It almost sounds like a dream come true. A seller puts their home on the market, and almost immediately someone presents a cash offer. Should the seller take it right away? At Raleigh Cary Realty, we would say, “That depends.”
We say that, of course, because no two situations are the same. The offer could be lower than the listing or what the seller is willing to take. The seller may not be in a hurry to close and move out of the home. On the other hand, the seller may want to move out fast and not deal with any contingencies.
Either way, from our experience, here are five things we want sellers to know about cash offers:
- The motive behind cash offers: In the past, cash buyers tended to come from one of two areas—either property investors/flippers or wealthy individuals who didn’t need a mortgage. That’s not necessarily the case anymore. Some buyers looking to save money in a tight market use paying cash as tactic to win a bid against another potential buyer. As a seller, it’s OK to ask what the motivation is.
- Cash buyers tend to underbid: Past surveys have shown that sellers accepted cash offers between 1980 and 2017 that were 12% lower than financed offers on similar properties. If a seller is not in a rush to close, then holding out for a higher offer is a likely option.
- Closing is a faster process: One advantage to a cash offer is that closing is a simpler and faster process. Even pre-approved buyers can take around 45 days to close, while a cash offer can close in around two weeks.
- No appraisals to worry about: In this market with homes going above appraisal value, if you get a great cash offer, this may be one of the biggest motivators for a cash offer because while mortgage lenders require an appraisal, a cash offer does not.
- Cash buyers are usually on a tight timeline: Because they want to close quicker, cash buyers tend to pressure the seller into taking their offer right away. Once again, if the seller is not under a deadline, they should be patient and see if better offers come in.
So, as a seller, should you accept a cash offer? Once again, we say, “That depends.” Your motivation, timeline, and your desire to get the right offer for your home should dictate that answer. For more advice, or to list your home, contact us at Raleigh Cary Realty. We’re your local realtor.