As a real estate investor and partner at a licensed brokerage, I’m regularly in contact with homeowners looking to sell their house. A common refrain is the property seller wants a “cash offer.” Of course, cash means no mortgage financing. This creates ease in the seller’s mind that the buyer won’t back-out and less risk of cancellation due to appraisals, property condition, financing, or mortgage rejection.
Sometimes cash offers can reduce sales proceed on a home. A cash offer is mainly important where a home is in such poor condition it will not qualify for traditional financing, for example due to the FHA and VA minimum property requirements.
Even though my investment company functions as a Florida cash home buyer, we often recommend that homeowners take their property the MLS and not insist on cash. Here’s the common reasons homeowners should not insist on a cash offer:
- No Rush! One of the main advantages of cash offers is cash closes faster. But is there a rush to close? If you don’t need money quickly, you can exercise patience and collect cash and financed offers. A property can go under contract just as easily with a financed offer, and a mortgage decision can be reached in a few weeks. In many cases, the financed offer from an owner occupant (as opposed to an investor) will be higher.
Excellent condition. Houses in pristine condition are a safe bet to appraise high and not have any habitability issues resulting in a mortgage being declined. Regular owner occupants (more likely to be relying on mortgage financing) will be happy to bid on the beautiful house at higher prices.
Create competition. Want to set buyers against each other and then call for highest and best? Every seller wants as much sale proceeds and competing buyers drive up price. If you limit yourself to cash only, that’s taking a lot of financed offers off the table.
High Likelihood of Approval. Some home buyers – although cannot pay cash – can be vetted to ensure they are good candidate for a mortgage. Step 1 is finding a pre-approved buyer. You can also request a higher than average earnest deposit, ask about credit score, income, down-payment. Proof of funds is also key for assessing any buyer (cash or financed).
Cash may sound like music to your ears – but don’t rule out financed offers. Regular owner-occupants will bid higher paying off for you in the end!
As a real estate investor and partner at a licensed brokerage, I’m regularly in contact with homeowners looking to sell their house. A common refrain is the property seller wants a “cash offer.” Of course, cash means no mortgage financing. This creates ease in the seller’s mind that the buyer won’t back-out and less risk of cancellation due to appraisals, property condition, financing, or mortgage rejection.
Sometimes cash offers can reduce sales proceed on a home. A cash offer is mainly important where a home is in such poor condition it will not qualify for traditional financing, for example due to the FHA and VA minimum property requirements.
Even though my investment company functions as a Florida cash home buyer, we often recommend that homeowners take their property the MLS and not insist on cash. Here’s the common reasons homeowners should not insist on a cash offer:
(1) No Rush! One of the main advantages of cash offers is cash closes faster. But is there a rush to close? If you don’t need money quickly, you can exercise patience and collect cash and financed offers. A property can go under contract just as easily with a financed offer, and a mortgage decision can be reached in a few weeks. In many cases, the financed offer from an owner occupant (as opposed to an investor) will be higher.
(2) Excellent condition. Houses in pristine condition are a safe bet to appraise high and not have any habitability issues resulting in a mortgage being declined. Regular owner occupants (more likely to be relying on mortgage financing) will be happy to bid on the beautiful house at higher prices.
(3) Create competition. Want to set buyers against each other and then call for highest and best? Every seller wants as much sale proceeds and competing buyers drive up price. If you limit yourself to cash only, that’s taking a lot of financed offers off the table.
(4) Likelihood of Approval. Some home buyers – although cannot pay cash – can be vetted to ensure they are good candidate for a mortgage. Step 1 is finding a pre-approved buyer. You can also request a higher than average earnest deposit, ask about credit score, income, down-payment. Proof of funds is also key for assessing any buyer (cash or financed).
Cash may sound like music to your ears – but don’t rule out financed offers. Regular owner-occupants will bid higher paying off for you in the end!
