When you list your house, you should expect to receive a variety of offers from potential buyers. One of the most common types of offers you are likely to get for your house is the cash offer. Therefore, you need to understand what this offer means and how you can benefit from it before you even list your house.
This article answers the question: What is a cash offer on a house? It also talks about the benefits of a cash offer on a house.
What Is A Cash Offer?
A cash offer on a house is simply an all-cash offer made by a buyer to the seller of a house. Instead of using a traditional mortgage or financing to buy a house, a buyer who makes a cash offer intends to pay cash in full to complete the transaction. This type of offer makes the process of selling a house quicker and easier, as it eliminates the tedious and uncertain process of underwriting.
When you are dealing with a property buyer who needs financing, you are not sure if lenders will approve the loan. Many factors can compel lenders to reject a mortgage application, including a poor credit score and home appraisals. This is often a major factor in escrows not closing as intended, and transactions being altogether cancelled.
That’s why most home sellers prefer cash offers over financed offers. With a cash offer, there are no financing strings attached.
Common Components Of Cash Offers On Houses
In the United States, cash offers on properties are fairly common. According to a study by ATTOM Data Solutions, cash offers on properties in the US account for about 24 percent of single-family and condo sales every year.
This number is even higher in some states, including Florida, North Carolina, and Georgia, among others. In these states, cash offers range between 32 and 40 percent of the total sales every year.
There are many reasons why a home buyer may choose to pay cash instead of getting a mortgage. For instance, if the buyer has recently sold their home and wants to invest the money in another property immediately, they may prefer to make a cash offer. Real estate investors and investment companies also like to make cash offers on properties, especially if they have ready cash or the property needs serious repairs.
If your house qualifies for a fix and flip, most buyers will give you a cash offer, as it will not qualify for financing from a traditional buyer. Also, some buyers will make a cash offer because they want to stand out or have an advantage over their competitors. As the property seller, it is important to understand how cash offers work before you accept any offer. Remember that cash offers can happen at any time, in any situation, and any transaction.
Keep in mind the fact that cash offers on houses can shift at any time depending on many factors, including market situations and changing price points.
Benefits Of A Cash Offer On A House
Fast Closing
A cash offer means that you will close the deal more quickly, eliminating the prolonged waiting period experienced in a traditional home sale. In fact, you can close the deal in less than ten days once all the necessary contingencies have been met. That way, you are assured of getting your money sooner, while the buyer takes over the ownership of the house within a shorter period of time.
For mortgaged offers, the process of closing the deal takes longer because the lender will take time to verify the creditworthiness of the potential buyer. In fact, this process can take longer than a month to complete, and even then, there is no guarantee that the lender will approve the mortgage at the end of the escrow period.
Fewer Contingencies
A home sale process involving a mortgaged buyer requires several contingencies before you can close the deal. Some of the contingencies include home appraisals, inspections, and financing.
Unfortunately, these contingencies slow the process down and can end up costing you time and money. But with a cash offer, the potential buyer can choose to skip the bureaucracies, eliminating potential obstacles that may derail the sale process. If you are looking for cash offers on your house in San Diego, you should target a well-established and reliable real estate company like we offer here at Trusted House Buyers. We are a reputable family-owned real estate company that helps homeowners to sell their homes quickly and easily without the hassle of paying for repairs and agent commissions, since we’ll give you an upfront cash offer for your home exactly as-is.
Keep Reading:
Previous Article: House closing process
Next Article: How does selling a house work
