The all cash offer is an increasingly popular option among homebuyers, with recent data showing that it accounted for 30% of purchases in some cities. While these buyers are typically retired, savvy sellers and real estate investors can also benefit from cash-only deals, which can help them get above asking prices or avoid the hassle of going through traditional financing.
A Pro-Seller Context
One of the biggest pros for sellers is that all-cash offers don’t include a financing contingency, which can make a deal difficult or even impossible if a buyer’s mortgage doesn’t work out. In some cases, this can cause an all-cash offer to fall through, leaving the seller with no profit and a lot of lost time and stress.
All-cash offers also tend to be less dependent on appraisals, which can be a common occurrence for financed buyers. Having an appraisal contingency means that the transaction may need to be postponed until the appraisal process is complete, which can create additional delays and costs for both parties. More info https://www.southernskyhomebuyers.com/tn/maryville/
Moreover, an appraisal can be used to determine whether or not the property is worth the asking price. This can be a huge advantage for sellers in some markets where the market is tight and competitive.
A Pro-Buyer Context
An all cash offer can give the buyer more negotiating power in certain market conditions, particularly where there are a lot of other buyers and lots of competition for homes. A buyer making an all cash offer will be able to submit a lower bid than competing buyers and the listing price, which can help them stand out from the crowd.
A Pro-Buyer Conclusion
While all cash offers can save the buyer a lot of stress and frustration, it’s important to assess all aspects of an all cash offer before you commit to it. Ensure that it doesn’t interfere with any of your other financial goals and objectives, and that you have the cash necessary to close on the property.
Limit your Liquidity
Unless you have a significant wealth reserve, all cash offers can drain your liquid capital, especially if an emergency occurs and your savings are low. It’s best to have a large chunk of your wealth in a liquid account that allows you to access funds immediately if needed.
It’s important to have a good understanding of the home buying process, which includes knowing how much you can afford to pay for a home, how much it will cost in a down payment, how long you can afford to rent and how much you want to spend on a property’s maintenance. You’ll also need to understand all the potential expenses that go along with buying a home, such as closing costs and moving expenses.
You can use a Better Real Estate Agent to help you through the process of making an all cash offer on a home. Your agent can help you determine your ideal offer number, prepare and submit the offer, negotiate with the seller, and more. You might want to ask your agent to include a negotiated closing date and inspection contingencies in your offer.