closing either way, why is cash better?<\/h2>\n
When you buy a house with cash, the risk is all yours. If you have to get a mortgage loan, however, the lender<\/a> shares the risk, and they often want to take steps to make sure the investment is a good one \u2014 like including an appraisal contingency<\/a> to make sure the home is worth the amount they are loaning you to buy it, and an inspection contingency<\/a> to see if there are any potential problems.<\/p>\n If the house has major issues or the appraisal comes in low<\/a>, the financing may fall through. And, ultimately, if you can\u2019t secure a loan, you won\u2019t be buying the house.<\/p>\n Cash buyers can take these same steps for appraisals and inspections, but they aren\u2019t required to do so to appease a lender. So, a cash buyer can waive appraisals and inspections to sweeten the deal for the seller if they choose.<\/p>\n Barnes sums up the benefits of a cash offer, saying, \u201cThe sale can close more quickly, closing costs can be slightly less, there\u2019s less risk of the financing not working out and having to put the home back on the market.\u201d<\/p>\n<\/div><\/div><\/div><\/section> In short, cash offers are enticing to sellers for these reasons:<\/p>\n Let\u2019s take a closer look to understand better how cash offers affect the process.<\/p>\n The fact that a cash purchase might not require an appraisal can be great for the seller because they don\u2019t have to worry about what will happen to the offer if the house doesn\u2019t appraise high enough<\/a>. A loan contingent on appraisal could fall through, and the seller would have to find another buyer or reduce the price.<\/p>\n If you\u2019re financing and trying to compete with cash offers, Barnes says his clients \u201cwere most successful with financing and trying to beat out a cash offer when they offered an appraisal guarantee.\u201d He recommends being willing \u201cto pay up to a certain amount above the appraisal if it comes in low or be willing to pay whatever the gap may be.\u201d<\/p>\n You could also offer to pay for a second appraisal if you think the first was too high.<\/p>\n Mortgage loans require an inspection<\/a> to make sure the house is habitable and in good shape. Again, cash buyers can forego this step since they are taking on the risk themselves. This may be especially appealing to a seller if they know their home has issues and are attempting to sell the house as-is<\/a>.<\/p>\n That said, foregoing a home inspection is a risky move for a buyer. Unless you\u2019re buying for investment purposes<\/a> and planning to completely renovate the house to rent or resell it, you\u2019ll probably want to know what you\u2019re getting into.<\/p>\n Fortunately, you can ask for an inspection and have a competitive offer. Home inspections are often used as a negotiation tool to ask for a lower price or for the seller to pay for repairs<\/a>, but it\u2019s also very possible to conduct one simply for peace of mind without asking the seller for anything.<\/p>\n This may work especially well in today\u2019s market, where Barnes says sellers\u2019 attitudes toward what they can get for their homes are behind the current trends. \u201cWe\u2019re still seeing some sellers that want to get a good price and not have to fix anything,\u201d he says. \u201cThey want to sell quickly with multiple offers, and they\u2019re kind of lagging behind where the market is because they still think we\u2019re in a red hot seller\u2019s market.\u201d<\/p>\n Using an inspection for informational purposes rather than as leverage for repairs can help make a financed offer more attractive.<\/p>\n Because cash buyers aren\u2019t obligated to get an appraisal or inspection<\/a>, these deals may close more quickly. This can appeal to sellers who want to move quickly and avoid their next mortgage payment.<\/p>\n<\/div><\/div><\/div><\/section> To compete with this, you can offer to let the seller control the timeline and do everything you can on your end to expedite the process:<\/p>\n While technically anyone with available funds can offer cash when buying a home, cash buyers do tend to fall into one of a few different categories:<\/p>\n Though it\u2019s true that a cash offer may lead to an easier, faster closing sale, cash isn\u2019t always king in the eyes of a seller. The seller gets paid just the same<\/a> whether you pay in cash or finance with a loan.<\/p>\n Sometimes cash offers come in low because the buyer knows the advantages for the seller. But if the timeline and contingencies aren\u2019t much of a concern, the seller has no reason not to take the best offer, regardless of where the money comes from. This means that, even if you are using a mortgage, you can absolutely still submit a competitive offer.<\/p>\n Whether you choose to borrow or pay in cash, consider these strategies to put in a solid bid:<\/p>\n Beyond offering financial perks, consider writing a personal letter<\/a> to the seller. If you have extenuating circumstances or a special emotional attachment to the home that might tug at a seller\u2019s heartstrings, this can work in your favor.<\/p>\n Bottom line: A higher price, as few contingencies as possible, and an emotional appeal can put you far ahead of any cash offer a seller might be considering.<\/p>\n There are many reasons a seller might prefer a cash deal, and you won\u2019t know what part of the cash deal is most appealing to them unless you try to negotiate. A good agent<\/a> should be able to assess the seller\u2019s position and give you advice on how to write the best possible offer.<\/p>\n At the end of the day, it might be easier than you think to outshine a cash offer. The key is to make things as easy for the seller as possible.<\/p>\n Header Image Source: (iriana88w\/ Depositphotos)<\/em><\/p>\n<\/div><\/div><\/div><\/section> Steph Mickelson is a freelance writer based in Northwest Wisconsin who specializes in real estate, building materials, and design. She has a Master's degree in Secondary Education and uses her teaching experience to educate and guide readers. When she's not writing, she can be found juggling kids and coffee. Richard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations. You’ve probably heard that making a cash offer on house purchases can give you a leg up when it comes to having your offer accepted or rejected. Considering the fact that 74% of homebuyers financed their purchase last year, it may seem frustrating to get into a market where a cash offer typically beats one that relies on financing. In this post, we’ll take a closer look at what a cash offer is and some options to make your offer look more attractive to home sellers. A cash offer simply means that a buyer already has the funds available to buy the house and can pay for it without securing a mortgage loan. From the seller’s point of view, it doesn’t make much difference whether the cash comes from the buyer’s personal bank account or a mortgage loan. The difference is the associated contingencies that come with a mortgage loan, which can pose an additional risk to the seller. The most obvious contingency with an offer that requires financing is, of course, the funding itself. Though you can (and should) submit your purchase offer with a pre-qualification or preapproval letter from a lender, these funds aren’t guaranteed until the loan is fully approved. From a seller’s point of view, if two offers are otherwise identical, and one buyer can pay cash, the cash offer is likely to be viewed as the stronger offer because it means the buyer definitely has the money and won’t risk not getting approved for financing, which can make closing on the house move more quickly. Warren Barnes, a top agent in Fort Wayne, Indiana, says that while he does see investors bringing cash offers, “it’s also been middle-aged to older folks that have had some time to grow their net worth, and they want to own something outright and not have any debt on it.” When you buy a house with cash, the risk is all yours. If you have to get a mortgage loan, however, the lender shares the risk, and they often want to take steps to make sure the investment is a good one — like including an appraisal contingency to make sure the home is worth the amount they are loaning you to buy it, and an inspection contingency to see if there are any potential problems. If the house has major issues or the appraisal comes in low, the financing may fall through. And, ultimately, if you can’t secure a loan, you won’t be buying the house. Cash buyers can take these same steps for appraisals and inspections, but they aren’t required to do so to appease a lender. So, a cash buyer can waive appraisals and inspections to sweeten the deal for the seller if they choose. Barnes sums up the benefits of a cash offer, saying, “The sale can close more quickly, closing costs can be slightly less, there’s less risk of the financing not working out and having to put the home back on the market.” In short, cash offers are enticing to sellers for these reasons: Let’s take a closer look to understand better how cash offers affect the process. The fact that a cash purchase might not require an appraisal can be great for the seller because they don’t have to worry about what will happen to the offer if the house doesn’t appraise high enough. A loan contingent on appraisal could fall through, and the seller would have to find another buyer or reduce the price. If you’re financing and trying to compete with cash offers, Barnes says his clients “were most successful with financing and trying to beat out a cash offer when they offered an appraisal guarantee.” He recommends being willing “to pay up to a certain amount above the appraisal if it comes in low or be willing to pay whatever the gap may be.” You could also offer to pay for a second appraisal if you think the first was too high. Mortgage loans require an inspection to make sure the house is habitable and in good shape. Again, cash buyers can forego this step since they are taking on the risk themselves. This may be especially appealing to a seller if they know their home has issues and are attempting to sell the house as-is. That said, foregoing a home inspection is a risky move for a buyer. Unless you’re buying for investment purposes and planning to completely renovate the house to rent or resell it, you’ll probably want to know what you’re getting into. Fortunately, you can ask for an inspection and have a competitive offer. Home inspections are often used as a negotiation tool to ask for a lower price or for the seller to pay for repairs, but it’s also very possible to conduct one simply for peace of mind without asking the seller for anything. This may work especially well in today’s market, where Barnes says sellers’ attitudes toward what they can get for their homes are behind the current trends. “We’re still seeing some sellers that want to get a good price and not have to fix anything,” he says. “They want to sell quickly with multiple offers, and they’re kind of lagging behind where the market is because they still think we’re in a red hot seller’s market.” Using an inspection for informational purposes rather than as leverage for repairs can help make a financed offer more attractive. Because cash buyers aren’t obligated to get an appraisal or inspection, these deals may close more quickly. This can appeal to sellers who want to move quickly and avoid their next mortgage payment. To compete with this, you can offer to let the seller control the timeline and do everything you can on your end to expedite the process: While technically anyone with available funds can offer cash when buying a home, cash buyers do tend to fall into one of a few different categories: Though it’s true that a cash offer may lead to an easier, faster closing sale, cash isn’t always king in the eyes of a seller. The seller gets paid just the same whether you pay in cash or finance with a loan. Sometimes cash offers come in low because the buyer knows the advantages for the seller. But if the timeline and contingencies aren’t much of a concern, the seller has no reason not to take the best offer, regardless of where the money comes from. This means that, even if you are using a mortgage, you can absolutely still submit a competitive offer. Whether you choose to borrow or pay in cash, consider these strategies to put in a solid bid: Beyond offering financial perks, consider writing a personal letter to the seller. If you have extenuating circumstances or a special emotional attachment to the home that might tug at a seller’s heartstrings, this can work in your favor. Bottom line: A higher price, as few contingencies as possible, and an emotional appeal can put you far ahead of any cash offer a seller might be considering. There are many reasons a seller might prefer a cash deal, and you won’t know what part of the cash deal is most appealing to them unless you try to negotiate. A good agent should be able to assess the seller’s position and give you advice on how to write the best possible offer. At the end of the day, it might be easier than you think to outshine a cash offer. The key is to make things as easy for the seller as possible. Header Image Source: (iriana88w/ Depositphotos)\n
The appraisal<\/h3>\n
The inspection<\/h3>\n
Timing<\/h3>\n
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What kind of buyers offer cash?<\/h2>\n
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Price still matters, and it pays to be competitive<\/h2>\n
\n
Handling cash offers as a buyer<\/h2>\n
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What’s the Deal with Making a Cash Offer on a House in 2025?
What is a cash offer?
If sellers get paid at closing either way, why is cash better?
The appraisal
The inspection
Timing
What kind of buyers offer cash?
Price still matters, and it pays to be competitive
Handling cash offers as a buyer