Is a Cash Offer Better Than a Financed Offer?

Is a Cash Offer Better Than a Financed Offer?

I’ve received multiple offers on my house. One is cash, the other is financed. Which one should I accept?

A: Both scenarios have pros and cons. The bottom line is not always the best deciding factor. Weigh these points before making a decision.

How quickly do you want to close?

Cash buyers can typically close very quickly – sometimes in as little as 7 days. Getting a loan can take longer. Have your agent speak with the loan officer. Find out how qualified the buyer is, if any of the underwriting process has been done, and what a realistic closing timeframe would be. These factors, and your timeline should inform your decision.

Are you prepared to make repairs?

Often (but not always!) cash buyers are prepared to buy a property, even if it needs some work done. They may not offer your full asking price, but you can negotiate. Buyers who are getting a loan might WANT to take the house as-is, but their mortgage company may have different standards. Certain repairs (i.e. health or safety issues) will be required before the buyer’s loan is approved. Also, buyers getting a loan will be required to get homeowner’s insurance before closing. An old roof, water heater or air conditioner might make it expensive or impossible to get insurance in Florida. This can also affect the buyer’s loan approval. In short, some repair requirements can cost you in the end, or kill the deal entirely. Weigh the cost of repairs against the offer’s net value and see where you come out.

Will the property appraise for the amount that the buyer is offering?

This a big one. Buyer’s will often offer more money than the asking price to try and compete with other offers, especially cash offers. Problems can arise if the house doesn’t appraise for the amount the lender is willing to loan. If the buyer can’t pay the difference out of their pocket, you will wind up with less net proceeds, or worse, a dead contract. Cash buyers don’t generally get an appraisal done. They purchase property based on their own assessment of value.

A cash offer is not always better than a financed offer. A good Realtor® will be able to help you weigh the pros and cons of every offer.

You know the one! Call me today for marketing that gets multiple offers, and for guidance that nets you the most on your sale.