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How To Make A Cash Offer

Insights Into Making A Cash Offer On  House

Since the 2008-2009 recession, cash offers have become more prevalent! In today's current real estate market, this is especially so. Still, cash offers are more common in some markets than others. And for buyers trying to find a house in an area where cash offers are in high demand, competing against those offers can be an intimidating part of the homebuying process.

If you intend to purchase a home in such a market, you need to understand how a cash offer on the house works. And what makes such an offer attractive to sellers. Once you've gained more inside knowledge, you will be able to write your compelling offer.

Insights Into Making A Cash Offer On  House

The Basics

When imagining a cash offer, you might envision someone approaching a seller with a suitcase full of neatly stacked "Benjamins", saying they're ready to hand it over, but that's not the reality.

A cash offer means that a buyer already has the funds to purchase the home and can pay for it without obtaining a mortgage loan. From the home seller's point of view, it doesn't make much difference whether the cash comes from the buyer's bank account or a mortgage loan. 

However, the associated contingencies that come with additional risks for the seller - are where the most critical distinctions between a cash offer and an offer backed by a mortgage loan come into play.

The most apparent contingency with an offer that requires financing is, of course, the financing itself. Though you can and should present your purchase offer with a prequalification or preapproval letter from our lenders, these funds aren't sure until the loan is fully approved.

In addition, from a seller's point of view, if two offers are identical and one buyer can pay cash, the cash offer is likely to be viewed as the stronger offer.

Advantages Of A Cash Offer

  • Typically a faster process
  • Less contingencies
  • Confidence that you will close on time
  • More control over the appraisal
  • Simpler process at time of closing

What Kind of Buyers Offer Cash?

While technically anyone with available funds can offer cash when buying a home, cash buyers tend to fall into a few different categories.

What Kind of Buyers Offer Cash?

Investors commonly offer cash when buying homes to either flip or hold onto to rent out. More experienced investors tend to buy and sell homes often, so they're likely to have the cash resources on hand that allows for paying out of pocket rather than securing a mortgage loan for each property they purchase.

Homebuyers who are downsizing maybe lean towards paying with cash. While the size of a house doesn't necessarily dictate its market value, it's not uncommon for the sale of a large house to produce enough profit to turn around and purchase a smaller property without the fuss of financing.

Additionally, buyers backed by a cash-purchase product can present a very attractive cash offer on a home they love.

If you're prepared to submit a cash offer on a home, our team is ready to help! Our USAdvantage Program could be the exact fit for your situation and could get you into your new home sooner than you may have planned.