Wednesday, February 6, 2019 / by Pamela Glende
IS A CASH OFFER ALWAYS THE BEST OFFER?
There is really not a right or wrong answer here. It all depends on your situation.
Are you needing to sell quickly to get into another home? Are there financial issues and you need funds sooner than later?
Let’s look at some pros and cons:
1. You can close quickly. It can take as little as a week or so.
2. There’s no appraisal required unless the buyer request one for their own peace of mind that they aren’t paying too much for the home.
3. There’s no financing contingency. You don’t have to worry about the deal falling thru do to problems with the buyer’s loan approval.
4. They may offer to waive the home inspection, but most buyers will want a home inspection.
Make sure that you do have proof of funds and that it’s not contingent on anything such as a sale of a home or an inheritance or something. If it is contingent on anything then there is the possibility the deal could fall apart. Such as if the buyer doesn’t sell their home or if the inheritance funds they are waiting are delayed for one reason or another. A cash buyer needs to have liquid funds available in a bank account that can be withdrawn at any time. Never ever accept a personal check at closing. The closing company can accept a wire for the funds the day or closing or they can have the buyer bring a cashier’s check to them a day or so before closing to make sure the cashier’s check clears. They will then send all needed documents to the court house for recording.
1. Often cash buyers think their offers are superior so they will often offer less for the home.
2. There usually are other contingencies such as a home inspection, so they may ask for some repairs. The buyer can still back out to the deal if they aren’t happy with the inspection.
3. If you have multiple offers on your home the other financed offers may net you more for your home.
The loan process today is much more stringent. Getting a home loan is now more difficult then it was in 2008. You should make sure that before accepting any financed offer that your real estate agent contacts the lender to find out if the buyer is merely pre-qualified or if they pre-approved. There is a big difference.
Pre-approved means that the lender has looked at the buyer’s finances, taxes, debt to income, and employment history and credit. Oftentimes they send this through to underwriting to make sure the buyer is indeed approved and they anticipate no issues.
Keep in mind that the deal could still fall through should something happen with the buyer during the loan process such as loss of job. The buyer shouldn’t go out and make any large purchases on credit unless they can pay it off that same month. Normally though the lender and the buyer’s agent will warn against making any large purchases or changing jobs during the loan process.
Which is best? A cash offer or a financed offer? It really depends on you. If a financed offer will net you more at closing it might be better to accept that one instead of the lower cash offer. The money is the same in the end whether it is a check from the mortgage company or a cashier’s check from the cash buyer. There are some risks with both cash and financing. You will just need to decide which offer works best for you! Also keep in mind that an offer from a person who has already had a mortgage generally can get a new mortgage and may be putting down substantial funds. You just have to decide what works best for you.
Haven Real Estate Group