Should I Accept a Cash Offer for My House?

Cash home sales are currently reaching around 23% of sales in a year, one of the highest records in US history. With increasingly strict lending procedures and red tape, buyers and sellers are understanding the benefits cash sales can bring. But is cash always the best option?

Both types of sales have advantages and disadvantages. If you are wondering “Should I accept a cash offer for my house?” read on for our essential advice below. 

How Does the Process Differ?

The process is much quicker with a cash sale and this comes down to financing. With cash, all that has to happen is the lawyer arranges the contract, money is exchanged and contracts are signed. 

In a mortgage, a number of additional steps are added. Applications, underwriting, appraisals, and contingencies all lengthen the process. They also add to the fees and costs. 

Who Buys a House With Cash?

There are several different types of people who may make a cash offer on a home. People who have enough money to buy without a mortgage are rare but they do come along. The types of people who may make an all-cash offer are listed below.  

Home Flippers

Home flippers are investors who buy homes at low cost, renovate properties, and then sell them at a profit. While they may offer lower prices, they often don’t ask for contingencies and work to make the sale as quickly as possible. 

Buy and Hold Investors

These are people who buy a property to renovate and then hold it while it rises in value. At this time, it is rented out to tenants. They are similar to home flippers, don’t usually have contingencies but may not be as eager to get the sale moved through quickly. 

House for Cash Companies

House for cash companies acts like house flippers. They work by buying properties, renovating, and then selling them for profit.

The advantage is that they often have an infrastructure in place to get the sale through quickly. As they are local businesses, it makes it easy to check their reputation and avoid scams. 

Traditional Investors

Traditional investors are those who have the money to buy outright. They may have money to invest from savings, businesses, or other house sales. 

What Are the Advantages When You Sell Your Home for Cash?

There are many advantages to selling your home for cash. However, keep in mind that if you have a mortgage you will still need to pay this off with the proceeds. If you don’t have much equity, then it may not be for you. 

Less Can Go Wrong

When you sell your home to someone who is getting finance, a lot can go wrong. They may not get approved, or may even get offered a lower amount. You then either have to lower your price, they have to find money from somewhere else or you have to locate new buyers. 

With a cash offer, there is no finance approval needed. All the buyer has to do is produce the cash and you can finalize the sale. 

Faster Sales

The process for mortgage approval is a long one, even if the offer comes from someone who has been pre-approved. You could be waiting for as long as sixty days to close the sale, but as little as two weeks with a cash sale. 

Fewer Contingencies

With a mortgage offer, the buyer may want an appraisal. From this, they may have contingencies that have to be met before the sale goes through. With cash offers, it is very unlikely anyone would ask for these.  

Should I Accept a Cash Offer for My House?

Several factors should help determine if you should accept a cash offer. The main reasons you may consider one over a financed offer are listed below. 

How Fast Do You Need the Money?

If you are not in a rush, then a financed offer may suit you better. Generally, they will be higher in value. However, make sure you weigh this up against any possible contingencies and repairs you may have to make. 

When you need money quickly, few offers will be better than a cash one. The sale can be closed within two weeks and once mortgages are paid back, you have the profit to do what you want. 

How Much Money Do You Need?

Cash offers will almost always be lower than financed ones. If you are selling because you need the money, then deduct the amount you have left on your mortgage from the offer to see what you will be left with. Should this not be enough, then you will have to take the longer route of a financed offer. 

Who Has Made the Offer?

Although cash offers generally go through easier, it is not always the case. Inexperienced cash buyers may still want to have appraisals and contingencies added. It may also get more complicated if they are not working with a real estate agent. 

Should you want peace of mind and experience, go for a house buying company. Most will be willing to take a home sold “as is” which means they won’t want any repairs or alterations made. 

Searching for a Cash Offer

If you were asking the question “Should I accept a cash offer for my house?” write up a list of the pros and cons. Should you want to sell for cash but don’t have an offer, there are ways to find cash buyers. However, it may take a little more work. 

We Buy Houses should be your first stop in the Memphis area. We will make you a cash offer quickly on your property. Contact us here for a free estimate and begin the process today.