{"id":63936,"date":"2022-04-08T10:40:48","date_gmt":"2022-04-08T14:40:48","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=63936"},"modified":"2022-04-08T10:40:49","modified_gmt":"2022-04-08T14:40:49","slug":"all-cash-offer-on-house","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/all-cash-offer-on-house\/","title":{"rendered":"Why All-Cash Offers on Houses Are Attractive to Sellers"},"content":{"rendered":"\n

What is the best way to pay for a house? Why is it smarter for you to make an all-cash offer on your house?<\/p>\n\n\n\n

In the book Buy, Rehab, Rent, Refinance, Repeat<\/em>, real estate agent David M. Greene says that sellers are more inclined to accept all-cash offers on houses. Compared to your competition, you don’t have to worry about pulling out because of loans, appraisals, or possible inspections.<\/p>\n\n\n\n

Continue reading to learn why making an all-cash offers on a house is the smarter way to buy and invest.<\/p>\n\n\n\n\n\n\n\n

Making an All-Cash Offer<\/h2>\n\n\n\n

Once you\u2019ve found a good deal, you may need to compete against other bidders to secure it\u2014and Greene says that an all-cash offer on a house makes your bid more competitive.<\/strong> Cash offers are attractive to sellers because they reduce the contingencies<\/em>, which allow buyers to pull out of a deal without losing money within a window of time (the contingency period<\/em>). Fewer contingencies mean greater odds that the deal will close smoothly and quickly. <\/p>\n\n\n\n

There are three primary contingencies<\/strong> in every property sale: <\/p>\n\n\n\n

  1. The loan contingency <\/strong>allows a buyer to withdraw if their loan doesn\u2019t get approved. A cash offer eliminates the need for a loan approval and, thus, this contingency. <\/li>
  2. The appraisal contingency <\/strong>provides time to get an appraisal and allows the buyer to withdraw if the property\u2019s value is below a certain amount. Banks often require an appraisal, but if you\u2019re paying cash, you have the option to waive this contingency. <\/li>
  3. The inspection contingency <\/strong>provides time for a home inspection and allows the buyer to withdraw or renegotiate if the property has significant issues. Regardless of whether you\u2019re paying cash, you can waive this contingency if you already anticipate a major renovation because the house is severely distressed.<\/li><\/ol>\n\n\n\n

    (Shortform note: Each contingency is assigned a specific contingency period<\/a>, during which the home is under contract<\/em>. For example, a loan contingency may last 30 to 60 days, while an inspection contingency may be just 10 days. If the buyer\u2019s financing isn\u2019t approved or they can\u2019t schedule a home inspection within the given time window, they have to decide whether to request an extension\u2014which postpones the closing date\u2014or move forward with the sale anyway.)<\/p>\n\n\n\n

    Greene adds that all-cash offers on homes also open you to more investment opportunities<\/a> because some extremely distressed properties don\u2019t qualify for financing. <\/p>\n\n\n\n

    Although Greene stresses the importance of all-cash offers on properties, it doesn\u2019t have to be your cash<\/em>.<\/strong> Alternative sources of funding include:<\/p>\n\n\n\n