HOW DO CASH OFFERS ON A HOUSE WORK?

WE ANSWER YOUR QUESTIONS ABOUT REAL ESTATE CASH OFFERS

A cash offer is well-known as a sort of “ace in the hole” when buying a home, because sellers will often pick a cash offer over others. Are you considering placing a cash offer? Read on for the details.

As always, please note that this is general information. For information about your specific options, please consult a real estate professional.

As opposed to a regular offer, which uses third-party financing, a cash offer is cash only. Sellers love these because they eliminate the risk that financing might fall through, and closing is usually quicker than with financed offers.

HOW DO CASH OFFERS WORK WHEN BUYING A HOME?

There are quite a few things that are different when a potential buyer places a cash offer.

For one, there is no required appraisal. With typical financed offers, the lender will require an appraisal to make sure that the home being financed is worth the money they’re lending the buyer. But, even if you’re making a cash offer on a home, you can certainly still get an appraisal if you want one!

Cash buyers will also sometimes skip the home inspection, but we don’t recommend that. It’s best that both parties, buyer and seller, enter into the sales process with all the information they need to make a good decision.

There’s no underwriting process with a cash offer, which ordinarily takes one or two months.

Buyers using a cash offer won’t need a lender to help with financing, but they’ll still need to show proof of funds, such as a bank statement, to prove to the seller that their offer is legit.

The last major difference between cash offers and traditional offers (with financing) is that fees will be a bit less. Cash buyers won’t need to pay bank-related closing fees like credit check costs.

WHO TYPICALLY OFFERS CASH?

The most common cash buyers are investors. Homebuyers who are downsizing and have the funds from a larger house at their disposal will use cash offers sometimes, too.

WHY DO SELLERS CHOOSE CASH OFFERS, EVEN WHEN THEY’RE SMALLER THAN FINANCED ONES?

It all comes down to risk. Sellers will frequently pick smaller cash offers than larger financed ones because it allows them to avoid any risk of financing falling through. The closing process will also be faster, so the seller will get their money faster.

Have more questions? Get in touch with our qualified team of Wisconsin realtors today!

Before you leave, get our four best tips for making an offer on a house in Madison, Wisconsin.