Even though the loan approval process has improved, nothing can replace the power of an all-cash offer. It is important to recognize that all sellers do not want the same thing from a transaction. The goal for you may be completely different than a neighbor down the road. On the surface, price drives the transaction but there are times when price may not be the most important factor. If you are under time constraints, or are simply fed up with the process, you may consider taking a cash offer, even though you are leaving money on the table. As is the case with many things in real estate it comes down to you and your individual desires. Here are four reasons why you would consider accepting an all-cash offer.
Speed. Most cash closings offer limited contingencies and allow you to close in two weeks or less. For any seller who has had their property on the market for some time this is especially appealing. Even if your property is just listed the ability to close quickly may be tempting. With most cash offers you are giving up something in terms of price for the ability to close quickly. This is important if you are looking to close on another property or have some other pressing need to sell. Instead of waiting around to find a buyer and then have them crawl through the process a cash offer can have you at the closing table in weeks.
Improvements to the Loan Approval and Underwriting Process. What once was a crapshoot to close is now almost back to normal. That being said, there is always some uncertainty with getting a buyer approved. There are many hurdles that buyers must face starting with the appraisal and ending with the closing. Even though the lender or mortgage broker can tell you how strong the buyer is all it takes is one negative item to cause problems. If the buyer ends up having to back out three weeks into the process you are forced to start over. The same pool of buyers may have moved on and you will take a major step back. An all cash offer doesn’t squeeze every dollar out of the property, but you know that you will close and not have to wait to find a buyer.
Using Proceeds Elsewhere. Prior to listing you should have an idea of how much you want, or need, to sell for. You will also most likely have a plan in place for what you are going to do with your proceeds. There are times when your sale has a chain reaction that impacts two or three other transactions. You may be using the proceeds to purchase another property or using them for investment purposes. Whatever you are using it for if you hit your number it may make sense to sell and move on. You may be initially disappointed with a reduced cash offer but when you take a minute to look at the big picture it may be a perfect opportunity in disguise.
Unique Property/Situation. If you have a multiple offer situation you probably don’t need to take a reduced cash offer. However, you need to always assess the demand for your property. Is there something about your property that limits the buyer pool? This could be anything from a five-million-dollar price tag to the condition of the roof. The fewer number of potential buyers the more difficult it is to find the right one. If there is something unique to the property or the contract it often makes sense to get as much as you can from a cash offer and run.
Accepting a cash offer doesn’t make sense in every situation. You and your real estate agent should sit down and weigh the pros and cons of every offer that comes in and make the best decision for you.