When it comes to buying a house, cash is king. A cash offer is a payment made in full, without the need for a mortgage loan or other type of financing. This type of offer is more attractive to sellers, as it eliminates the risk of falling through due to funding issues and generally results in a faster closing time. Paying in cash also has other advantages that make it more attractive to sellers.
In a competitive market, a seller is likely to accept a cash offer over other offers because they don't have to worry about the buyer being denied financing, according to Peter Grabel, managing director of MLO Luxury Mortgage Corp. A cash home purchase also has the flexibility to close faster (if desired) than one involving loans, which could be attractive to a seller. Cash buyers don't need to get a mortgage, since they already have the money for the purchase. This means that the mortgage application and approval process can be bypassed, making it easier and faster for the seller.
Cash offers also mean no interest and lower closing costs, which can be beneficial for both parties. Cash buyers can be especially beneficial if you need to quickly unload an unwanted or distressed property. However, if you want to sell fast without sacrificing a ton of capital, Clever is one of your best alternatives. Clever is an online real estate marketplace that connects buyers and sellers directly, allowing them to negotiate and close deals quickly and easily.
The 70% rule is another factor that makes cash offers more attractive to sellers. This rule states that buyers should not pay more than 70% of the value after repair (ARV) of the home what they expect to sell for fewer repairs. This means that cash buyers are less likely to want a property that needs significant improvements or requires major repairs, as they are already spending a considerable amount of money on the home. Paying in cash for your home can give you great peace of mind, but it shouldn't be at the expense of your overall financial security and becoming poor housing.
If you're considering buying a home with cash, make sure you have enough money saved up for other expenses such as taxes and insurance. Finally, if you're looking to sell your home quickly without sacrificing too much capital, consider selling it to an iBuyer or real estate investor who buys homes for cash in select cities across the state. These businesses are usually willing to buy homes in poor condition that wouldn't qualify for financing from traditional buyers. The buyer needs to resolve the title policy and insurance, provide proof of funds, and sign closing documents, but this process can usually be completed within a week or two.