A look at the benefits and potential drawbacks for both sellers and buyers when it comes to cash offers.
However, accepting or making a cash offer has its drawbacks.
What Is a Cash Offer?
Credit:Adam Albright
Offering cash removes a lender from the picture and often leads to a faster closing process on the home.
The National Association of Realtors estimates that all-cash buyers now comprise over one-third of home sales.
BRYSON TAGGART
Buyers often make cash offers to compete with other buyers in a competitive market.
Sellers like them because they make for smoother closings.
Offering cash can be a position of strength for a buyer, says brokerTate Kellyof Coldwell Banker Warburg.
it’s possible for you to get this through a conventional home loan or other options.
Veterans qualify for VA loans, which require no money down.
Buyers typically start a house hunt by being preapproved for a loan from a bank.
This gives them a ballpark range of what they can expect to be approved for with a home loan.
However, its only an estimate.
Financing is often the top contingency on a home purchase, followed by ahome inspection.
This risk is eliminated with a cash offer.
Buyers can also save upfront by skipping fees associated with traditional financing.
For example, most lenders charge utility and origination fees.
Fees are also associated with getting an appraisal and an inspection to complete the loan process, Taggart says.
These fees can add up to over $2,000.
Banks play a very small role in cash offers.
The only part the bank plays is sending the buyers funds to the sellers account at closing.
Accepting a cash offer also speeds up the closing process for sellers.
Is a Cash Offer Right for You?
If it is, consider your reasoning for going this route.
Are you looking to make a competitive offer on a coveted piece of property?
Sellers should keep in mind that a cash buyer might be less inclined to haggle on the price.
In addition, a cash buyer must show proof of funds, or the deal can crumble.
