Should you consider a lower cash offer?

In today’s seller-friendly market, it’s not uncommon to encounter at least one buyer who is willing to pay in cash. (No, they’re not delivered in a stuffed briefcase. Though that would make cash offers a little more interesting!) 

For sellers, this type of offer is certainly inviting. And why shouldn’t it be?

It’s the most straightforward process you’ll encounter. If you plan on selling quickly and want to avoid any contingencies, accepting a cash offer is the best route there is—even if it’s not the highest offer. But if you’re still unsure about whether you should consider a lower (but likely more expedient) cash offer, then this guide is for you. 

It really comes down to two factors: 1) the terms of the deal and 2) your preferences as a seller. If you’re willing to wait for a better offer and are in no hurry to close the sale, then there’s absolutely no need to accept the first cash offer you receive. Let’s dig into the details.

Cash offers: the advantages

Did you know that cash offers accounted for one-third of home sales in 2021? 

Such is the finding of the National Association of Realtors (NAR). That’s a significant rise from 20% in 2019 and will be higher by the time the year ends.

After the 2008-2009 financial fallout, many contemporary homebuyers are aware of markets where cash offers aren’t only accepted but have become prevalent. One of the biggest advantages of choosing a cash offer is that sellers can be almost certain that the deal will close on time. 

According to NAR, only 5% of such contracts were terminated as of April 2021. Make sure that the buyer has verified proof of the requisite funds, and you’re good to go. The same report confirms that delays in closing deals impacted roughly 22% of all real estate transactions in the first quarter. 

Opting for a cash offer reduces the probability of delay. You can successfully navigate the sale in a week or two, instead of waiting some 40-60 days when the buyer is anticipating a mortgage approval. (And since there are no loans involved in cash offers, there’s no appraisal stress whatsoever.)

Real estate investors may also show interest in your property, including in challenging scenarios like:

  • Homes requiring major repairs
  • Properties with significant storm or fire damage
  • Homes with fees and taxes owed
  • Properties with title flaws

You probably know them as ‘home flippers.’ But many investors use cash transactions to purchase such challenging properties in an effort to make a living. They remodel or renovate them, and then later list them for a much higher price. 

Cash offers: the disadvantages

One of the most obvious cons of choosing a cash offer: you often lose the chance to consider competing bids. 

Mike Ferrante, a real estate agent in Cleveland, described this in an interview with NerdWallet. “We had an investment property where the buyer came in $5000 over list price, and they said this offer has an expiration of tomorrow evening.”

What did they do? They opted to wait for other offers rather than taking the cash. 

And for them, it was a smarter move. “In this case, now there are three offers, and one is considerably higher than what they had offered,” Ferrante said. 

What’s the verdict?

If you need to close a sale in the next couple of weeks and have considerable home equity, accepting a cash offer is a suitable and likely lucrative option. On the other hand, if you can afford to test the waters for a month or two, consider listing and expanding your sales possibilities on the open market.  

The point is that you have options. As mentioned earlier, it ultimately comes down to your preferences and the deal itself—if you’re content with the price offered or are willing to wait for a potentially higher (and possibly more problematic) payout. 

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