Articles and Advice

The Pros and Cons of Accepting a Cash Offer

With the current competition in the market, many buyers believe that making a cash offer will give them an advantage over others. But is taking a cash offer in your best interest as a seller? Or are you better off sticking to your price and holding out for a lender-financed buyer?

There certainly are some advantages to selling your home to a cash buyer. However, as with most things, there are also some potential drawbacks.

Let's dive deeper into the pros and cons of a cash sale.

The Pros

Fast Closing

One of the best things about a cash deal is the ability to go to closing quickly. When a buyer purchases a home with traditional financing, it often takes 30 to 60 days from when the contract is signed until the closing date. Since a cash buyer doesn't have to undergo the loan underwriting process, you may be able to close in a few weeks or, in some cases, even a few days.

No Need for Repairs

Before a lender approves financing for a home, they'll require an inspection. If your home needs major repairs and you're unable to make them, then an "as-is" cash sale is likely your best option. While you must disclose any problems with the home, it's up to the buyer to deal with them after the purchase is complete.

Less Uncertainty

Almost all lender-financed contracts have contingencies written into them. The contract will likely fall through if the home appraisal isn't high enough or the buyer can't obtain financing. While some cash deals have contingencies written into them, they're less common. Generally, accepting a cash offer gives you more certainty that the deal will close.

The Cons

Lower Selling Price

Despite the benefits of a cash sale, there are some trade-offs. The biggest is usually the selling price. Cash offers are almost always lower than what you could get if you waited for a traditional buyer, sometimes significantly so. However, once you factor in the cost of repairs, the stress of the uncertainty, and the money you'll spend while you're waiting to sell your home (for example, if you're carrying two mortgages), you may decide that the trade-off is worth it.

Transaction Risks

When selling your home for cash, you must watch out for scams! You'll want to ensure the buyer has the money to pay for the home. Ask to see a bank statement or, even better, a "proof of funds" letter from the bank before accepting the offer.

For your protection, never accept a personal check from a buyer to pay for your home. Instead, insist on a bank check or a check from the attorney's escrow account. Also, beware of a buyer who tries to purchase the home with actual cash. The cash could be part of a money laundering ring or from illegal drug sales. If that's found to be the case and you fail to report it, you could lose your home.

The Bottom Line

A cash offer can be the perfect answer for sellers hurrying to sell their homes. However, if you have the time to wait and can deal with minimal uncertainty, you'll almost always get a better deal from a lender-financed buyer. Your circumstances will determine which is the best choice for you.

If you're thinking about selling your home, give us a call. Working with a qualified agent can help minimize stress and give you the peace of mind that you're making good decisions. We'll help you determine your property's fair market value and find the perfect buyer so you can sell your home without the hassle.

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The Pros and Cons of Accepting a Cash Offer

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