Cash Offer: Things You Need To Know

With a cash offer, the process of buying and selling is different from the process involving mortgages.

First, the process is usually faster. There is no mortgage application, documentation or underwriting, and the buyer usually does not need to be assessed. As a buyer, you still need to sort out the title policy and insurance, provide proof of funds and sign the closing documents, but according to Redfin, you may be able to complete a full cash quotation week within two transactions. In terms of the situation as of September 2019, the average mortgage takes 43 days to close.


Here are some other ways the process can differ with Cash Offers:


  1. Evaluation:

The assessment is usually performed by the lender, so if there is no lender, the buyer usually does not have to worry about them. However, in some cases, the buyer may still need to evaluate-especially if they are investors who want a guaranteed return.


  1. Closing:

The checkout process for cash offers is much simpler. As a buyer, you will sign the settlement statement, title and deed, hand over the cashier’s check (or wire transfer), and receive the key. If no fees are paid, paperwork will be greatly reduced. Since there are no additional credit fees, your transaction fees are also lower.


  1. Contingencies:

Contingencies for cash sales are usually less. The buyer does not need financing surprises (for mortgage loans), and may not need transaction surprises. Some buyers may still want to check.


Also Read: How To Get 100% Full Market Value for Your Home Guaranteed


  1. Title and escrow:

As a buyer, you still need ownership and escrow companies to process the transaction; but there may be more leeway in choosing these parties without the participation of the lender. Shopping around will help you compare costs.


Another major difference is that cash buyers need to prove their financial capabilities to the seller before moving on. With a mortgage, buyers usually come to the table with prior approval, which means that the lender has reviewed it and determined that they have the financial capacity to process the expected mortgage payment.


Cash offers can provide huge advantages for buyers and sellers. But they may not always be the right choice. If you are selling a house, make sure to consider the pros and cons of the cash offer; and the source of the offer. You want to make sure that you do business with a reputable party that has sufficient funds to complete the transaction.


If you are buying a house, think twice and invest all your cash in an asset. Consider talking to your accountant or financial adviser; and make sure you understand everything before you make an all-cash bid.




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