Cash offers for homes can help you secure a fast close. If you are planning on making a cash offer for a new home you need to understand what sellers are looking for in cash offers to ensure you get the fast close you are looking for. Here are the three ways cash offers help you close fast.
What Are Cash Offers for Homes
A cash offer simply means the buyer has the funds available, without securing a mortgage, to purchase the property. To the seller, it makes no difference if the funds come from a personal bank account or a mortgage, they end up with cash either way.
It is the associated contingencies that come along with a mortgage and add risk for the seller that make selling a house for cash advantageous.
Cash buyers do not need to meet these contingencies and can close on the deal without lender approval, making the process faster, and reducing risk for the seller.
A cash deal means that there is no risk that the potential buyer will not have the funds to make the purchase. 41% of delays in contracts in 2019 were due to financing issues. Cash buyers are not reliant on finance to close a deal.
If the owner feels you may not have access to the finance they are likely to prefer the sure deal, the cash offer.
Lenders will also require additional contingencies before they approve a loan. So even if the buyer has provisional approval, the lender will conduct an appraisal and inspection.
The Appraisal and Inspection
Lenders will require an appraisal of the property before approving the loan. If the house doesn’t appraise high enough the loan may fall through. For the seller, this means they are limited in how much they can sell their home for.
A cash offer does not require an appraisal and the buyer may be willing to pay above the appraised price, which is not possible with loan finance.
Lenders will also require an inspection to ensure there are no issues with the condition of the home. A cash buyer can choose to forgo the inspection or overlook specific issues at their discretion.
This can be especially appealing to the seller if they know there are issues with the home and can’t or don’t want to fix them before selling.
Timing and Flexibility
Possibly the biggest advantage to cash offers is timing. Because cash offers do not require an appraisal, inspection, and the input of a third party the deal can close quickly.
You can also let the seller control the process. Businesses like Fasterhouse let sellers control the timeline. A cash offer gives you the flexibility to meet their needs and do so quickly. If another offer falls through and they know you have the cash you will be their first call.
Close Fast With a Cash Offer
Cash offers for homes give the buyer some important advantages in the property market. When negotiating with sellers, cash for homes allows you to drop loan contingencies and reduce seller risk, as well as giving them a more favorable timeline. If you enjoyed this article check out the rest of our real estate blog.