If you’re selling your home for the very first time or you just haven’t thought about the selling process too often, you might not realize the difference between receiving a cash offer versus a financed offer. And you may not know why a cash offer is a much better option.
You see, many homeowners are simply content to sell their home by any means necessary. So they’d be happy to accept a financed offer just as quickly as they would accept a cash offer. Without really thinking about it, you may not realize that there is actually a very big difference between the two offers.
To help you better understand, we’d like to tell you three reasons why accepting a cash offer is much better than a financed offer. In certain situations, it could even be better to accept a lower cash offer than someone willing to pay more money for your home through financing. Stick around to find out more information about this critical topic.
Why Cash Offers Are Better
- Cash Offers Make It Possible to Sell Your House Faster
If potential buyers make a cash offer on your home, you should congratulate yourself because you are in an amazing position. Not only are you on the verge of finally selling your home, you’re more than likely going to do it in record time.
Why is that?
For starters, cash offers are phenomenal because they make the selling process go much quicker than a financed offer. Since the buyer is paying cash, there is no need to wait weeks or months for a potential lender to approve the deal and guarantee the mortgage.
In all situations, a lender will look at a potential sale and wait for an official appraisal before making their final determination. If it turns out that the home is in more disrepair than initially expected, the mortgage company can reject the loan and turn down the applicant even if they are completely 100% qualified.
On the other hand, if the applicant doesn’t have the best credit score and cannot necessarily prove that they’ll be able to pay their mortgage each month, a lender may eventually disqualify them and reject their mortgage application as well. This all takes time that you may not have to spare, so being able to avoid the roadblocks and potential pitfalls created by mortgage companies is certainly a good thing when selling your house.
As an example, if you get two offers on your property and one is a cash offer and the other is a financed offer, you should seriously consider the cash offer because it’s basically guaranteed as long as the buyer finds the appraisal and inspection acceptable.
- Cash Offers Have a Better Chance of Surviving a Low Appraisal
Speaking of appraisals, mortgage companies have the right to reject a mortgagee if they feel the property isn’t worth the amount being borrowed. This can create major problems for sellers who might be asking more for their home than it is necessarily worth.
As an example, let’s say you receive a financed offer on your property for $250,000. The mortgage company sends in their appraiser and he or she says the home is only worth $225,000. In this particular case, the lender is not necessarily going to be keen to loan money on a house they feel is worth $25,000 less than the asking price.
On the other hand, if you receive a cash offer in this same vein and the buyers really want your property, they might not care about the $25,000 discrepancy as long as they get to own their dream home.
So it’s definitely better to deal with a cash offer in this situation because nobody can tell cash buyers how much to spend on a property based on its perceived value.
- Cash Offers Are Guaranteed to Close
Lastly, when selling a home accepting a cash offer is much better than a financed one because it’s guaranteed to close. For all the reasons mentioned above, a financed offer can get rejected by lenders far and wide if they are unhappy with the deal for one reason or another.
On the flipside, a cash offer is worth its weight in gold. The homeowner has the money available and doesn’t need to ask anyone to loan it to them. So as long as they are happy with the appraisal and all other aspects of the deal, they will close on your property and buy it from you without any red tape getting in the way.
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