What You Need to Know About A Cash Offer
One way to quickly sell your house is by accepting a cash offer.
This is not a route that regular buyers take. Many choose to apply for a bond and pay it off over 20 or 25 years.
Cash offers, however, are very appealing because you have capital available immediately and you can sell your house quickly.
This is not always as clear-cut as it seems. There are a few things that you need to know about cash offers before accepting them from a buyer:
#1 - What is a cash offer?
A cash offer is when a buyer makes an offer with all-cash. This means that there is no mortgage or other financing involved. Cash offers come with added security because there the buyer doesn't have to wait for approval from the bank.
Some cash offers are generally lower than the asking price. It can also be lower than an offer where a mortgage is involved.
You shouldn't, however, bargain on a cash offer. It is dependent on several factors including the local housing market and the condition of your home.
#2 - Who will approach a seller with a cash offer?
Several types of buyers will approach a seller with a cash offer.
Some buyers want their offers to stand out from the rest. They know that a cash offer is more appealing than an offer that has to be financed.
Companies often approach homeowners with cash offers because they are interested in the location of the erf. Sellers should be warned here that companies sometimes offer way below market value in these cases.
Buyers who are interested in flipping homes also pay cash because they are interested in selling it at a profit after renovation.
#3 - Why should you consider a cash offer?
There are several reasons why sellers can consider cash offers. It might be because it is the best offer and it stands out above the rest.
You might also need the money immediately to for a downpayment on a new house.
You might not be able to find a tenant for your rental unit. This could lead to undesirable monthly expenses. In this case, it would be wise to sell the unit for cash.
Another case where cash offers are appealing is when a house has been inherited. Many people don't want to deal with the upkeep of another house and would rather have the cash instead.
#4 - What are the benefits of a cash offer?
When accepting cash offers, you must weigh up the pros and the cons. There are several benefits when accepting a cash offer.
There are fewer contingencies and less financial risk. The buyer has the money available immediately.
You don't need to go through the rigmarole of having your house appraised by the bank.
You also don't have to wait very long for the sale to register, as there is no mortgage application involved, so you can finalize the sale quickly.
#5 - What are the disadvantages of a cash offer?
Cash offers might be lower than you expect. The buyer might bargain on the fact that you'll accept a cash offer immediately.
It might not be too much of a negative thing if you want to sell your home quickly.
Another drawback is that cash offers are only finalized when you sign the contract. Some buyers might even ask that you make and pay for any repairs before they sign.
There are many things to consider when it comes to accepting cash offers. Make sure that you communicate with the buyer and that you have done enough research.