When a homeowner is listing a home, they may be anticipating multiple offers. This can help to drive up the final price offered on a home. While many potential buyers will be financing their purchase through a lender, there may be a couple offering to pay for the home in cash.
Cash offers may be an attractive option for a seller. However, those homeowners selling their home for the first time or who may not have dealt with buyers paying in cash may want to learn more about a cash offer and how it may alter the home buying process.
A Cash Offer or Financing
A cash offer is not an option for every buyer. An all-cash offer enables the potential buyer to forgo dealing with a lender's approval process as a mortgage loan is not necessary. A buyer intending to pay cash should be able to show proof of funds and provide supporting documentation to facilitate the sale of a home.
When faced with a lower cash offer and a higher one financed with a lender, many buyers choose the cash offer. A homeowner may be willing to get less for their home when they do not have to worry about a potential buyer's ability to qualify for a mortgage loan. As even pre-qualified buyers may be denied final approval, a cash offer continues to have its appeal. When buyers who are financing do not get approved for a loan, sellers need to contact other potential buyers or put the home back on the market. Sellers would much rather go through with the home selling process with the original party and not waste extra time and energy.
The Benefits of a Cash Offer
Lending institutions are heavily involved in the purchase of a home when they are providing a loan to an involved party. Such involvement can lead to delays in the process until they are satisfied. Such a case can happen with the appraisal contingency. A home should appraise at the purchase price. However, there are times when a home appraises for significantly less, such as due to the home's condition or the current market. At this point additional negotiations may be needed as a buyer may have to offer more cash to afford the home or the seller is forced to lower their price. Such delays and discussions may lead to either party walking away from the transaction. Cash offers are good for a seller in that the appraisal contingency is not required for the sale to take place.
Sellers need to be concerned with other factors when a buyer is financing through a loan. As the qualifications of an applicant may change at any time, such as from increased debt levels, a lender may not be approved. The loan funding contingency is generally required for those buyers working with a lender.
Westchester home buyers paying in cash can often quickly meet any remaining contingencies. Motivated sellers often appreciate the ability to close on a home with a cash offer as the process can be swift. There are time when it can take as little as seven days to go through the process. Imagine being able to get through the rest of the demands in about a week. This is a reason why many sellers are attracted to dealing with buyers making a cash offer.
Working with a Motivated Buyer
Not every seller gets to work with a cash buyer and the majority of transactions involve buyers requiring a mortgage loan. Cash offers may occur more frequently in competitive markets where there are few properties available. Speak with an experienced agent to learn more about handling a cash offer.